Agreeing there is government waste, panel divides over where

House Democrats and Republicans agree that millions and perhaps billions of dollars in federal funds are wasted or lost annually to fraud and abuse. But perceptions of the source of that waste appear to differ by party affiliation.

Following a script familiar to longtime observers, a House Oversight and Government Reform Committee hearing on Thursday to examine ways to trim the budget deficit devolved into a public-vs.-private battle, with Republicans looking to cut bloated federal programs and Democrats blaming not-always-accountable federal contractors.

In a nearly four-hour hearing, committee Republicans and fiscally conservative witnesses listed a host of government programs and offices that should be cut, eliminated, privatized, or more highly scrutinized.

Committee Chairman Darrell Issa, R-Calif., cited the pay and benefits of federal employees while others cited waste in the Recovery Act or billions lost in improper payments through Medicare and Medicaid.

"The president's [fiscal 2012] budget adds approximately 15,000 employees to the federal payroll at a time when private sector unemployment has remained above 9 percent for the longest duration since the Great Depression," Issa said.

But Democrats, led by ranking member Rep. Elijah Cummings, D-Md., repeatedly directed the conversation back to federal contractors. Cummings cited the Government Accountability Office's 2011 High-Risk List, released on Wednesday, which included six programs directly related to federal contracting.

"When you examine all of these together, they have a massive impact, accounting for hundreds of billions of taxpayer dollars every year," Cummings said.

Sen. Claire McCaskill, D-Mo., chairman of the Senate Homeland Security and Government Affairs Subcommittee on Contracting Oversight, told the House panel that roughly half of the most wasteful spending identified in the GAO report involved contracting. McCaskill and Issa, whose committees cover a significant number of crossover issues, including federal contracting, agreed to begin meeting regularly to discuss their oversight agendas.

Cummings was not alone in his criticism of contracting. Rep. John Tierney, D-Mass., focused his comments on private security contractors. Rep. Dennis Kucinich, D-Ohio, addressed waste in Pentagon weapons systems. Del. Eleanor Holmes Norton, D-D.C., focused on KBR's contracts in Iraq, and Rep. Jackie Speier, D-Calif., hammered the sole-source contracts provided to Alaska native corporations.

GAO Comptroller General Gene Dodaro agreed there must be more systematic oversight of functions that can be outsourced, but he said there is no "magic solution" to the problem.

A half-dozen private sector scholars, analysts and watchdogs also offered their solutions for reducing government spending.

Thomas Schatz, president of the advocacy group Citizens Against Government Waste, called on Congress to defund the Export-Import Bank, which is charged with aiding foreign exchange; the Essential Air Service, which provides subsidies to continue airline service in less populated regions; and the Agriculture Department's Market Access Program, which helps farmers and growers promote U.S. products overseas.

Schatz also recommended repealing the Davis-Bacon Act, which requires contractors to pay the prevailing wage on federal construction projects costing more than $2,000. "The mandate raises the cost of government projects by 15 percent and costs taxpayers more than $1 billion annually, not including $100 million in administrative costs," he said.

Others offered even bolder proposals. Veronique de Rugy, a senior research fellow at the Mercatus Center at George Mason University, argued the private sector rather than the government is best-suited to run Amtrak, the U.S. Postal Service and the air traffic control system.

"This is not just inefficient," she said. "It also hinders economic growth and costs the taxpayers money while providing low-quality services to customers."

But one analyst asserted the greatest level of savings will occur not through cuts but when government operates smarter and more efficiently.

Debra Cammer, IBM's public sector consulting leader, proposed seven cost-saving proposals, among them reducing federal energy use, consolidating information technology infrastructure and streamlining government supply chains. The recommendations, outlined in a recent IBM report, would generate $1 trillion in savings during the next decade, she said.

"These savings would be generated through improved performance rather than through program reductions or tax increases," Cammer said.