Government has never been known as a model of efficiency. Yet a new report from the Government Accountability Office should make even the most hardened cynic blanch.
Last week, the GAO revealed that the federal government lost at least $186 billion to “improper payments” in fiscal 2025. That’s up by $24 billion from the previous fiscal year. An improper payment is defined as “one that should not have been made or that was made in an incorrect amount (including overpayments and underpayments).”
Astonishingly, the GAO calculates that “executive branch agencies have reported cumulative improper payment estimates of about $3 trillion since fiscal year 2003.” That’s more than 7.5 percent of the entire soaring national debt. Now we’re talking real money.
In the understatement of the year, the GAO noted that “improper payments are a long-standing, significant problem in the federal government.” A GAO letter to Congress suggests, “it is imperative that agencies prioritize reducing improper payments.”
This, in and of itself, is an argument for shrinking the Beltway behemoth. The larger the administrative state becomes — and the more Washington bleeds from the private sector — the more taxpayer money that is inevitably squandered.
Putting that aside, however, the report reveals that six federal agencies — the Corporation for National and Community Service along with the departments of Agriculture, Labor, Treasury, Veterans Affairs and Health and Human Services — have estimated improper payment rates of 10 percent or higher for at least three consecutive years.
Medicare and Medicaid account for about half of all “improper payments,” making the Trump administration’s push to eradicate waste and fraud from those programs even more vital. Other programs on the “high-risk list” include unemployment insurance payments and the Earned Income Tax Credit.
A 2019 law deems programs that exceed a 10 percent improper payment threshold for consecutive years as noncompliant and mandates they inform the Office of Management and Budget and Congress. Yet “five of the seven agencies” deemed noncompliant after fiscal 2025 “did not have sufficient documented policies and procedures to ensure consistent timely reporting for their noncompliant programs.” That means Congress is left in the dark regarding “which programs continue to pose elevated risks and whether agencies are taking meaningful steps to address them.”
This is unacceptable. Congress must ensure that agencies are transparent and actively working to get improper payment rates down to zero. If this is too big a burden for bureaucracies to bear, Congress should take a machete to their budgets until they show they can responsibly handle the money with which they are entrusted.
