Whitman: $10-15 Billion in Waste, Fraud, Abuse

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Meg Whitman may be a newcomer to politics, but she seems eager to reopen a very long running debate about how much taxpayer money is being used properly... and how much is being wasted.

In a one-on-one interview today, the GOP gubernatorial candidate said there's between $10 billion and $15 billion of "fraud" and "mismanagement" in state government. As such, she says, she disagrees with Governor Schwarzenegger that there's no more "low hanging fruit" to pick when it comes to erasing the deficit.

Shortly after our interview, she repeated the 'waste, fraud, and abuse' theme in a town hall meeting in the Sacramento suburb of Roseville where she pitched her idea of a citizens' grand jury. And she made clear that she thinks some of Schwarzenegger's budget choices could have been avoided.

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No catch phrase has been more bandied about in California politics over the last decade than 'waste, fraud, and abuse' and it's easy to understand why: it taps in to the disbelief of many citizens flabbergasted by how the state could have possibly gotten into such a rotten fiscal situation.

And it was Schwarzenegger who turned that phrase into political dynamite in 2003. "The first thing I will do is open up the books and show where is now the waste going on in government," said the Republican in comments reported by ABC News the day before the recall. On his 2003 campaign website (an archive is here thanks to UCLA), he estimated the waste, fraud, and abuse at "more than $250 million per year."

During the 2009 budget impasse, the governor focused in on one specific state program -- In Home Support Services (IHSS) -- but other times, as I pointed out today to Whitman, he's backed away from the fiery political rhetoric about huge amounts of fiscal wrongdoing.

"That's not true," she said. "I don't think he said that." You can hear our exchange below.

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Actually, he did say it. On May 12, 2006, I asked the governor during a budget press conference about those 2003 promises. "We did not find the kind of abuse that I thought there is," said Schwarzenegger.

Whitman actually made two assertions of waste, fraud, and abuse in our interview today: $6 billion in combined fraud in Medi-Cal, IHSS, and workers compensation, and then a later reference to $10-$15 billion across the spectrum of state government, which you can hear below:

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Her campaign is using three sources to back up that assertion: a digest of news stories compiled by the California Taxpayers Association, an online chronicling of reported welfare fraud by the state Department of Social Services, and a 2009 Sacramento County Grand Jury report on IHSS fraud (a helpful leg to stand on for Team Whitman's intended news headline of how she as governor would convene a statewide "grand jury" to root out such abuses). A campaign adviser this afternoon clarified Whitman's statement, saying that the larger number isn't necessarily one she believes can be found in one single year's budget but rather a reflection of the broader problem that's been chronicled in the past.

The Republican candidate said the existence of such waste is why she would not have proposed what Schwarzenegger did on Friday -- the elimination of the state's welfare-to-work program CalWORKS. "I would have reformed welfare, I would not have cut CalWORKS completely," she said.

Meantime, the candidate made another interesting remark while discussing waste, fraud, and abuse in our interview. She recalled a recent meeting with UC President Mark Yudof and a discussion about the recent cuts to the UC budget during the state's fiscal crisis. "He thought that the first 10% cuts actually made the UC system stronger and better," she said, "and that there's ways to restructure how we deliver education, in a way that can be more cost effective."

Audio clip below:

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I called Yudof's office to see if that's how he remembers the conversation. The response was... not exactly. "He doesn't recall saying it in that context," said Yudof's communications chief, Lynn Tierney. She says the UC leader simply meant that the budget cuts forced the university system to re-examine its operations in ways that might be beneficial.

In fairness, that nuance is in Whitman's comments. But does any of that comes across on the campaign trail?

Take, for example, CalTax's chronicling of 'waste, fraud, and abuse.' While many examples are truly bad people doing bad things with taxpayer dollars, the list also includes the hundreds of millions, even billions, being spent by the federal court appointed receiver for prison health care. It also includes millions of dollars spent on lawsuits over foster care and conditions inside some schools. Those kinds of expenses are certainly not a great use of precious dollars, but they do seem to be driven partly by an unwillingness of state elected officials to make prudent fiscal decisions years ago, and that lack of good judgment led the state into costly legal action.

