Americans for Tax Reform is proud to join the coalition of groups who support Rep. Ed Royce’s Government Risk and Taxpayer Exposure Reduction Act of 2018, or GRATER Act (H.R. 5381). This legislation would allow the government to consider or move entirely the transfer of risks associated with projects or programs off the government’s books and allow the private sector to hold the risk. This would protect taxpayers by limiting their exposure if a project, like the renovation of a bridge, were to go over budget, allowing for the risk of future payments on the to would be absorbed by the private sector and not the taxpayer.
There are hundreds of programs the federal government oversees and administers funding for, all of which carry some form of risk. The risk could be as small as operating radio stations for weather updates, or loans made to large scale infrastructure projects. These risks can be in the form of litigation, failure to complete the project or running out of funding, or even natural disasters, all of which taxpayers are on the hook for if anything goes wrong. In the bridge example, all four of these risks, and more, could happen and expose taxpayers to additional costs.
H.R. 5381 would allow the government to transfer much of the risk associated with administering and overseeing like this projects to the private sector and pay the private sector small fees essentially for insurance. The risk would be borne by the private sector but the private sector would also compete for the government’s business, allowing the government to choose the most qualified company at a desired price. In the case of infrastructure projects, the private sector is incentivized to complete the project on time and under-budget as any delay could reduce their opportunity to keep a profit from the project.
This form of risk management is a smart way to address taxpayer protection and ATR is proud to join The American Consumer Institute’s coalition effort. Click here to view the letter.