The US Government Made $144 Billion in Improper Payments in 2016
Although everyone in Congress presumably agrees that reducing wasteful government spending is a laudable goal, there is little political impetus to actually curb said spending. Hopefully this changes under President Trump, who campaigned on “draining the swamp” and reducing improper payments—but as of yet, nothing has been done.
Improper payments refers to government payments made in the wrong amount, to the wrong person, or for the wrong reasons. Such payments cost American taxpayers an astronomical amount.
For example, in 2016 it is estimated that $144 billion of improper payments occurred—an all-time high. Granted, not all of this money was irrecoverable, but much of it was, and furthermore, vast quantities of time and treasure are wasted reversing said payments.
For additional context: in 2015 the Government Accountability Office (GAO) found that many agencies made improper payments to people who were ineligible because they had died—good luck collecting from them.
Likewise, GAO determined that up to $1.3 billion was squandered on incorrect Medicare payments to ineligible health care providers with fake addresses, including addresses for empty lots and fast food restaurants—fraud.
Another example: in 2016 the Department of Agriculture noted overpayments of $218 million for federal crop insurance, and the Pentagon admitted that it overpaid by more than $100 million to commercial vendors and more than $400 million for travel pay.
This is just a taste of some of the government’s abuse of taxpayers—and this is to say nothing of all the proper, yet incompetent spending. Remember how we wasted $300,000 on “Frankenfest” (the Frankenstein-themed beer garden)?
How Do We Stop Improper Payments & Reduce Government Waste?
In 2010 Congress passed a law requiring government agencies to provide accurate annual estimates of wasteful spending using statistically valid procedures. It was hoped that Congress could use these estimates to curb the main areas of government waste.
The problem is that even now, the rules aren’t being followed unilaterally. According to GAO, some 15 government agencies have yet to comply with the 2010 law. Compliance would help.
Of course, there are other things that could be done. Peter Tyler and Nicholas Pacifico, from the nonpartisan Project on Government Oversight, shared four recommendations in an essay for The Hill:
- Complete the Estimates. All federal agencies should correctly and completely estimate their improper payments. Most importantly, the Department of Defense, whose spending is roughly half the discretionary budget of the federal government and whose estimates the GAO and its own inspector general call “unreliable,” should comply with this basic requirement.
- Eliminate Root Causes. Agencies should do a much better job detailing the steps and timelines for not only identifying but also eliminating, the root causes of its improper payments. This is required by current law, but the administration could issue new directives to ensure consistent implementation.
- Share Best Practices. The administration should quickly establish robust and high-level working groups for sharing proven solutions in order to better detect and prevent improper payments and fraud across all federal agencies. This would include sharing of advanced data analysis techniques.
- Stop Fraud. The Fraud Reduction and Data Analytics Act, passed by Congress last year, aims to prevent fraud by requiring agencies to use stronger financial tools and practices. The administration should complete required guidance to federal agencies — which is now overdue.
Of course, this is all easier said than done. However, it is our hope that President Trump can motivate Congress to more carefully monitor its spending—and we likewise hope he does a better job of enforcing existing regulations than did his predecessor.