And perhaps the most intriguing question is whether this line of campaigning resonates with voters the same way it used to. As noted earlier, the existence of 'waste, fraud, and abuse' makes many people seethe with anger. But in an era where the spending reductions have been so large and so serious, it will be interesting to see whether the public still believes that elected officials are, intentionally or not, still turning their backs on a massive waste of precious cash.

[Note: We'll be running my radio story on the Whitman interview Wednesday on The California Report, and will post audio of the entire half hour conversation online at that time.]

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About John Myers

John Myers is senior editor of KQED's new multimedia California Politics & Government Desk.  He has covered California politics for most of the past two decades -- serving previously as Sacramento bureau chief for KQED News and, most recently, as political editor for KXTV News10 (ABC) in Sacramento. He moderated the only gubernatorial debate of 2014, and was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.
  • EarlRichards

    Chevron gouged $24 billions in excessive profits in 2008,as per http://www.tyrannyofoil.com. Schwarzenegger should put an excessive profits tax on these profits, instead of protecting the oil corporations from fair taxation, then, there would be sufficient public funds for all the vulnerable, people programs. Big business lost the fight to eliminate domestic violence funding, so now they are coming back with a vengeance. There is no funding provision for battered women shelters in the May Revise. Schwarzee picks on the most vulnerable, and on corporate tax “deadbeats.”

  • Stevefromsacto

    It is oh so simple to just scream “waste, fraud and abuse” because nobody asks for real proof that it is widespread.

    One example: A recent report from the Sacramento County DA’s Office shows fewer than 100 potential fraud cases in the IHSS homecare program–out of more than 20,000 IHSS recipients in the county. Fraud? Maybe. Widespread? Hardly.

    Despite this, the governor has asked for more than $41 million to fight fraud in IHSS. At the same time, as the Fresno Bee editorialized last week: “The governor proposes to cut aid for the weak, the poor and the unpopular. He proposes to reduce or eliminate help for developmentally disabled, mentally ill, children of mothers on the skids, and elderly people who need help to stay in their apartments and not end up in nursing homes.”

    “Demonizing the poor” has been part of the Republican playbook since the days of Nixon and Reagan. Shows how desperate Meg-o has become.

  • hsj

    Amen, with the “Fraud, waste and abuse in government”. She should also use “Corruption”. Start with the big budgets first and work down.

  • hsj

    The DA is in with the government fraud, waste and abuse. Those that are truly responsible, govt officials, judges, lawyers, court officials, not the Joe blows on the corner.

  • Nick

    I am really tired of the Waste, Fraud and Abuse claims.
    Arnold claimed he was going to balance the budget, only to borrow $15B to ‘balance’ it.

    My questions for any candidate making these claims:
    1. If there is that much, how many weeks will it take to eliminate at least half of it?
    2. Does it cost more to find the fraud than the cost of the fraud itself?
    3. Who determines what is waste? Some consider it a waste to continue incarceration of non-violent first time drug offenders.

  • lowelldice

    Just example with many more like it in the thousands of State Personal and Consulting Services Contracts – A “Clerical” is getting paid $140,000 per year, but that includes benefits. If we figure $40,000 is for benefits, then $100,000 is her pay. We know Clericals do not get paid $100,000 a year, maybe $40,000, and more likely even less. So where is all that State money really going? To the owner of the company. If you want to find billions in State waste, fraud and abuse, you need look no further than the glut of corrupt contracting out by the State administration in the form of grossly overpriced personal services and consulting contracts. Follow the money.

  • Harry Homeowner

    Stevefromsacto: Very good point. There will always be miscreants committing fraud – such is human nature. And the government will always fight fraud. But when there is a fraud-fighting proposal that costs more than it could possibly bring in by controlling fraud, what interest other than the political does it serve to embark upon it? [Just underscoring your point here…]

  • http://none Charles Sainte Claire

    Earl Richards
    You can’t tax a corporation. They simply raise prices. Raise taxes on corporations and you will pay for it yourself at the pump. Raising taxes makes money go through government. That is like giving yourself a transfusion from your left arm to your right arm through a leaky hose.