The federal government spends as much as $800 billion annually on fraudulent benefit payments, according to a leading expert, who said the incoming Trump administration could reduce the federal deficit without slashing departments or agencies.
Haywood Talcove, CEO of government at LexisNexis Risk Solutions, estimates that 20% of the government’s big spending programs, such as Medicaid and food stamps, are wasted on fraudulent payments.
The scope of the waste challenges Washington’s conventional wisdom, which for decades has held that the amount of fraud and abuse doesn’t warrant significant changes. After the pandemic exposed massive fraud, experts now say weeding it out is worth the time and effort.
“I think there’s probably $800 billion annually sitting there, and I think $500 billion is low-hanging fruit,” Mr. Talcove told The Washington Times. “The focus needs to be on the fraudulent and improper payments. I don’t think in many cases there needs to be this action to cut spending in a program.”
President-elect Donald Trump and his budget-cutting commission, the Department of Government Efficiency, are plotting to slash the federal deficit.
Conservatives have considered ending prominent government programs, such as public broadcasting and the Education Department.
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Mr. Talcove said fraud and abuse give DOGE a lot of room to maneuver before the commission axes entire programs.
Jordan Burris, a former senior federal information technology official and now general manager for the public sector at Socure, a digital identity verification and fraud prevention technology firm, said the government would save plenty of money if agencies worked harder to prevent bogus and erroneous claims.
“It wouldn’t surprise me if between 10% to 20% of payments that are rendered today for many federal programs prove to be fraudulent,” Mr. Burris said.
Elon Musk and Vivek Ramaswamy, the leaders of DOGE, suggested $500 billion to $2 trillion as their savings goals, though Mr. Musk said this month that $1 trillion is probably the sweet spot.
“I think we’ll try for $2 trillion. I think that’s the best-case outcome,” Mr. Musk told political strategist Mark Penn in an interview on X. “But I do think that you kind of have to have some overage. I think if we try for $2 trillion, we’ve got a good shot at getting $1 [trillion].”
In an op-ed in The Wall Street Journal, Mr. Ramaswamy and Mr. Musk said they wanted to eliminate programs not authorized through nonspending legislation and agencies extending their reach beyond congressional approval.
Experts said they could reach those goals without axing any programs.
“Vivek and I should have a contest: Who can find $500 billion the quickest? I think I could find it in five days,” he said. “Another couple weeks, I’ll find you another $500 billion. It’s not that hard.”
The experts said the key is to prevent wasteful payments from going out the door and to track down and recapture payments that shouldn’t have been made. They say this pay-and-chase model is a lousy way to run a government.
“Pay and chase is not something that should be part of our vocabulary,” said Mr. Burris, adding that private firms don’t use that model.
The experts said criminal syndicates backed by adversary nations such as China or Russia are responsible for much of the misspending.
“It’s not like your average everyday person,” Mr. Burris said. “These are coordinated efforts leveraging AI at scale to launch automated attacks, and they’re coming from other countries.”
Last year, federal authorities brought charges against a Romanian operation that netted nearly $200 million in bogus food stamp payments over 21 months from 2022 to 2024.
Investigators said the fraudsters used skimming machines to steal authorized food stamp recipients’ card numbers and codes. They then recoded that information onto blank cards to claim the benefits.
Mr. Talcove said converting food stamp payment cards into chip cards could easily reduce the fraud, although the switch could take years under current plans.
He pointed to Social Security’s disability benefits program as another prime target.
Mr. Talcove said Social Security conducts asset testing on only a small segment of the population, which allows for fraudulent benefits.
“By simply doing what they’re supposed to do, they would probably save $100 billion annually,” he said.
Some policymakers on Capitol Hill say the government, unlike businesses, needs to get money to people who deserve benefits under the law and that fraud and other erroneous payments are inevitable.
Mr. Burris dismissed that concern.
“I believe it is a false premise that you cannot have strong fraud prevention while at the same time getting payments issued to the right people,” he told The Times. “When historically we’ve seen this go wrong, it’s because they’re using a legacy technology or a legacy approach to issuing these payments.”
The federal government collected more than $4.9 trillion in revenue in fiscal year 2024 but spent nearly $6.8 trillion, leaving a deficit of $1.8 trillion. That was the third-largest deficit on record, trailing those of the first two years into the COVID-19 pandemic.
The Congressional Budget Office said the government will run trillion-dollar deficits yearly for the foreseeable future.
The $36.2 trillion total federal debt increased by $8.4 trillion during President Biden’s four years.
President Trump oversaw a $7.8 trillion increase during his four years, President Obama tallied $9.3 trillion during his eight years and President George W. Bush notched $4.9 trillion during his eight years.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
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