Monitor Big Spenders
by Chris Edwards
 The federal government purchases about $500 billion
of goods and services each year. It also hands out about
$500 billion each year in grants to individuals, businesses,
nonprofit groups, and state and local governments. Much
of this spending makes little economic sense, and some of
it simply represents taxpayer-funded gifts to favored
special interests.
Recently, Sen. Tom Coburn (R-OK), Rep. Jeff Flake
(R-AZ), and other reformers have tried to cut wasteful
special interest spending. Their efforts have gained
attention both from the established media and from many
popular websites and Internet blogs. Average citizens are
increasingly using the Internet to monitor the budget
process and track overspending abuses in Washington.
To empower citizens to more closely oversee the
budget, Senator Coburn is proposing legislation to create a
comprehensive Internet database for spending on
contracts, grants, and other federal payments. This
bulletin looks at the proposal and discusses data that are
already available to help citizens track federal spending.
Finding Out Who Receives Taxpayer Dollars
In justifying federal aid programs, politicians usually
speak in empty platitudes about the need to help struggling
farmers, small businesses, artists, and others. But who
actually receives the money from subsidy programs and
contracts? In the past, finding out was difficult and usually
left to investigative reporters. That is changing as there are
now a number of online databases that provide details
about the recipients of federal payments.
- Federal Assistance Award Data System (FAADS).
This system provides quarterly reports listing the
recipients and amounts received in grants, loans, and
other subsidy payments from 600 federal programs.
- Federal Audit Clearinghouse (FAC). This website
provides audit reports for state and local governments
and nonprofit groups that receive more than $500,000
per year in federal payments.
- Federal Procurement Data System. This system
provides data on the roughly 1.8 million federal
contracts awarded each year worth more than $2,500.
- RAND Database of Research and Development. This
database tracks all federal R&D spending, which
includes thousands of grants from 22 federal agencies.
- National Endowment for the Arts. The NEA has a
website that lists recipients of arts grants, the amounts
received, and descriptions of funded projects.
Let’s look at the information available from FAADS. Users can
choose a time period, open a spreadsheet for a state, and
sort the data by recipient name, zip code, program, and
other criteria. Here is a summary of federal subsidies
awarded in California for the third quarter of 2005:
- Businesses. Thousands of grants, guaranteed loans,
and other aid is listed for motels, fast food franchises,
and other businesses. One federal program for firms
that supposedly don’t qualify for private loans
provided $1.5 million to a liquor store in Los Angeles,
$1.4 million to a car wash in Anaheim, and $1.1
million to a pizza shop in Hayward.
- Nonprofit groups. About 3,600 payments are listed for
nonprofit groups, including the Wine Institute ($1.5
million), the San Francisco Symphony ($50,000), the
California Strawberry Commission ($227,000), and
the International Museum of Women ($298,000).
- Individuals. Most subsidy programs for individuals
are grouped by county and individual recipient names
are not revealed. But names are revealed for some
programs. George Peale of Orange County received
$40,000 for a project titled “References to Spanish
Baroque Theatre in the Royal Palace Archives.”
- State and local governments. California and other
states receive billions of dollars in aid for roads,
housing, education, airports, and hundreds of other
properly local and private activities.
The FAC database is
also a useful resource. Keywords can be used to search for
the names of subsidy recipients. Page 3 in each entity’s
audit report shows which subsidies were received. Palm
Beach County received $109 million in grants in 2004
from 53 federal programs including “citizen corps,” “rural
business,” “nutrition services,” “job access reverse
commute,” “bulletproof vest partnership,” and “outdoor
recreation.” The Beverly Hills school district received $2.7
million in grants from 21 federal programs in 2005.
The
American Association of Retired Persons Foundation
received $82 million from five programs in 2004. Reports
for the Teamsters, American Federation of Teachers, and
other unions reveal millions of dollars in federal subsidies.
Current federal databases have various shortcomings.
One problem is that the ultimate recipients of aid to state
and local governments are not provided. FAADS and FAC
might show that a city received federal money for
“community development,” but not reveal which private
groups were the ultimate recipients of the cash.
Coburn’s legislation aims to fix that and other
problems with current data sources. His idea is to put all
information on federal grants, loans, contracts, and other
funding into one database. The database would provide
more timely information than currently available and
eventually include multiple years of data for recipients.
Questions to Ask about Spending While waiting for Coburn’s database to be created,
taxpayers can examine existing databases and then
consider the following policy questions:
- Are spending items properly a federal responsibility
under the U.S. Constitution?
- Would the activities be more efficiently funded by
local governments, businesses, or private charities?
- Does federal funding go to groups that actively
support policy positions and beliefs that you oppose?
Looking at data in FAADS and FAC, one is impressed
by the large number of groups and businesses that are on
the federal dole. They form an army of interests with an
incentive to oppose budget restraint. Small businesses, for
example, should be natural enemies of big government.
But these databases reveal that many of them are
effectively bought off and likely neutralized as opponents
of restraint because of their receipt of federal dollars.
Conclusions A Coburn-style database would be a big step forward
for open and transparent government. The more
information people have, the better they can assess the
sound bites of politicians. The real-world results of
programs are often very different from the sentimental
hopes of policymakers. For example, detailed data on farm
aid reveal that subsidies often go to wealthy landowners—
many who don’t even farm—and not to hard-pressed small
farmers as politicians often claim.
Congress should do more oversight of federal agency
spending to reduce waste, but citizens can help monitor the
spending habits of Congress and the agencies. Citizens
need access to more complete and timely data to aid them
in critiquing spending programs. We have invented the
Internet, let’s use it to improve government oversight.
A recent New York Times story on Coburn’s proposal
noted, “While advocating for openness, Mr. Coburn is also
placing a philosophical bet that the more the public learns
about federal spending, the less it will want.” I think that
is a safe bet to make.
Chris Edwards is the Director of Tax Policy Studies for Cato Institute, where this article originally appeared.
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