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The federal budget is a mess.

The budget deficit for this year alone is nearly a trillion dollars. That’s how much the total U.S. national debt was in 1982, my first year in the U.S. Government, when I worked for Sen. Chuck Grassley (R-Iowa) on the Senate Budget Committee. 

Today, just four decades later, the debt is 31 times higher — $31 trillion!

Washington currently is in a paroxysm over raising the debt limit. It’s not the first time, and — given our politics — it won’t be the last.

The usual argument — rightly — is over revenue and expenditures: raising taxes and cutting spending.

But in the 1980s I learned there’s another element — one critical to taxpayers — that too often gets left out of the equation. While our political parties seem preoccupied with more telegenic obsessions, like punishing Disney’s Mickey Mouse, banning books, or attacking Clarence Thomas, there’s a real need for creative, bi-partisan ideas to stop the hemorrhaging of tax dollars.

The losses to fraud each year are estimated to be approximately 7 percent of the federal budget; 7 percent doesn’t sound like much, but given the size of the federal budget, it’s real money. For this fiscal year alone, that would be a staggering $406 billion.

Consider an analogy: One of the most effective strategies in avoiding an “energy crisis” like the U.S. experienced in the 1970s — apart from getting people to use less or increasing production — has been increasing energy efficiency of the things we use, from cars to air conditioners.

Similarly, reducing fraud increases the efficiency of the tax dollars we spend.

In the early 1980s under then-President Reagan, we faced a similar fiscal freakout. Projected budget deficits were projected to be $200 billion in perpetuity. Before that, deficits had been well under $100 billion.

Back then, we implemented a concept to combat fraud against taxpayers that has proven to be remarkably successful and that could be expanded — to the immediate benefit of taxpayers.

During Reagan’s unprecedented defense budget build-up, defense contract fraud was rampant. The Department of Justice (DOJ) turned a blind eye to it, so Sen. Grassley borrowed a concept from Abe Lincoln, who experienced similar contractor fraud during the Civil War. Lincoln signed into law the False Claims Act, which allowed any citizen who witnessed fraud to sue the contractor on behalf of the taxpayers

If the citizen could prove his case, the taxpayers would receive treble damages in recoveries, and the plaintiff would get a significant percentage as a reward. The monetary incentives were perfectly balanced. The law was effective — until industry successfully lobbied to weaken it during World War II.

Enter Grassley, who restored the law’s original strength, then made it even tougher.

Thus was born the False Claims Act Amendments of 1986. I had brought that concept to Grassley in 1984 from a famous whistleblower — Ernie Fitzgerald — and in just two years and against all odds, it was signed into law by Reagan.

Three months ago, the Biden Justice Department announced that, last year, the law recovered more than $2 billion for the Treasury and that the total return to the Treasury since Grassley’s amendments first passed has been $72 billion. Two years before, then-President Trump’s DOJ had a similar announcement and called the law “the government’s primary civil tool to redress false claims for federal funds.” 

This is a shining example of a law working as well as — or better than — advertised when first passed.

But the reality is that $72 billion is a spit in the ocean of a $31 trillion problem.

We could strengthen the law further for an even bigger impact.

The current law essentially depends on private-citizen whistleblowers, usually people who work for a private company involved in government fraud who have the courage not to simply look the other way.

The law is effective but limited.

What if we incentivized professional investigators, people who are most familiar with how government so often doesn’t work?

In 2006, I went to work for Earl Devaney, inspector general of the Interior Department. Earl was a real kickass, law enforcement pro with a stellar anti-fraud Secret Service pedigree, and — unbeknownst to me — he was already a leader in expanding the scope of the False Claims Act, government’s primary weapon against fraud.

The Interior Department oversees collecting royalties from U.S. companies mining oil, gas, coal and other resources on Federal and Indian lands. The potential for fraudulent claims was abundant. Earl established a shoestring operation, working with DOJ, to recover such claims. Between 1998 and 2007, his investigations recovered $674 million, from just 25 companies.

Earl recovered that sliver of the fraud pie — $674 million worth — without additional employees, better known to government as specialized full-time equivalents (FTE). Rather, he had existing staff divide their time between doing their normal tasks and seeking out fraud. Unlike citizen whistleblowers under the False Claims Act, Earl’s part-time investigators — government employees — did not receive any reward; all the recovered money went into a general fund.

Earl told me that if his office could be awarded just 2 percent of the funds recovered, he would have had enough to create a dedicated unit to recover fraudulent payments for the Treasury — a bona fide expert unit to do the job professionally, specialized inspectors general who could effectively investigate and recover lost revenue and identify other violations in complex cases.

It was a great idea then, and it’s a great idea now.

Citizen whistleblowers in successful False Claims Act cases often receive as much as 30 percent of the recovered funds; for just 2 percent, we could unleash a massive anti-fraud program that engages the people closest to the action in their own back yards — the government’s team of inspectors general, including those in the departments of Defense, Homeland Security (including the Federal Emergency Management Agency), Health and Human Services, Housing and Urban Development, and Transportation, along with the Small Business Administration and several others.

It would not diminish the debt overnight, but the approach — and the mindset — are indispensable.

It would require bipartisan legislation to allocate the 2 percent of recovered funds, but really — given the proven benefits touted by Democratic and Republican administrations alike — that should be the easy part.

Kris Kolesnik is an expert on federal government oversight. He spent nearly 20 years as senior counselor and director of investigations for Sen. Chuck Grassley (R-Iowa). He then served as executive director of the National Whistleblower Center, after which, he spent 10 years working with the Department of the Interior’s Office of Inspector General as the associate inspector general for external affairs.

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