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Outside View: U.S. budget could save $100B

The Department of Energy should downblend its excess highly enriched uranium and sell it as fuel for nuclear reactors

Obama aims to save billions in federal contracts
US President Barack Obama on Wednesday outlined a plan to save tens of billion dollars a year in wasteful government spending, especially targeting bloated defense contracting. "We are spending money on things we don't need, and we are paying more than we need to pay. That's completely unacceptable," Obama said at the White House. The US leader signed a presidential memorandum reforming the contracting system across the entire government, in line with a vow to cut unnecessary waste. The president was flanked by Democratic Senator Carl Levin, head of the Senate Armed Services Committee, and his onetime Republican rival for the presidency, Senator John McCain, along with other US legislators and officials. Obama said it was time to end "an era of fiscal irresponsibility so that we can sustain our recovery, enhance accountability, and avoid leaving our children a mountain of debt." He homed in on runaway Pentagon spending, vowing that "the days of giving defense contractors a blank check are over," and highlighted steps being taken by Defense Secretary Robert Gates to overhaul military procurement at the Pentagon. "It's time to end the extra costs and long delays that are all too common in our defense contracting," the president said, vowing to "strengthen oversight to maximize transparency and accountability." The cost overruns were especially apparent during the war in Iraq, where "too much money has been paid out for services that were never performed, buildings that were never completed, companies that skimmed off the top." The reforms require the White House budget director to work with cabinet members and agency heads to frame tough new guidelines on contracting work by the end of September. Obama aims to save 40 billion dollars each year by halting outsourcing in some government jobs, and by ending "no-bid" contracts for favored companies which proliferated in US operations in Iraq. Last month, the US leader ordered a review into huge cost overruns on a new fleet of presidential helicopters, as McCain complained at the skyrocketing cost, raising concerns about how many military projects tend to come in well over budget. "I don't think that there's any more graphic demonstration of how good ideas have cost taxpayers an enormous amount of money," McCain said at the time.
by Michael Smallberg
Washington (UPI) Mar 3, 2009
Last week President Obama submitted to Congress a blueprint for his $3.6 trillion budget, laying the groundwork for a fierce political battle over hot-button issues ranging from earmarks to tax cuts. In the meantime, taxpayers already are paying a steep price for the government's bailout and stimulus programs, which will only add to the intensity of the upcoming budget wars.

What is often lost in this debate, however, is all the low-hanging fruit that already exist in the federal budget. There are many opportunities for both parties to come together to eliminate programs that are clearly a waste of taxpayer dollars. The Project on Government Oversight has proposed five simple reforms that would easily create more than $100 billion in revenue and savings for the American taxpayer over the next four to five years.

Some of the most important reforms are tied to the U.S. nuclear weapons complex and the government's collection of oil and gas royalties:

-- The Department of Energy should downblend its excess highly enriched uranium and sell it as fuel for nuclear reactors. Internal security tests and analyses have shown that the department cannot adequately protect America's voluminous stockpiles of weapons-grade nuclear material. In addition to posing a significant homeland security vulnerability, this dangerous material is very expensive to store and secure. The department could make billions by downblending the several hundred tons of excess highly enriched uranium and selling it as fuel for nuclear reactors. Based on calculations by Harvard University's Matthew Bunn, downblending 300 metric tons of HEU and selling it as nuclear fuel would result in gross revenue of $21.6 billion. This figure does not include the money that would be saved by not having to secure the dangerous material.

-- Congress and the Department of Energy should substantially reduce the number of deployed nuclear warheads, which would save money not only on the refurbishment of unneeded warheads but also on associated delivery systems. A recent report by the Carnegie Endowment for International Peace found that the United States spent approximately $29.1 billion in FY 2008 to operate and maintain the nation's nuclear arsenal and nuclear weapons production complex. Everyone from William Perry to Henry Kissinger has acknowledged that U.S. nuclear forces could be vastly reduced without jeopardizing security. An upcoming report by the Nuclear Weapons Complex Consolidation Policy Network estimates the United States could save between $2.5 billion and $3 billion by reducing the stockpile of nuclear weapons to 1,000 by 2015, dramatically shrinking the nuclear weapons complex and limiting weapons activities.

