Top auditor tells Clinton of laxness U.S. losing billions to mismanagement

January 08, 1993|By New York Times News Service

WASHINGTON -- The top federal auditor told President-elect Bill Clinton yesterday that the government did "an abysmal job of rudimentary bookkeeping" and has tens of billions of dollars in hidden liabilities.

In a series of 45 transition reports, Comptroller General Charles A. Bowsher, the head of the General Accounting Office, painted a grim picture of a government plagued by mismanagement, unable to collect delinquent taxes and unwilling to acknowledge the full cost of its long-term commitments.

He said the State Department, the Transportation Department, NASA, the Health Care Financing Administration and the Energy Department were losing billions of dollars a year because they were lax in supervising federal contractors who build embassies, subways and satellites, pay Medicare claims and run government laboratories.

"Widespread financial management weaknesses are crippling the ability of our leaders to effectively run the federal government," Mr. Bowsher said.

The comptroller general has historically been a nonpartisan official appointed by the president. In Mr. Bowsher's case, he was appointed by President Ronald Reagan in October 1981 for a 15-year term.

The government, he said, spends $1.5 trillion a year, but does "an abysmal job of rudimentary bookkeeping," using unreliable, fTC ineffective techniques to control the flow of money.

As a flagrant example, Mr. Bowsher cited an Agriculture Department program that lends money to farmers. Under the program, run by the Farmers Home Administration, farmers are delinquent on more than one-third of the $20.5 billion in outstanding loans, and "borrowers who have defaulted on past loans are free to obtain new loans," he said.

Federal officials "seem to believe that keeping farmers on the land is more important than making prudent lending decisions," he said.

In another example, Mr. Bowsher said the government did not properly supervise private insurance companies that process claims under Medicare, the federal health insurance program for the elderly.

These contractors "focus more on paying claims quickly than on reviewing the accuracy of payments," he said. In many cases, he said, the Medicare contractors fail to investigate beneficiaries' complaints about fraud by doctors, laboratories and other services.

Likewise, Mr. Bowsher criticized the Energy Department for its supervision of companies that produce nuclear weapons and operate national laboratories for the government.

Under some of these arrangements, he said, the government must reimburse contractors for money and materials stolen by the contractors' employees and must pay fines incurred by contractors for violating environmental laws.

Mr. Bowsher warned Mr. Clinton against relaxing federal regulation of banks, as the industry and some Clinton advisers have recommended to stimulate the economy by encouraging lending.

But Mr. Bowsher said the current inspection of banks by regulators was inadequate to assess "the safety and soundness of bank operations," or to provide early warning of problems.

And Mr. Bowsher recommended new banking regulations. He suggested that Congress should set accounting standards for delinquent loans if the accounting profession does not voluntarily adopt tougher standards.

Congress asked Mr. Bowsher in November to analyze the issues facing the new president. In December 1988, Mr. Bowsher gave the president-elect, George Bush at the time, a report that urged him to address domestic problems neglected by the Reagan administration and said the costs would be staggering.

Now, in the new reports, Mr. Bowsher said the problems and the costs of correcting them had increased substantially.

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