Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, January 8, 1993 TAG: 9301080119
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: METRO
SOURCE: From Knight-Ridder/Tribune and The Associated Press
DATELINE: WASHINGTON LENGTH: Medium
GOVERNMENT DEBT-LADEN MESS, AUDITORS REPORT
President-elect Clinton is about to get another batch of bad news about the government's finances.Beyond the grim numbers of the mounting federal deficit, there are hidden fiscal time bombs - perhaps hundreds of billions of dollars in unfunded liabilities for banking insurance, environmental cleanup and a host of other programs. These potential costs are detailed in a new series of audit reports prepared by the General Accounting Office, the congressional watchdog agency.
"The state of management in the federal government is not good," says one of the reports. Most agencies lack "a strategic vision for their futures" and often "do not have the people with the necessary skills to accomplish their missions."
It suggested federal agencies might be better managed if there were fewer politically appointed managers, but the report didn't recommend cuts in patronage.
Very little of this potential liability is accounted for in regular assessments of federal finances by Congress and the White House.
The studies are to be unveiled today by the Senate Governmental Affairs Committee. "These things have been ticking away, just waiting to blow up in our faces," Sen. John Glenn, D-Ohio, the committee chairman, said Thursday.
Officially, the White House predicts the federal deficit will top $300 billion this year. The GAO notes that just cleaning up nuclear and biological waste sites could add $160 billion or more to the deficit by the end of the decade. It could cost many billions more for the Environmental Protection Agency to clean up other hazardous waste sites.
The size of the Pension Benefit Guaranty Corp.'s likely bill to pay the obligations of bankrupt private pension plans has also been grossly underestimated, the GAO believes. Between now and 2001, the report says, its deficit could balloon from $2.3 billion to $17.9 billion.
And the GAO estimates it will cost an additional $188 billion to finish the bailout of the savings and loan industry.
On the revenue side, the Internal Revenue Service has virtually given up on efforts to collect $30 billion in unpaid taxes, says the GAO.
"The federal government runs the world's largest financial operation without having the reliable information needed for making informed decisions," the GAO said.
Among the poor-management examples cited:
High default rates on student and farm loans.
The Farmers Home Administration has reduced or forgiven delinquent loans worth $7.6 billion in recent years. Last June 30, borrowers were delinquent on 37 percent of the agency's $20.5 billion loan portfolio. The government covered $3.6 billion in defaulted student loans in 1991.
Out-of-control spending for Medicare, the health insurance program for elderly Americans, which the GAO predicts is heading toward bankruptcy in a decade.
Poor planning of weapons development and purchases. The GAO found, for example, that because the C-5A cargo aircraft entered production before it was fully tested, the government had to spend $1.3 billion to correct problems with the giant airplane's wings.