Time To End Big Gov. Payments That Cost You $14k Every Decade

The U.S. House of Representatives held its first DOGE Subcommittee hearing on Feb. 12, focusing on fraud and improper payments.

With the federal government having issued over $1.9 trillion in improper payments over the past decade — including $567 billion in Medicaid programs alone — improper payments offer low-hanging fruit for improving government efficiency, but President Trump and DOGE will need Congress’s help to successfully crack down on them.

Improper payments — which have cost the average American household $14,000 over the last decade, or about 6 weeks’ worth of groceries per year — are checks the federal government sends to the wrong people and in the wrong amount.

President Donald J. Trump and Elon Musk, the driving forces behind the Department of Government Efficiency, or DOGE, have already called out improper payments, with President Trump citing EPIC’s research on improper payments from the Oval Office as part of his efforts to root out waste, fraud, and abuse across the federal government.

Improper payments are widespread across nearly every government program, but some are more outrageous than others. The worst offender in 2024 was the Farm Service Emergency Conservation Program, which spent 45 cents out of every $1 on improper payments.

In the Earned Income Tax Credit program, or EITC, 27 cents out of every $1 was an improper payment in 2024. The EITC’s total of $15.9 billion in improper payments equals the entire annual incomes of 200,000 typical households.

And the government’s health insurance programs — Medicare, Medicaid, Obamacare, and the Children’s Health Insurance Program (CHIP) — combined sent out $88 billion in improper payments in 2024. That’s enough to pay for the health insurance premiums of 9.8 million individuals or 3.4 million families.

Despite Congress trying to stop the explosion in improper payments with legislation requiring agencies to report improper payments, establish plans to reduce them, and follow through with those plans, the laws have been all bark and no bite. Agencies that neglect the laws and have ever-rising improper payments face zero consequences. Rather, they’re typically rewarded with even larger budgets to cover their mistakes or outright negligence.

Take the Small Business Administration, for example. Vivek Ramaswamy noted in an X post that “the Small Business Administration granted over 100,000 forgivable loans to individuals who were on the DNP [Do Not Pay] list, resulting in $5.3 billion of payments to recipients who may have been ineligible for federal support. The SBA’s Inspector General recognized this & recommended the agency stop this, but the agency’s current leadership rejected the proposal.”

While DOGE can and already has done much on its own, ensuring significant and lasting reductions in improper payments will require Congress’s help.

For starters, since most improper payments are the result of agencies’ failure to identify that people are who they say they are and that they are eligible for the payments they claim, Congress should improve and mandate secure data sharing, which will likely require amending the Privacy Act.

To ensure continued emphasis on proper stewardship of taxpayers’ dollars, Congress should consider creating a Taxpayer Integrity Office or a Fraud Czar (covering fraud, misuse, abuse, and negligence). The mission of this new government entity should be to make it easier for federal programs to protect taxpayers’ money and harder for them to waste it. To be successful, Congress must empower the TIO or Fraud Czar with enforcement capabilities.

Since federal health care programs waste the most money on improper payments, Congress should consider reducing states’ Federal Medicaid Assistance Percentages (FMAP) if they exceed reasonable improper payment rates.

And Congress should use committee hearings to require agency heads, program leaders, and inspectors general to regularly provide an account of improper payments and answer questions about what they’re doing to reduce them. Those in charge should know that they can lose their jobs if they fail to reduce improper payments.

Finally, the most surefire way to reduce the government’s improper payments is to reduce government payments. In 2024, the federal government spent $3.8 trillion, or $29,000 per household, on transfer payments. And improper payments are rising faster than total payments; over the past 20 years, total transfers shot up 262 percent and improper payments skyrocketed by 325 percent. By getting the federal government out of the business of what others — like individual people, businesses, charities, or state and local governments — can do better, Congress can reduce improper payments and also prevent a fiscal crisis.

Rachel Greszler is Visiting Fellow in Workforce at the Economic Policy Innovation Center (EPIC).