Tom Coburn: Government employees are a drag on the economy by Nin-Hai Tseng @FortuneMagazine March 7, 2011, 1:29 PM EST E-mail Tweet Facebook Google Plus Linkedin Share icons The Republican senator talks about how he’d fix government waste, what to do about government employees, and how Americans know how stupid Congress is. Sen. Tom Coburn, a Republican from Oklahoma. Last week, Oklahoma Senator Tom Coburn called members of Congress everything from “stupid” to “jackasses,” following the release of a comprehensive study by the Government Accountability Office that found dozens of overlapping and duplicative programs from education to defense that cost taxpayers billions of dollars each year. The 330-plus page report is the first in a series looking at ways government could reduce waste and save public dollars. The report couldn’t come at a more tumultuous time. With less than two weeks to cut a deal on this year’s federal budget, Republicans and Democrats have been hotly debating ways to reduce spending. The U.S. budget deficit for 2010 was at nearly 10% of GDP and it’s one of the biggest factors unnerving investors. But how big of a deal is the GAO report? Coburn, who pushed for the study as part of a provision he inserted into a law that raised the federal borrowing limit last year, says the findings shouldn’t be much of a surprise to lawmakers or even the American public. The agency found, among other things, 82 federal programs to improve teacher quality, 47 for job training and employment, as well as hundreds of military clinics that could gain from consolidating administrative, management and clinical functions. The 62-year-old Republican senator estimates there’s between $100 billion to $200 billion in duplicative spending, although the GAO did not report a specific figure. Coburn says if anything, the findings echo just how inefficient Congress really is. He hopes the report will serve as a template for plans to reduce spending in a big way. I caught up with Coburn, a medical doctor and ordained Southern Baptist deacon. We talked about the government looming debts and deficits, steps to save the government money and the 2011 federal budget. Do the findings surprise you? No they didn’t surprise me. And I’m sure they’re not going to surprise the American people because they know how stupid we are in terms of what we’ve done and how we’ve kind of abdicated our responsibility to do oversight. There are really two issues: One is how many of these programs are outside the enumerated powers clause of the U.S. Constitution and that’s a big problem, because we’ve got the federal government doing things that it was never intended to do. The second thing is we have all this duplication. What happens in Washington is always well-intentioned but what we do is we see a problem and instead of doing the oversight and seeing how we make the programs that we have work, members of Congress just create another program. What do you find most wasteful? Job training is wasteful. We put ‘help wanted’ on our government website and we’re getting people who have been through these programs who say they are a total joke and a total waste of time. I’m not against job training. I want a job-training program that actually trains somebody to do something that they get a job for. Why should we have 47 different separate job training programs? Nobody understands them all. If it’s a federal role — which I question –then any job-training program ought to be designed so that you can measure its effectiveness. None of the 47 has any metrics on it to measure effectiveness. The GAO report took particular aim at military programs. Lawmakers from both parties will probably be very hesitant about reducing defense spending. What are your thoughts? Defense spending should be on the table. I’ve said that all along. I think there is at least $50 billion of waste in the US Department of Defense. But we don’t really know because nothing in the Defense Department can be measured because they don’t have audited financial statements. They’re not even sure what they’re buying and they’re not even sure if they’ve paid for it. One of the things I’ve been working on for the last two years is to put financial controls in the Defense Department. They’re highly effective at what they do but they’re highly inefficient. There’s a lot of money in that $600 billion budget that we could save just through good management practices. Let’s talk next steps. What would you like to see come out of this study? First of all I’d like to see Congress get serious about oversight. The President is very interested in the GAO report and so is his staff because he does want to do some consolidation. So I’m going to be working with them, as well as members of Congress. We’re going to try to take examples of duplication in the GAO report and look at how we can get some savings. I told President Obama ahead of time about the report. He said that would help us consolidate things. I mean he’s been in the Senate, he knows how the Senate works. We don’t work effectively. With less than two weeks to cut a deal on the budget, the White House has proposed more than $6 billion in spending cuts. Without knowing where the cuts would be made, what are your thoughts on the President’s starting off point? There are no budget cuts. The debt doubles over the next 10 years to $26.7 trillion. The savings by freezing won’t even pay the interest costs for the first three years of deficits that he’s going to run. They weren’t bold and they should have been. What about House Republicans’ call to cut $61 billion from this year’s budget? I think it’s not nearly enough. The amount of money we borrow over that six months is $580 billion. So we’re going to borrow $580 billion but we’re only going to cut spending by $61 billion? How do you think that fits with the expectations of Americans both liberal and conservative who think we ought to be downsizing the federal government right now? It doesn’t fit. It’s a good start but we have big problems. I’ve studied a lot of international finance in the last year and a half and I’ve read the works of every major economist around the world and I’ve talked to US Treasury Secretary Timothy Geithner and I’ve talked to US Federal Reserve Chairman Ben Bernanke. We’re in deep weeds right now. If something collapses in the Middle East and interest rates go up we have the potential to go on a downward spiral that we cannot get out of. We’re going to become Japan, too. If we cut too much, wouldn’t that slow America’s economy even further? Democrats have widely cited a Goldman Sachs report that says cutting the budget by $61 billion could reduce GDP by 1.5 to 2 percentage points in the second and third quarters of the year. I tend not to believe that statement as I look at it. There’s no doubt that if you take $61 billion out of the economy from the federal government that you’ll have some negative effect on GDP. The question is what’s the positive effect that you get from not spending that money in a nonproductive manner and putting that same money to work? Economists would agree that you’ll have a little pressure on GDP, but there’s no confidence out there about the future. With consolidation, public employees would lose their jobs. Couldn’t that put upward pressure on unemployment at a pretty dismal time? No. First of all, government employees, although they’re fabulous and they overall do a great job, they produce no net economic benefit in our country. Matter of fact, they produce a net negative economic benefit. So if you take the drag off the economy by nonproductive implementation of capital what you’re going to see is that capital is then going to be put to use in something that is productive. We’re not talking about letting go hundreds and thousands of employees — we’re talking about streamlining things. Even if it were hundreds of thousands of employees, if we’re not borrowing another $300 billion additional next year because we streamlined some programs, that has some tremendous benefit to the economy as well.