Praise be to DOGE for yelling about what we knew already. Seriously, yelling helps.
DOGE Is Searching for Wasteful Spending. It Isn’t Hard to Find.
Agencies already self identify billions in improper payments. Doing something about it is the hard part.
The benefit to yelling is the stench is now so bad that perhaps we fix something.
The Wall Street Journal reports DOGE Is Searching for Wasteful Spending. It Isn’t Hard to Find. That is a free link courtesy of the WSJ, emphasis mine.
It is one of Washington’s most persistent and challenging problems: The federal government misspends at least $100 billion each year out of its multitrillion-dollar budget. Identifying the wasteful outlays isn’t the hardest part; it is actually doing something about it.
Every year, agency reports posted online document billions in improper payments, which include fraud but also underpayments, duplicate payments, payments to ineligible recipients or for ineligible goods or services. According to the Government Accountability Office, they can also include correctly paid amounts that didn’t follow regulations, such as a contract missing a required signature.
Top Lines
In the most recent fiscal year, which ended in September 2024, the agencies that reported their improper payments identified $149 billion in such outlays, or 3.7% of payments that totaled $4.1 trillion. The reports cover a large chunk of total government spending, which the Congressional Budget Office put at $6.75 trillion last fiscal year.
Last year, more than 90% of improper payments were overpayments.
Biggest Improper Spenders
In 2024, the median accuracy rate for payments across 68 programs was 95%, with an overall rate of 96%. Some high-spending programs rank among the biggest sources of improper payments, even with accuracy rates over 94%.
Improper payments mushroomed during the Covid-19 pandemic, when Congress, the first Trump administration and the Biden administration pushed out new relief programs and expanded existing ones to cushion the shock. Some required little documentation and had weak fraud protection.
Improper payments have fallen 46% since 2021 but remain above 2019 levels, in part because spending grows with inflation, the economy and the population. As a share of outlays, improper payments rose from 2.9% in 2019 to 7.1% in 2021 before falling to 3.7% last year.
Why waste persists
Agencies have tried to recover some overpayments. In 2024, they targeted $33.5 billion as potentially recoverable and succeeded with about two-thirds—$22.6 billion, including some from previous years.
Danielle Brian, executive director of the Project on Government Oversight, an independent watchdog group, said one of the largest sources of overspending—and one of the toughest to grapple with—is how the government handles contracts. Since the federal government is often the only customer of a certain product or service, such as weapons, it is difficult to know what price to pay.
That “allows for price gouging,” Brian said. “If that could get wrestled to the ground, that would have an extraordinary impact on the federal budget.” And since big federal contractors have a lot of sway on Capitol Hill, the methodology has proved hard to change.
Where does DOGE come in?
In addition to targeting bloat, President Trump and Elon Musk have put a big emphasis on rooting out fraud. The Musk-led Department of Government Efficiency says it has amassed $55 billion in estimated savings as of Feb. 17 through a combination of fraud detection, contract and lease renegotiations, grant cancellations, asset sales, workforce reductions and regulatory savings. About 20% of those savings come from actions taken on contracts, DOGE said on its website.
DOGE’s purported top savings come from the U.S. Agency for International Development, which the Trump administration has gutted. It is not a big source of improper payments.
The initial actions DOGE has taken could change as it focuses on the government’s largest programs, such as healthcare and military spending. Improper payments don’t always mean fraud was involved. Agencies tallied $7.2 billion—or 5% of improper payments—as court-confirmed fraud in 2024.
A federal judge in a lawsuit over the administration’s freeze of federal funds made a similar point in a recent ruling. “The Defendants now plea that they are just trying to root out fraud,” U.S. District Judge John McConnell Jr. in Rhode Island wrote. “But the freezes in effect now were a result of the broad categorical order, not a specific finding of possible fraud.”
What won’t put a big dent in the federal budget? Firing government workers, which so far has been one of the main objectives of DOGE, Brian said.
“The entire cost of the federal workforce is a tiny fraction of the total cost of the federal budget,” she said. Legal observers have raised concerns about Musk’s efforts to shrink the size of the government, since the power of the purse lies in the hands of Congress.
There is much more in the report that merits a closer look.
My interpretation is that this is all good, but likely not as significant as it looks at first glance.
Much of it is one-time or at least diminishing savings given that pandemic-related fraud has already stopped.
On top of that, clawbacks recovered about a third of what did go out.
I agree with the Journal that regarding labor force cutbacks and the freeze in Federal funds. It’s just not that big in the grand scheme of things.
Perhaps an Appeals Court overrules the USAID freeze, but if not, case-by-case was a much better approach.
Besides, spending is ultimately up to Congress, not DOGE. What Congress cuts (or adds) remains to be seen.
Still, I am rooting for DOGE, whether it seems that way or not. I simply prefer going about things in a legally sound way so they don’t get tied up in courts.
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February 20, 2025: How Will 77,000 DOGE Terminations Impact Unemployment and Jobs?
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77,000 * $150,000 = $11,550,000,000. That’s $11.6 billion, assuming Congress comes up with matching cuts. Don’t count on it.