The publication of the research by Citizens Against Government Waste is a valuable body of research with surprising information. TaxConnections will post the information from this organization in a series to gain public attention to where your tax dollars are spent. We encourage you to reach out to Congress with your thoughts and/or make your commentary below and we will compile your thoughts and deliver this to them.

INTRODUCTION
The United States is on a path to fiscal insolvency. The national debt has surpassed $33 trillion for the first time and is set to grow at a record pace over the next decade. A February 15, 2023, Congressional Budget Office (CBO) report forecast an average annual deficit of $2 trillion between fiscal years (FY) 2024 and 2033. The annual deficits during this period will add $20.3 trillion to the national debt, bringing it to $53.3 trillion by FY 2033. According to the CBO, the deficit in 2033 will reach 6.9 percent of gross domestic product, “a level exceeded only five times since 1946.”

Rising interest rates will make payments for interest on the debt a fast growing share of federal expenditures. If Congress does not reduce spending, more money will have to borrowed to fund federal programs, which will mean more interest payments. Each one percentage point increase in interest rates means $330 billion more in annual interest payments on a debt of $33 trillion. That amount is more than the combined annual budgets for the Departments of Commerce, Energy, Interior, and Justice. The fiscal morass has been caused by several massive spending packages,
including bills signed into law in response to COVID-19 starting in the Trump administration, but mostly due to the bills passed during the Biden administration. They added $6 trillion in pandemic-related spending, much of which had nothing to do with the pandemic. The American Rescue Plan Act, which cost $1.9 trillion and was passed on a partisan basis by a Democratic majority in Congress and signed into law by President Biden, added as much as 3 percentage points to inflation. This excessive stimulus resulted in higher inflation in the U.S. than the average in 10 Organization for Economic Development countries.

Other legislation has not improved the picture. The Infrastructure Investment and Jobs Act of 2021 (IIJA), signed by President Biden on November 15, 2021, came with a price tag of $1 trillion. Then, on August 16, 2022, President Biden signed the Inflation Reduction Act, a deceptively labeled bill that included $369 billion in climate change/Green New Deal spending, $80 billion to hire 87,000 new Internal Revenue Service agents, and the establishment of drug cost negotiations that will result in price caps for drugs purchased by Medicare, crippling innovation by biopharmaceutical companies. Even President Biden admitted the bill was misnamed, saying on August 11, 2023, that “it has nothing to do with inflation: it has to do with $368 billion, the single largest investment in climate change anywhere in the world …” To help mitigate the fiscal tsunami, Citizens Against Government Waste
(CAGW) is releasing Prime Cuts 2023, which has been published since 1993. The 2023 version contains 543 recommendations that would save taxpayers $402.3 billion in the first year and $4 trillion over five years.

The recommendations were drawn from longstanding and new proposals from CAGW, including some that were set forth by both Democratic and Republican administrations and members of Congress, as well as nonpartisan sources. Prime Cuts 2023 addresses every area of government spending. For example,the report proposes eliminating the Market Access Program (MAP), which aims to help agricultural producers promote U.S. products overseas. MAP is a corporate welfare program that funnels millions of dollars to large,profitable corporations and trade associations that can well afford to pay for their own advertisements. Eliminating MAP would save taxpayers $878 million over five years.
Numerous cuts can be made at the Pentagon without jeopardizing national security, including eliminating funding for the alternate engine for the F-35 Joint Strike Fighter (JSF), which is opposed by the Biden administration and Pentagon officials. Upgrading the JSF’s existing engine as opposed to developing a wasteful second engine would save $588.4 million in the first year and $2.9 billion over five years. The recommendations also include longstanding proposals to eliminate the sugar, dairy, and peanut programs; reduce Medicare improper payments by 50 percent; and sell excess federal property.