In addition, Congress should eliminate funding for wasteful and unnecessary nuclear weapons facilities and plutonium pits. For instance, there is no clear rationale for the proposed construction of the Chemistry and Metallurgy Research Replacement Nuclear Facility at Los Alamos National Laboratory in New Mexico or the Uranium Processing Facility at Y-12 National Security Complex in Tennessee, which are estimated to cost taxpayers a combined $6.1 billion. Meanwhile, the House Subcommittee on Energy and Water Development recently concluded that the additional production of plutonium pits "serves obsolete Cold War concepts rather than current or future needs," yet the Department of Energy's current plan to produce 20 pits would cost taxpayers $2.6 billion.

By eliminating all of these spending programs related to the nuclear weapons complex, Congress and the Department of Energy could save taxpayers an estimated $11.2 billion.

-- The Department of the Interior should phase out its Royalty in Kind program and return to a market-priced Royalty in Value program. Oil and gas royalties collected from drilling on federal lands and waters are one of the largest sources of federal revenue other than taxes. Despite its important mission of collecting these royalties, Interior's Minerals Management Service has become best known for its mismanagement and corruption. In recent years, MMS increasingly has accepted royalty payments in the form of product rather than cash, a program known as Royalty in Kind. However, the Government Accountability Office has found repeatedly that MMS cannot accurately verify the program's costs and benefits. In fact, the information that is available strongly suggests that Royalty in Kind exists primarily to benefit the oil and gas industry. While the opaqueness of the program makes it difficult to estimate its cost and benefits, returning to a market-priced Royalty in Value program could easily result in millions, if not billions, in additional revenue for American taxpayers.

The president and Congress also could save billions by eliminating expensive and outdated weapons systems, and setting aside more money for the government's auditors and investigators, which would result in greater savings in the long run.

-- Congress and the Department of Defense need to make fundamental weapons acquisition reforms and redefine the military's 21st century priorities in order to reduce wasteful defense spending. A recent GAO report found the department's FY 2007 weapons portfolio was a whopping $300 billion over initial estimates. Given today's security and budgetary challenges, the time has come for Congress and the department to implement long-needed weapons acquisition reforms and eliminate costly and outdated weapons programs.

Just a few reforms that would scale back or eliminate expensive weapons systems without jeopardizing national security interests, and the resulting estimated savings for taxpayers: Cancel the Army's Future Combat Systems program ($3.3 billion); defer deployment of unproven missile defense systems ($4.6 billion); end production of the F-22 Raptor ($12 billion); do not start full-scale production of the F-35 Joint Strike Fighter until flight tests have been completed ($1.8 billion); cancel the MV-22 Osprey while continuing production of the CV-22 ($1.8 billion); cancel Increment II of the VH-71 Presidential Helicopter Replacement Program ($7.5 billion); and stop paying defense contractors award and incentive fees regardless of acquisition outcomes ($8 billion). In total, these reforms would save taxpayers an estimated $39 billion.

-- Federal agencies and Congress should work together to ensure that government auditors and inspectors general have sufficient funding, staffing and resources to expose wasteful and abusive spending. In addition, agencies should make every effort to implement the recommendations made by these oversight bodies, or at least provide a satisfactory explanation for not doing so. Experience has shown that increased funding for auditors and investigators ultimately results in greater savings for taxpayers. A 2002 POGO report found that at the Defense Criminal Investigative Service (part of the Department of Defense's inspector general's office), every dollar spent resulted in $14 in anticipated recoveries. A more recent report by the General Services Administration IG found that "for every dollar invested in pre-award contract reviews, at least $10 in lower prices or more favorable terms and conditions are attained for the benefit of the government and the taxpayer."

In FY 2008 federal contracting officers did not uphold the Defense Contract Audit Agency's findings on $6.5 billion in questioned, disallowed or unsupported contract costs. This represented more than one-third of all costs found to be unsupported by the agency. Furthermore, a recent report by the majority staff of the House Committee on Oversight and Government Reform found that federal agencies potentially could save taxpayers more than $25 billion by implementing more than 13,000 recommendations that have been made by inspectors general since 2001.

If implemented, the combined recommendations by IGs and the DCAA potentially would result in $31.5 billion in savings. If agencies decide not to implement these recommendations, they at least should be required to provide a compelling reason for not doing so.

As battle lines are drawn over a wide range of budgetary issues, the need for easy money is greater than ever. By taking these five simple steps, the president and Congress could generate more than $100 billion in revenue and savings that could be put to better use on more sensible and responsible programs. American taxpayers deserve nothing less.

(Michael Smallberg is blog editor and Web outreach associate for the Project on Government Oversight, an independent non-profit founded in 1981 that investigates and exposes corruption and other misconduct in order to achieve a more effective, accountable, open and honest federal government.)

(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

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China hunts for Europe takeovers as stocks jump
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