NCPA - National Center for Policy Analysis

Nontax Debt Owed Government Increases

June 12, 2000

In 1995, the year before Congress passed the Debt Collection Improvement Act, the federal government was owed $50 billion in nontax related debts that are past due and uncollected. Yet the amount had grown to $59.2 billion by the end of fiscal year 1999.

  • The money is owed by people who were late in repaying a variety of obligations -- including farm loans, student loans and housing loans.
  • It also includes the amount owed for overpayments to contractors or entitlement program beneficiaries.
  • The 1996 law was aimed at improving the government's recovery efforts by centralizing collection activities in the Treasury Department and allowing it to use private collection agencies.

But some agencies have been slow to turn over their debt records to Treasury, including the Social Security Administration, which has yet to make its first referral, and the Department of Veterans' Affairs, which has so far referred only 1 percent of its eligible debt.

The General Accounting Office reports that 46 percent of the debt referred to the Treasury for collection is over four years old -- which makes it extremely difficult to collect.

Source: Michael A. Fletcher, "U.S. Debt Collection Lags Despite Changes in Law," Washington Post, June 9, 2000.

 

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