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Horowitz: The federal government issued $175 billion in ‘improper payments’ in 2019

Imagine taking $175 billion in cash and flushing it down the toilet. Well, that is what our federal government did last year, according to a new survey from the government’s watchdog.

Every year, the Government Accountability Office (GAO) tracks the amount of improper payments made by various federal agencies and programs in the form of waste, fraud, and abuse. The audit does not subjectively judge whether a program itself is wasteful, but whether, based on the program’s own guidelines, there are payments made that should not be. For fiscal year 2019, the GAO found that the federal government made $175 billion in improper payments, a 15 percent jump from FY 2018.

While we will never tackle the federal deficit crisis by combating waste and fraud alone, these numbers do add up. $175 billion is roughly the cost of the entire annual budget for the gargantuan federal civilian and military retirement pension program. According to the GAO, the federal government has wasted $1.7 trillion on improper payments alone since 2003. That’s when Congress began requiring this annual audit.

Here are some other key takeaways from the report, which was published yesterday.

  • Roughly $121 billion (69 percent) of the waste was concentrated in just three programs: Medicaid ($57.4 billion), Medicare ($46.2 billion), and Earned Income Tax Credit (EITC) ($17.4 billion). In other words, Medicaid accounted for more waste than all of the other government programs (aside from Medicare and EITC) combined. This is another reason why it would be better to convert Medicaid into a direct subsidy to those in need, much like food stamps, rather than funneling it through corrupt managed care. The rate of improper payments for Medicaid accounts for a whopping 13.5 percent of the entire cost of the program, as compared to a 6 percent improper payment rate for the food stamp program. The same principle applies to the Children’s Health Insurance Program (CHIP), which is also funneled through the managed care cartel and racked up improper payments ($2.7 billion) composing 15 percent of the program’s budget.
  • Roughly $38 billion of the total amount of improper payments resulted from the agency not being able to authenticate eligibility criteria. Think about what could be done with such a sum of money if we merely clamped down on eligibility standards.
  • Medicaid was the big culprit for the large increase in improper payments from FY 2018 to FY 2019. There was a $21.1 billion increase in Medicaid improper payments estimated by HHS this past year.
  • Some of the increase came as a result of the government tracking waste in certain programs it never previously monitored. For example, this was the first year that the Treasury Department tracked improper payments in some of the other refundable tax credits. It found $7.2 billion in improper payment estimates for Additional Child Tax Credit and $2.1 billion for the American Opportunity Tax Credit.

What’s so tragic about this is that both parties always talk about cutting “waste, fraud, and abuse” as a cop-out for actually addressing the systemic problems in major government programs and the premise of the federal government’s involvement in various aspects of our lives. However, when it comes time to actually cutting waste, they never do it. Why is it that they are constantly increasing spending to record levels and then passing even more emergency spending bills without ever trying to genuinely combat what is universally regarded as improper payments?

It’s also sad how so much of the waste is embedded in socialist transfer-of-wealth programs, such as Medicaid and refundable tax credits, aka welfare through the tax code. These are programs that many Americans pay for but never receive benefits from. Taken together, the tab for improper payments among all the refundable tax credits was $26.7 billion. That is more than a quarter of the entire cost of refundable credits, estimated to cost about $96 billion!

With the debt surging past $23 trillion and with endless trillion-dollar annual deficits as far as the eye can see, one would think this report would spawn a bipartisan effort to at least combat universal waste. Sadly, the only bipartisanship in Washington is a commitment to waste even more taxpayer funding, subsidize more favored industries, and redistribute even more wealth.

Meanwhile, with 5,000 deportation officers for over 3 million criminal aliens, they can’t fund a few billion dollars to remove other countries’ violent criminals, one of the most important jobs of a national government.


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