OPINION:
The federal government has put forward an estimate of $521 billion in annual fraud levels. That’s enough money to rebuild every crumbling bridge and school in the country, all squandered because of government incompetence.
In fiscal year 2024, just 16 agencies reported improper payment estimates totaling $162 billion. This money was lost to error, fraud, overpayments or ineligible claims. It was part of a staggering $2.8 trillion lost since 2003.
That is just what has been reported. Fraud-heavy programs such as Temporary Assistance for Needy Families and housing subsidies likely push the total higher.
This isn’t a mere accounting error; it’s a heist on taxpayers, stealing cash that could have stayed in your wallet.
Nearly 75% of these losses come from five programs: Medicare, Medicaid, the earned income tax credit, SNAP, and the Restaurant Revitalization Fund. For these programs, error rates amount to roughly 45%.
Unemployment insurance is another major culprit, with its controls collapsing during the COVID-19 crisis and fueling fraud through identity theft. Retirees wait for delayed Social Security checks while the government keeps paying benefits to the dead.
All told, that’s billions of dollars that could lower health care costs, stabilize Social Security or shrink the deficit, all lost to the black hole of government dysfunction.
Worse, many federal agencies don’t follow basic accountability laws. In 2023, the Government Accountability Office flagged 11 major agencies — including the Department of Defense, the Department of Health and Human Services, and the Treasury — for breaking payment integrity laws.
The Defense Department exemplifies these problems. Despite its massive budget, it has never passed a clean audit, and its outdated systems and lax fraud controls leave taxpayers footing the bill for untold losses.
Other government agencies skip reporting losses entirely or ignore fraud reduction crackdowns.
No business could survive losing billions of dollars without tracking where it went. It would go bankrupt overnight. In Washington, though, failure just demands more taxpayer dollars to bury the mess.
The national debt has soared past $35 trillion, with $2 trillion annual deficits piling up. Every wasted dollar, including the billions lost to improper payments, adds to a taxpayer burden that is now more than $270,000 per household.
As the government borrows more to cover these gaps, it floods the market with debt, pushing interest rates above 5%. Debt payments now outstrip defense spending, which drives up mortgage rates, loan costs and everyday expenses for families and businesses.
The GAO’s proposed fixes — stricter reporting, blocking ineligible payments, extending fraud investigations — are a start, but they don’t touch the root problem: Washington’s reckless expansion of government programs. When these programs grow too big, fraud and mismanagement become inevitable.
Some argue that cuts harm the needy, but the real damage is the waste, which lets scammers siphon off billions of dollars that should reach veterans and retirees. More money won’t solve this problem; accountability will.
Congress must eliminate improper payments, not adjust them.
Agencies squandering taxpayer dollars should face budget cuts and a leadership overhaul. Fraud prevention systems should be upgraded to require real-time ID checks (capable of stopping $60 billion in unemployment insurance fraud outright) and eligibility verification before fund dispersal. All funding should be linked to performance.
Further, states should be required to report data from state-administered benefit programs to the federal government. This would aid efforts to truly crack down on fraud.
Congress must impose firm spending limits and enact a balanced budget amendment to restore constitutional governance and return to a limited government.
The government isn’t underfunded; it’s wastefully stealing too much of what we have all worked hard to produce. Americans deserve a system that protects their hard-earned money, not one that squanders it.
• Richard Stern is acting director of the Roe Institute for Economic Policy Studies at The Heritage Foundation and director of its Grover M. Hermann Center for the Federal Budget. Katherine Miller is a former member of Heritage’s Young Leaders Program.
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