Yesterday, we heard that Donald Trump “vowed to establish a task force to review federal expenditures, an idea recommended by Tesla and SpaceX CEO, Elon Musk. Trump said the commission would be ‘tasked with conducting a complete financial and performance audit of the entire federal government and making recommendations for drastic reforms.’”

Obviously, I am all in favor of such a commission, which, as Dominic Pino noted, is a Reagan idea. But let’s be honest about why such a commission is needed: It’s because Congress, through the budgeting process, is not doing its job. Congress should be the one cutting inefficient spending, waste, fraud, and abuse each year from our budget. They don’t do it because they want that spending, which serves the special interests they support, to go on.

That said, those of you who have read me for a long time won’t be surprised that I was pleased to hear former president Trump specifically mention improper payments in one of his latest speeches in relation to the efficiency commission. According to GAO:

Federal agencies made an estimated $236 billion in improper payments in FY 2023, and cumulative federal improper payment estimates have totaled about $2.7 trillion since FY 2003. Approximately 79% of the FY 2023 total (about $186 billion) was reported by five program areas.

The GAO puts out reports every year and no one cares. What we learn in these reports is that the top programs for improper payments are always roughly the same: Medicare, Medicaid, and the earned-income tax credit (administered by the IRS, by the way). In 2023, we also saw all the improper payments coming from Covid-relief programs like the Paycheck Protection Program and the Pandemic Unemployment Assistance program.

It won’t be easy, even if Elon Musk is in charge. In part, it’s because it is much harder to cut government spending than to fire your own employees. Also, improper payments can’t be reined in without dramatically reforming the programs responsible for the improper payments.

Trump, I am afraid, has said he is against reforming Medicare. The program is responsible for $51 billion in improper payments in 2023 alone.

But let’s even assume that these guys succeed. It will only make a dent in the enormous fiscal problem before us. The $236 billion in improper payments we face now pales in comparison with the projected $2.8 trillion deficit we will face in 2034. That’s assuming none of Trump’s tax cuts are extended.

But that’s nothing in comparison with the enormous deficit spending, and debt, that will come about because of Medicare’s and Social Security’s unfunded liabilities. CBO projects that the federal government will have to borrow $124 trillion for those two programs alone. The worse culprit of the two is Medicare.

And then there is the economic damage caused by all the government’s misallocation of capital and the creation of perverse incentives, such as moral hazard, from both handouts to the private sector (some of which Musk has received) and grants to state and local governments. Regarding the latter, according to Chris Edwards at Cato, “federal aid to the states totaled $721 billion in 2019.”

The grants, of course, come with regulatory strings and requirements, and they cause serious harms to fiscal federalism.

That’s what happens every year. Then there is what happened during the pandemic. Edwards writes:

Congress boosted aid enormously during the pandemic to $829 billion in 2020, $1.25 trillion in 2021, and an estimated $1.23 trillion in 2022. These are fiscal years. As it turned out, most of this aid was not needed because state and local tax revenues have grown strongly the past two years, providing governments the resources to handle the crisis.

Also, go read Paul Winfree’s report on the Biden administration’s $350 billion Coronavirus State and Local Fiscal Recovery Fund (SLFRF). Your head will spin and your stomach will turn. But know that if we don’t change the incentives or the rules by which Congress operates, next time an emergency occurs, politicians will support sending the same amount or more to the states whether they need it or not.

This is not an argument against a commission to look at inefficiencies in government. Instead, it is a reminder that inefficiency in government isn’t just fraud, waste, abuse, improper payments, and such. That’s small potatoes. The big problem is all the stuff the federal government does that it shouldn’t do and all the promises it has made to us that it doesn’t have the first dime to pay for.