Report Details How Inept Federal Agencies Lose $100 Billion Of Taxpayers’ Money Annually


Federal agencies paid out $688 billion of taxpayer money in improper payments between 2002 and 2012. And even though the agencies have known all along that the payments were being made in error, their own accounting indicates that $100 billion in improper payments is still on the books.

Data assembled by The Fiscal Times highlight massive losses reported by the Office of Management and Budget, which serves as the fiscal watchdog for the executive branch.

“In 2012 alone, the Office of Management and Budget gathered data on just 13 high-error programs in the federal government, and determined that they made a combined $101.3 billion in improper payments,” the Times reported. “To put that in perspective, that’s almost $16 billion more than the highly controversial budget sequester wound up cutting from government spending in 2013.”

An improper payment is any money spent by the government resulting from accounting errors and other fiscal mistakes made by the government or from mistakes made by people and organizations filing government claims.

That the agencies are aware of the wasteful spending has little impact on the government’s ability to recover the lost funds, according to the report. Despite making $101.3 billion worth of improper payments in 2012 alone and a similarly exorbitant amount the previous year, the government was able to recover only $2 billion of the money it shouldn’t have spent in 2011 and 2012.

For 2013, the agency most responsible for improper payment waste was reportedly the Department of Health and Human Services. The agency spent $55.9 billion broken down thusly: $33.2 billion in erroneous and fraudulent payouts for Medicare’s Fee for Service program, $8.3 billion in improper spending for Medicare Part D and C, and $13.5 billion for specious Medicaid expenses.

The Times report awarded the prize for the highest frequency of payout errors to the Internal Revenue Service, which recorded a 22.7 percent rate of error in Earned Income Tax Credit payouts. The payouts cost the Federal government $12.6 billion in revenue.

Also noted in the report is $6.2 billion spent by the Department of Labor on fraud and overcompensation to individuals receiving unemployment benefits. The agency is reportedly able to recover about 25 percent of unemployment overpayments.

In a White House blog post from December, Deputy Director for Management of the Office of Management and Budget Beth Cobert said that officials have made modest strides in lessening improper payments and continue to look for ways to shrink the costly problem.

“OMB has also begun conducting a comprehensive analysis of agency-specific corrective actions to identify programs with the highest return-on-investment or potential for substantially reducing improper payments,” she wrote. “This analysis will help shape guidance on improper payments to be released in the months ahead.”

The strongest incentive to reduce improper payments, however, could come from legislation that punishes agencies that pay out money they shouldn’t and fail to recoup losses. But partisan squabbling is always a hindrance to Congressional efforts to cut waste, no matter how sensible they are, at all levels of government.

As Senator Tom Coburn (R-Okla.) told Senators during a hearing following the release of his most recent “Waste Book,” “The problem isn’t that we don’t know what the problem is. The problem is that we [political leaders] don’t act.”

Coburn’s publication revealed $30 billion in wasteful government spending on 100 projects in 2013.

Personal Liberty

Sam Rolley

Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After covering community news and politics, Rolley took a position at Personal Liberty Media Group where could better hone his focus on his true passions: national politics and liberty issues. In his daily columns and reports, Rolley works to help readers understand which lies are perpetuated by the mainstream media and to stay on top of issues ignored by more conventional media outlets.

Join the Discussion

Comment Policy: We encourage an open discussion with a wide range of viewpoints, even extreme ones, but we will not tolerate racism, profanity or slanderous comments toward the author(s) or comment participants. Make your case passionately, but civilly. Please don't stoop to name calling. We use filters for spam protection. If your comment does not appear, it is likely because it violates the above policy or contains links or language typical of spam. We reserve the right to remove comments at our discretion.