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This week at a House Committee on Oversight and Government Reform Committee hearing, Congressman Glenn Grothman (R-Glenbeulah) questioned experts on “backdoor spending”, which is federal agency spending that occurs outside of the federal appropriations process. This means that federal bureaucrats are deciding how tax dollars are being spent with no Congressional oversight. Due to prior Congresses ceding power to bureaucrats, “backdoor spending” has increased by 88 percent since 1994.

Witnesses included:

• Ms. Tranchau (Kris) T. Nguyen, Director of Strategic Issues at the Government Accountability Office (GAO)

• Ms. Julia Matta, Managing Associate General Counsel, Office of the General Counsel at the GAO

• Mr. James Wallner, Senior Fellow, Governance Project at R Street Institute

• Mr. Robert Weissman, President of Public Citizen

Excerpts of Grothman’s questioning

Congressman Grothman: “Theoretically, all federal spending should be authorized. Did the GAO confirm that all of this backdoor spending was authorized?”

Ms. Nguyen: “Yes, our process of confirming the statutory authority required us to work with agencies to identify both amount and statutory references. And when possible, we verified this information against the President’s budget.”

Grothman: “How many spending authorities did Congress create say over the last 20 years?

Nguyen: “As I mentioned earlier, we have a total of 902 accounts.”

Grothman: “Can you give me some examples of the biggest ones?”

Nguyen: “In our report, we identified the biggest drier of the growth is permanent appropriations. And specifically HHS, SSA, with their Medicare and old age and survivor and disability insurance programs are among the top spending authorities. And, in addition to that, Treasury is the third in line. Collectively, those three agencies make up 75 percent of spending authority in permanent appropriations.”

Grothman: “I take it by the ‘Treasury’ you mean interest on the government debt?”

Nguyen: “Yes.”

Grothman: “How much has backdoor spending gone up per year the last couple years?”

Nguyen: “As I mentioned earlier, backdoor spending is a general term that’s referring to appropriations that occur outside of the annual appropriations process. And our definition of ‘spending authority’ is the authority that is made available outside of the annual appropriations process.”

Grothman: “How much has that gone up per year the last couple years?”

Nguyen: “The increase collectively is 88 percent since 1994.”

Grothman: “Right, but the last couple years?”

Nguyen: For that level of information I would need to get back to you on that.”

Grothman: “I’d like to find out for the last couple of years both the increase in what you’d call mandatory spending, or backdoor spending, and the increase of appropriations and see for the last two years what overall has happened. You said Congress amended some backdoor spending authorities. Can you give me some examples of authorities Congress how expanded in the last few years?”

Ms. Matta: “One good example, Representative Grothman, would be the Flood Insurance fund. They’ve reported an increase in about 878 million in offsetting collections in 2012, after legislation increased the annual limitation on premium increases for certain insurance premiums.”

Grothman: “You said GAO confirmed that the programs are authorized. Have any authorizations ever lapsed.”

Matta: “Yes, during that period of time some authorizations did lapse. The other point that I want to let you know is that out of the approximately 1,000 Authorities, we were unable to confirm about 28 authorities with individual agencies. As our report is issuing publicly today, we are planning to refer those particular accounts to the appropriate authorizing and appropriations committees in case they wish to exercise further oversight. We attempted to confirm those with the agencies on our own and working with them. We were unable to identify whether it was an improper use of an authority, or the data in that particular account, coming from the OMB database, perhaps had an error in it. But we were unable in those particular counts to confirm the authority. So, the vast majority, we did, but there was a small part we did not. 

Click here to view Grothman’s full remarks (beginning at 48:16).

Additional Information

Purpose:

• To examine the extent to which federal agencies use backdoor spending to avoid the annual appropriations process.

• To explore how backdoor spending undermines Congress’ authority and what Congress can do to reassert its authority over the power of the purse.

Background:

• Congress generally asserts its constitutional authority over the power of the purse through the annual appropriations process. However, prior Congresses have ceded some control to the Executive Branch by allowing backdoor spending. Backdoor spending is federal agency spending not subject to congressional review in the annual appropriations process, such as permanent appropriations and offsetting collections like fines and penalties.1 Spending outside of the appropriations process undermines congressional oversight by allowing agencies to fund agency operations and unappropriated programs without an annual approval by Congress.

• On December 11, 2018, the Government Accountability (GAO) will issue a report examining federal agency use of backdoor spending. According to GAO, federal agencies reported $3.2 trillion in backdoor spending in 2015, an 88 percent increase since 1994.

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U.S. Rep. Glenn Grothman is serving his second term representing Wisconsin’s 6th Congressional District in the U.S. House of Representatives.