Deficit Reduction

Targeting is a promising approach to deficit reduction that can help reduce spending as well as improve federal programs and services. When resources are poorly targeted, the federal government spends more money than needed to reach its intended population and achieve program goals. Moreover, in a climate of large budget deficits, the inefficiencies resulting from poorly targeted programs and services has sometimes called into question the legitimacy of continuing these programs or maintaining them at current levels. This report summarizes previous GAO work that proposed "better targeting" as a strategy for downsizing government. In past reports, GAO has identified instances in which individuals, organizations, and jurisdictions have received program funds, service benefits, or tax subsidies. This report presents examples illustrating better targeting in a wide range of federal programs.

GAO found that: (1) better targeting can reduce spending and improve federal programs and services, but poor targeting can result in overspending; (2) Congress must decide how to reduce funding for certain programs and alter the allocation of resources to meet its deficit reduction goals; and (3) options for better targeting include revising formula grants to states and localities to reflect differences in fiscal capacity, altering eligibility rules for federal benefit programs to restrict certain benefits, instituting fees for those that consume certain government-provided, business-type services, and limiting or eliminating tax preferences given to state and local governments that issue industrial development bonds.