President Trump is serious about fraud. As he should be — nothing more quickly undermines faith in our government, or enthusiasm for our safety net, than evidence that taxpayers are being ripped off.
And, boy, are they being ripped off.
During the State of the Union address on Tuesday, the president said, “I am officially announcing the war on fraud, to be led by our great Vice President [JD] Vance. He’ll get it done.”
He also said, “And [if] we’re able to find enough of that fraud, we will actually have a balanced budget overnight. It’ll go very quickly. That’s the kind of money you’re talking about.”
That is optimistic, for sure. Our deficit this year is estimated at nearly $2 trillion — two thousand billions of dollars. Welfare fraud is almost certainly less than half that amount. But Trump is still right that the amount of government payments being hijacked by crooks is stunning.
In 2024, when Joe Biden was still president, the Government Accountability Office reported that “the federal government could lose between $233 billion and $521 billion annually to fraud.” In other words, up to half a trillion dollars was being stolen each year! That estimate was based on a survey of spending done in the years between 2018 and 2022, in the wake of the massive COVID relief programs authorized by Congress.
Note that this horrendous sum does not include “improper payments”; that’s a whole different (and also enormous) category, according to the Government Accountability Office.
GAO reported that “No area of the federal government is immune to fraud” and suggested that “a government-wide approach is required to address it.” That suggestion went unheeded.
Theft undermining our welfare programs is not new — it has just gotten worse.
During the COVID years, Congress approved more than $5 trillion in payments to keep the economy afloat, and pushed money out the door as rapidly as possible to maintain employment and spending. The flood of barely supervised outlays in programs like the Small Business Administration’s Paycheck Protection Program, Economic Injury Disaster Loan Program and the Unemployment Insurance programs was practically an invitation to steal.
Confidence in the government has been trending downward for decades, under both Republicans and Democrats. It is currently near an all-time low. While there are doubtless many reasons that voters no longer trust their leaders, surely revelations of massive welfare fraud do not help.
Politically, attacking the pilferage of dollars meant to help sick children or provide housing for single low-income moms is a no-brainer. As we saw in Minneapolis, voters are incensed to find that their well-meant money is being stolen, and they blame the government officials who oversee the programs and allow the thievery to go on. After the discovery that billions of dollars had been stolen from state coffers, Tim Walz decided he could not run for a third term as Minnesota’s governor. He was right; the blowback from voters was swift and merciless.
Since blue states like California, Illinois and New York tend to embrace expansive welfare programs, hoping to win votes with taxpayer largesse, Democrats will be under scrutiny for allowing money to go missing. Republicans will highlight the mismanagement, adding to critiques that Democrats are poor administrators and especially feckless about fiscal management.
But unlike the federal deficit, the theft of welfare hits close to home.
Alhough Trump officially tapped his VP Tuesday night to direct the anti-fraud effort, it isn’t his first move on that front. Earlier this month, he set up a new division in the Department of Justice to tackle the theft of government payments. And at the end of last year, he demanded states supply extensive information about recipients and payments.
Vance will spearhead the anti-fraud campaign, and he has already thrown down the gauntlet. The vice president, along with Medicare and Medicaid Services chief Mehmet Oz, just announced a pause on federal Medicaid reimbursements to Minnesota, where billions meant for day care centers and autism treatments were stolen.
Team Trump is withholding some $259 million in Medicaid reimbursements while an investigation, based on a recent audit, goes forward. Vance is demanding that Minnesota address its fraud problem before receiving more funds from Uncle Sam.
That seems reasonable. Why should taxpayers across the country hand over their hard-earned cash to crooks?
This isn’t a hypothetical. As NBC reports, “The Justice Department has charged 98 people there, 85 of whom are Somali, with $1 billion in fraud.” As the scandal has widened, some put the total lost as high as $9 billion. (Trump misspoke when he mentioned a figure of $19 billion in his address on Tuesday.)
Walz responded to the holdup of Medicaid payments by trying to turn the spotlight back on ICE activities in his state, saying, ”This has nothing to do with fraud. The agents Trump allegedly sent to investigate fraud are shooting protesters and arresting children.”
Nice try, Tim. Unrest over the tragic killing of two civilians in your state by ICE may have conveniently diverted the spotlight from your welfare fraud scandal, but it is not going away.
Vance will no doubt pursue fraud allegations in California and New York, among other states, where Republicans will hope to hold onto a few essential House seats in the wake of damaging redistricting by Democrats. Govs. Gavin Newsom (D) and Kathy Hochul (D) have already pushed back, both touting prior efforts to clean up stealing in their states.
Given the enormity of both states’ welfare operations, and their reportedly lax standards regulating who can access those payments, my guess is Newsom and Hochul will be on the hot seat in coming months. That will be good for Republicans — and for taxpayers.