The Prime Cuts Summary contains 17 recommendations, in order of one year savings, that would save $24.4 billion in the first year and $124.1 billion over five years. The full database of recommendations can be accessed at CAGW.org/PrimeCuts. By following the blueprint provided by CAGW’s Prime Cuts 2023, wasteful government spending can be reined in, and the nation can begin to chart a path toward fiscal sanity. Prime Cuts 2023 is essential reading for taxpayers, the media, and legislators alike.

Reduce Medicare Improper Payments By 50 Percent Over Five Years
1-Year Savings: $4.68 billion
5-Year Savings: $23.4 billion
Improper payments in Medicare have plagued the program since its inception. According to the Centers for Medicare and Medicaid Services (CMS), the FY 2022 improper payment rate for Medicare fee-for-service increased by 19.2 percent, from 6.26 in FY 2021 to 7.46 percent in FY 2022. The Medicare Part C improper payment rate was 5.42 percent, a decline of 47.3 percent from the 10.28 improper payment rate in FY 2021. Because of its chronic vulnerability to waste, fraud, abuse, and mismanagement, the Government Accountability Office (GAO) has for more than 20 years designated the Medicare program as “high risk.” The April 20, 2023, High-Risk Series report found that Medicare improper payments were an estimated $46.8 billion in FY 2022. According to the report, “spending is expected to increase significantly over the next decade as the U.S. population ages and more individuals begin receiving Medicare
benefits.” Without action, the total amount wasted in improper payments will increase.

Better oversight is needed, as the program has a funding gap on the horizon. According to the report, “the Medicare Hospital Insurance Trust Fund is projected to be depleted in 2028. At that point, the Medicare program’s revenue would be sufficient to pay about 90 percent of scheduled benefits.” In a bipartisan effort to reduce improper payments and help stave off the impending bankruptcy of the Medicare Trust Fund, Congress first implemented a recovery audit contractor (RAC) demonstration project for Medicare Parts A and B that ran from 2005 to 2008 and recovered more than $900 million in overpayments to providers. Congress enacted legislation to expand the program nationwide and make it permanent, a process that began in early 2009 and was fully implemented by September 2010.

In 2010, Congress further expanded the scope of RACs in the Affordable Care Act to include auditing for Medicare Parts C and D. The legislation also required states and territories to establish RAC programs for Medicaid, noting that the RAC program was a proven, valuable tool in reducing improper payments. Since the beginning of the RAC program, $11 billion has been returned to the Medicare Trust Fund. In FY 2013 alone, RACs collected $3.65 billion, according to the Medicare Trustees’ report to Congress on the program. Only $57.6 million of that amount, or 1.6 percent, was overturned at the first level of appeal. In addition, only 9.3 percent of all claims that reached the top level of appeal to administrative law judges was overturned in FY 2013.
RACs boasted an average accuracy rate of 96 percent, which makes them far and away the most successful tool Congress has ever implemented to protect taxpayers and Medicare beneficiaries from rampant improper payments. The Trustees’ FY 2013 RAC report called the RAC program “an important initiative in CMS’s goal to reduce improper payments and pay claims accurately.”
Unfortunately for taxpayers, Congress and CMS have caved to relentless pressure from hospitals and their state and national trade associations, which aggressively opposed the program from its inception, and quietly permitted the RAC program to shrink to a shadow of its former self. The volume of claims that RACs are now permitted to review has been reduced from a high of 2 percent, which is meager to begin with for a $568 billion agency that processes more than one billion claims per year, to a statistically insignificant .5 percent. The claims areas RACs are permitted to review,
which CMS must approve in advance, have dropped from 800-plus to 163. Not surprisingly, the undermining of the program has drastically reduced monetary recoveries to the Trust Fund. Hospitals have been granted a RAC oversight holiday and Congress has allowed tens of billions in improper payments to continue to hemorrhage out of Medicare. Legislators should not only stop giving in to pressure to weaken the RAC program, but they should also reinstate and safeguard the RACs as one of the many actions that need to be made to reduce Medicare improper payments.

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Information Obtained From CAGW Website

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