Treasury Secretary Scott Bessent released a shocking report this week from the Government Accountability Office, which estimates 10 percent of the annual federal budget is lost to fraud.
Between $223 billion and $521 billion in federal spending was lost to fraud, waste, and abuse every year between 2018 and 2022, Bessent said.
The GAO fraud estimated that fraud represents nearly 2 percent of the United States gross domestic product (GDP) — the total economic output of the entire country.
“If we can get rid of this waste, fraud, and abuse, we can finance a safer, sounder U.S. … without taking on more debt,” Bessent said in the interview.
The GAO has also documented approximately $2.8 trillion in improper payments since 2003 across federal programs, though the actual amount may be significantly higher because only a small number of programs report these mispayments.
In 2024 alone, 16 agencies reported about $162 billion in improper payments across 68 programs. Nearly 75 percent were from five federal programs: Medicare, Medicaid, Supplemental Nutrition Assistance Program (SNAP), the Restaurant Revitalization Fund, and the Earned Income Tax Credit.
Fraud is obtaining something of value through willful misrepresentation, while improper payments are payments that should not have been made or were made in the incorrect amount.
All fraudulent payments are considered improper, but not all improper payments result from fraud.
The Trump administration has launched aggressive efforts to identify and prosecute fraud across federal programs over the past year.
Vice President JD Vance announced last Thursday during a White House briefing the creation of a new assistant attorney general role focused on combating fraud involving taxpayer dollars.
The Trump administration has focused particular attention on Minnesota, where Bessent announced several anti-fraud initiatives earlier this month.
“President Trump has instructed the administration to bring accountability for the hardworking people of Minnesota,” Bessent said. “Under Democratic Governor Tim Walz, welfare fraud has spiraled out of control. Billions of dollars intended for feeding hungry children, housing disabled seniors, and providing services for children in need were diverted to benefit Somali fraud rings.”
The fraud allegations have focused largely on organizations linked to Minnesota’s Somali community and gained national attention after an independent journalist published a video that showed numerous federally funded child care facilities that were completely empty.
The FBI opened an investigation late last month following the video’s release.