By Rachel Greszler
Friday, December 27, 2024
The fiscal year 2024 data are in, and
they show that the Biden administration has overseen a record $926 billion in
improper and unknown federal payments since 2021.
That is 38 percent more than the Trump administration’s
$673 billion total over four years, and it’s only 4 percent less than the Obama
administration’s $962 billion total over eight years. Moreover, all of
these figures are underestimates as they only account for about 68 programs out
of the more than 2,000 that the federal government operates. The Biden
administration’s $926 billion total translates to more than $7,000 for every household
in America. That’s about seven months’ worth of groceries for a family of four, or three mortgage payments for the average homeowner.
Despite the high price tag of improper payments — which
are payments made to the wrong people or in the wrong amount — there’s been
little attention and zero consequences for government agencies that regularly
squander taxpayers’ dollars. Instead of penalties, agencies with increasing
improper payments are rewarded with bigger budgets. More than a quarter of the
programs that track improper payments reported improper payment rates of 10
percent or higher in 2024. Major refundable tax credits such as the earned
income tax credit, the American opportunity tax credit, and the refundable
portion of Obamacare’s premium tax credit all exceeded a 27 percent improper
payment rate.
Most improper payments consistently flow through the
federal government’s health insurance programs. Last year, Medicare, Medicaid,
and the Children’s Health Insurance Program sent out $87 billion in improper
payments — enough to pay for the health insurance premiums of 9.7 million individuals or 3.4
million families.
Almost no household could afford to consistently spend a
significant portion of its budget on wrong payments. So how and why is this
commonplace in the federal government?
Most improper payments are the result of agencies’
failure to confirm that someone is who he says he is and that he is eligible
for the payments he receives. Sometimes, improper payments are outside of
agencies’ control. For example, it can be hard to verify whether someone who
claims the child tax credit, the earned income tax credit, and other
child-dependent benefits such as food stamps actually had that child living
with him for at least half of the year. Even then, there are things agencies
could do — such as refusing to process tax returns with child-related benefits
until after April 15 so that the IRS can verify that the same child isn’t
claimed on more than one return, or cross-reference the addresses of children
who receive school lunch benefits with the addresses of the individuals
claiming them as dependents.
Much of the time, however, agencies fail to use data that
are available to them, ignore recommendations from their inspectors general,
and outright defy legal requirements for fraud protection.
Consider the Small Business Administration’s Restaurant
Revitalization Fund, which issued 30.3 percent of all its payments, or $8.7
billion, improperly. According to the SBA inspector general’s report, most of this was due to the
SBA’s simply ignoring planned and legally required protocols. For example, the
agency awarded $552 million to 901 applicants that had active holds on a file
the SBA was supposed to check. And it issued $7.9 billion in awards to about
63,000 applicants despite the fact that only 24 percent of those applicants had
cleared the IRS validation test.
While Congress’s attempts to crack down on improper
payments have been all bark and no bite, the same can’t be said of Elon Musk or
Vivek Ramaswamy, who have been tasked with running a new, nongovernmental
Department of Government Efficiency.
In a November 19 post
on X, Ramaswamy called out the SBA’s current leadership for rejecting its
inspector general’s recommendation to stop sending payments to people who are
on the Treasury’s Do Not Pay list and concluded, “This kind of flagrant waste
needs to end. Time for @DOGE.” Cracking down on improper payments provides an
opportunity for the DOGE to save up to $1 trillion over ten years even before
it shrinks or eliminates any government programs. The DOGE will need Congress’s
help, however, to ensure lasting changes.
And yet improper payments are only a symptom of the
disease of excessive government spending. The federal government spent $3.8
trillion on transfer payments last year. That’s $29,000 per household. Since
2005, transfer payments and improper payments have grown twice as fast as the
economy. The DOGE’s efforts to improve government efficiency must therefore
include both reducing improper payments and getting the federal government out
of things it has no business doing.
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