Throughout this week, the Washington Examiner’s Restoring America project will feature its latest series, “Reforming the Deep State: Reining in the Federal Bureaucracy.” We invited some of the best policy minds in the conservative movement to speak to the issues of what waste, fraud, abuse, and unaccountability exist throughout the federal government and what still needs to be done. To learn more about the series, click here.

Every year, the federal government sends hundreds of billions of dollars to the wrong people —criminals, ineligible recipients, and beneficiaries of bureaucratic errors. In 2024 alone, the federal government admitted to at least $162 billion in improper payments. That’s $1,200 for every household in America.

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That’s on top of the $233 billion to $521 billion that the Government Accountability Office estimates the federal government loses annually to fraud.

But even some of these steep price tags are massive understatements.

For example, Medicaid reported $31 billion in improper payments in 2024, but Brian Blase of the Paragon Health Institute and I estimate that the true figure was likely closer to $153 billion (equal to the cost of providing private health insurance to 1.7 million people).

That’s because Medicaid’s reported improper payments metric largely ignores eligibility checks, which are the biggest source of errors.

THE GAO’S DEEP STATE DOUBLE STANDARD

But instead of facing penalties, agencies are rewarded with larger budgets — meaning they’re effectively paid more to fail.   

While Medicaid issued an estimated $1.1 trillion in improper payments over the past decade, the federal government doubled its budget, from $302 billion in 2014 to $618 billion in 2024.

When the Small Business Administration granted $5.3 billion in forgivable loans to more than 100,000 individuals on the federal government’s Do Not Pay list, the administration’s inspector general recommended the agency stop. The agency’s leadership rejected that advice.  

In the private sector, waste means bankruptcy — not a bigger budget.   

But despite the enormous cost of improper payments, there has been little attention and zero consequences for government agencies that regularly squander taxpayers’ dollars.

Fortunately, the Trump administration, DOGE, and Congress have all taken action to reduce fraud, waste, and abuse.

In March, the Trump administration issued three executive orders designed to help agencies access the data they need to verify whether people are who they say they are and whether they are eligible for the payments they request. That’s important, as failure to do these two things accounts for roughly 85% of improper payments.

These orders will also improve the integrity and efficiency of the federal government’s financial transactions, including the nearly $6 trillion in payments disbursed from the Treasury’s General Fund.

Among its accomplishments, DOGE implemented a requirement that the Treasury Department include proper descriptions with all payments so that they can be properly tracked. Further, it spelled out necessary improvements to the Treasury Department’s Do Not Pay database, including providing it with access to more government data sources.

Now, some members of Congress are trying to lock in and build upon the Trump administration’s crackdown on waste, fraud, and abuse through legislation such as the Delivering on Government Efficiency in Spending Act and the Payment Information Integrity Reform Act.

The One Big Beautiful Bill also achieved similar goals with provisions that will significantly reduce improper payments, particularly in Medicaid. It requires states to check Medicaid eligibility twice a year (instead of just once), imposes new checks to prevent the federal government from paying multiple states to enroll the same individuals on Medicaid, and makes it harder for the federal government to waive its 3% limit on federal government payment for states’ improper Medicaid payments.      

These provisions will make significant headway in addressing profligate waste, fraud, and abuse, but more is still needed.  

CLICK HERE TO READ MORE FROM THE ‘REFORMING THE DEEP STATE’ SERIES

Whether through a second reconciliation bill or stand-alone legislation, Congress should build on recent reforms by: (1) enhancing secure data sharing across agencies, (2) tightening eligibility verification, (3) creating a Fraud Czar or Taxpayer Integrity Office, and (4) holding agencies and states accountable for improper payments.

If Washington can’t stop sending hundreds of billions of dollars to the wrong people, it will never earn the public’s trust to enact entitlement program reforms that will be necessary to prevent a fiscal crisis. Cracking down on waste isn’t just good stewardship — it’s essential for America’s fiscal future.        

Rachel Greszler is a Senior Research Fellow in Workforce and Public Finance at the Heritage Foundation and a Visiting Fellow in Workforce at the Economic Policy Innovation Center.