A Modest Proposal To Tackle Government Fraud
Every day, it seems, brings a new story of government fraud, which raises two questions: Why is fraud so rampant? And why is so little being done to combat it?
An answer to both can be found in the more than 200 programs that the federal government pays for, but the states run. These are programs that spend a total of $1.2 trillion a year, and despite their openness to fraud, the government does little to combat it.
The money to fund these programs passes through several hands, including state and local government agencies, private contractors, and so on, before reaching a beneficiary. And “every level added to the flow of funds creates a new entry point for fraud risks,” according to a new report from the Government Accountability Office.
So what systems are in place to detect and prevent fraud in these programs? Almost none.
The GAO looked at 20 of the biggest programs — which includes Medicaid, food stamps, special education grants, infrastructure projects, and others — that account for nearly 90% of that $1.2 trillion. It found that only five have anti-fraud detection measures in place. Ten of them — including biggies like Medicaid, Temporary Assistance for Needy Families, and SNAP — had only partial measures. The others have even less.
Worse, legislation requiring agencies to report on their anti-fraud measures lapsed in 2020.
So, it’s not surprising that audits done from 2020 through 2024 found “severe and persistent findings” of fraud risks in 18 of those 20 programs.
As our good friend Mark Tapscott notes at The Washington Stand, this is the ”latest of hundreds of GAO reports identifying hundreds of billions of federal tax dollars lost to waste, fraud, and corruption.”
Trump has been targeting fraud and waste this term, first with DOGE and now his White House Anti-Fraud Task Force, headed by Vice President J.D. Vance. Just last week, the administration withheld more than $1 billion in Medicaid funds intended for California and Minnesota over concerns about widespread fraud in those states.
That’s a start. Now Congress needs to step up and reinstate the fraud reporting requirement that it let lapse. “With this information, Congress would be better positioned to identify gaps in agencies’ fraud risk management practices, benchmark progress over time, and drive accountability,” the GAO notes.
But there’s another option that nobody mentions yet would do much, much more to permanently combat fraud. Stop sending taxpayer money to the states altogether.
It makes no sense to have taxpayers send their hard-earned dollars to Washington, then have those same dollars sent back to their states in the form of program grants, with countless middlemen taking their cuts along the way, legally and illegally.
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