OMB Putting Out ‘Dragnet’ for People With Unpaid Loans : U.S. to Crack Down on ‘Deadbeats’

The Reagan Administration will crack down on Americans who owe the federal government billions in delinquent loans and taxes, Budget Director James C. Miller III asserted Wednesday.

Other officials acknowledged, however, that it will be extremely difficult to track down the hundreds of thousands of people who owe money to the federal government, a long-standing problem that a number of previous administrations has attempted but failed to eradicate.

“It’s ‘Dragnet’ time,” said an undeterred Miller, attempting to sound like TV’s Sgt. Joe Friday in announcing the stepped-up collection drive.

Mugging for Cameras

But it seemed like “Miller time” at the press conference, with the portly budget director--who looks more like ex-ballplayer Marv Thornberry of beer commercial fame than actor Jack Webb--mugging for the cameras, apparently in hopes of winning a few seconds of air time on the evening news shows.

“This is a message to every American who owes the federal government money: Hands up! We’ve got you covered!” Miller said.

Joseph R. Wright Jr., deputy director of the Office of Management and Budget, estimated that the various debt collection programs will garner at most $5 billion over the next two years. “We’re going against a lot of tradition and history,” he said.

The Administration plans to intensify its efforts to collect from “deadbeats,” Miller said, even threatening to impound cars and repossess other assets from those who are caught not paying their debts.

“I will personally ask the attorney general to seize cars, homes, any assets,” Miller said. “If people refuse to pay up, then we will go after these things. We’re not going to just give up.”

The new program is modeled after an experiment in Philadelphia four years ago in which 35 cars belonging to individuals who had not repaid government-backed student loans were seized. Nearly all the loans were paid off and 33 of the cars reclaimed, Wright said.

The Justice Department, Wright said, would work through state and local authorities in filing lawsuits aimed at collecting the debts.

Of the estimated $68.3 billion in delinquent debts, $41.9 billion reflects long-overdue tax payments and the remaining $26.4 billion reflects unpaid loans.

The outstanding loans are the target of the new collection drive, Wright said, explaining that “the IRS has proven to be a pretty effective collector of delinquent taxes.”

Of the $26.4 billion in delinquent loans, about $5 billion was incurred by students and $10 billion by farmers, many of whom may be so deeply in debt already that they are in no position to pay off their government loans. The rest are mostly unpaid small business loans, Veterans Administration loans and housing loans.

Those most likely to be caught in the computerized dragnet are federal employees who have not kept up with their payments on government loans. About 141,000 bureaucrats who owe $346.7 million are expected to receive notices soon that up to 15% of their monthly pay will be garnisheed if they don’t meet their obligations.

Similar notices will go out later to employees of the judicial branch and of Congress, officials said. Members of Congress have not yet been informed of the plan, so “we’ll talk to them first,” Wright said. Otherwise, he acknowledged, “it would not be politically wise.”

Collection Program

Indeed, the media campaign seemed aimed most at lawmakers, who have been asked by the White House to extend a program of collecting delinquent loans by authorizing the deduction of delinquent debts from federal income tax refunds.

The two-year pilot program, which went into effect last year, has collected nearly $500 million so far, but it will expire at the end of this year unless Congress extends it.

“Unless we have a signed bill by the end of next month,” Miller said, “we won’t be able to continue the program . . . . So, if our lawmakers really want to do something about the deficit, they can pass a simple bill.”