Government Spending

Bad Payments Rise in High Risk Federal Programs

Error-ridden programs paid out $125 billion in improper payments last year.


It's another bad year for bad spending in Washington. The government once again spent more than $100 billion of your hard earned dollars on payments that shouldn't have been made in programs that are known sources of waste and abuse. Indeed, bad payouts

Improper payments, the term of art for this particular form of waste, in 13 federal programs labeled high-risk jumped by $19 billion in the last fiscal year, sources tell Bloomberg Business. According to the report, improper payments in high risk programs came in at $106 billion last year, or 3.5 percent of the total spending in the programs. This year, improper payments are said to come in at $125 billion, or 4 percent of the total. Bad payments, in other words, are growing faster than the programs that are making them. 

There's no information yet on precisely how the botched spending is divided between programs, but as Bloomberg's report notes, the biggest offenders have previously been health care programs Medicare and Medicaid, as well as the Earned Income Tax Credit (EITC) subsidy for low-income individuals.

As Veronique de Rugy and Jason Fichtner of the Mercatus Center noted last month in a report on payment errors in federal programs, Medicare's improper payment rate was 10.1 percent, while Medicaid's was a comparatively modest 5.8 percent.

Medicare is the biggest spender in dollar terms, which is mostly a reminder of how huge and budget-consuming the nation's single-payer-for-seniors program currently is. But the biggest offender in percentage terms is the EITC, which shells out 24 percent of its total payments improperly. Basically, a quarter of the spending that happens on that program shouldn't have happened or, at a minimum, shouldn't have happened in the way that it did.

You can see the exact amounts and percentages in a chart handily compiled by de Rugy and Fichtner.

Mercatus Center

None of this is particularly new, of course; these programs are labeled "high risk" because they are serial offenders, blowing billions on bad payments year after year. Medicare was designated by the Government Accountability Office (GAO) as a program at a high risk for fraud back in 1990. Medicaid has been on the watch list since 2003. Every so often, administrators trot out a novel fraud-prevention program, and sometimes there are scattered small scale successes, but for the most part, these programs continue to pay for fraud and abuse year after year, with very little overall improvement. And as the preview of this year's numbers suggests, it's often the case that things get worse, not better. 

NEXT: 35 Percent of Americans Want Pension Reform to be "Top Priority" for Govt

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  1. Let’s not forget the $5.3 billion given out in fraudulent tax refunds (mostly due to ID theft and the inability of the IRS to cross-reference the veracity of returns before they mail out a check) in 2013.

    2014 numbers will probably be worse.…..tID=394274

  2. It makes sense. I mean, we’re probably paying out more disability money to fraudulent claimants than to actual disabled people, so why not do the same everywhere else? That was the whole point of the bailouts and the stimulus, right?

  3. Such a good picture….with no alt-text 🙁

    1. “Scrooge McDuck about to wrench his back in Vail, Colorado.”

  4. Is it the Koch brothers doing?

  5. Yah, well, libertarians want child slavery!

    When confronted with the question of whether or not discouraging vaccination is a threat to children’s health, Paul launched into a meandering consideration of public health and liberty that concluded with the assertion that “the state doesn’t own your children, parents own the children.”

    Paul’s bizarre rendering of the parent-child relationship as unilateral ownership is not the most unhinged thing a well-regarded libertarian has ever said about children. In fact, libertarians exhibit a historical inability to adequately explain how parents should relate to their children, why parents are obligated (if at all) to care for their children, and whether or not moral nations should require that parents feed, clothe, and shelter their children within a libertarian frame.


    Complaining of laws that prevent, among other things, second-graders from operating forklifts, Rockwell opines that “we are still saddled with anti-work laws that stunt young people’s lives.” Like Rand Paul on vaccine mandates, Rockwell sees child labor laws as government overreach. “In a free and decent society, decisions about these matters are for parents, not bureaucrats,” Rockwell writes, referring to whether or not schoolchildren should be breadwinners.

    1. Well, I don’t think it should be mandatory that orphan children polish monocles. That’s only for when there’s not more rewarding slave labor available for them.

    2. In fact, libertarians exhibit a historical inability to adequately explain how parents should relate to their children, why parents are obligated (if at all) to care for their children, and whether or not moral nations should require that parents feed, clothe, and shelter their children within a libertarian frame.

      Ummm…maybe that’s because the explanation is obvious to anyone who isn’t a sociopath; parents take care of their children because they love them.

    3. Unrelated, but still interesting:…..s-he-lying

      “Brian Williams Is Being Punished for Something Every Human Does”

      It was just a matter of time. Remember, it isn’t a problem to lie if you are One of Them. It is never a problem to lie if it makes the Left look good.

  6. Who the hell is going to get into the small seams of ore in my silver mine, if not tiny child laborers?

    Must I rely on robots?

    1. I suggest you switch to injecting harsh chemicals directly into the earth to loosen up the silver deposits, then just waiting for the ground water to carry the chemicals away.

      1. Fuck that shit. That’s no fun at all. That’s what dynamite and heavy mining equipment is for. If you can’t rape Gaia for profit the fun way, it’s not worth doing!

        1. Anyway, save the harsh chemicals to inject directly into the tiny children laborers. If you are lucky they will sprout extra arms to polish more monocles at once.

  7. How do I get my piece of this action?

    1. Donate millions to the campaign of a corrupt politician. You’ll be good to go.

      1. If I had millions of dollars to throw away like that I wouldn’t need to bother with nickel-and-dime welfare fraud.

        1. You start with nickel-and-dime welfare fraud with the risk of arrest and then save up enough to where you can legally bribe politicians for subsidies.

  8. Obviously, these totals come from projecting audited samples against the entire cost of these programs. Tell you what: offer bounties of, say, 20% of amount recovered, and let loose the legions of retired bean counters, criminal defense attorneys, burnt out LP members, and teabaggers with time on their hands to root out fraud.
    I can spare a day or two each week to shadow the disabled guy who water skis or the medical device company operating out of a rent-a-mail box that bills $10 million a month to Medicare.

    1. Every state has a Medicare fraud control unit stuffed with lawyers and investigators (who get to carry guns!)*, and Medicare is still stuffed with fraud.

      *(I interned at an MFCU. They loved to wear their guns around the office, like some crazy indicted doctor was going to burst past security and they’d have to take him down)

    2. You would think that Medicare and Medicaid would love that idea. But, you would be wrong. I have a friend that does pretty much what you are proposing for a single hospital in Central Texas. He digs through their books and recovers erroneous payments. His only compensation is a 10% bounty on what he recovers. He makes a crazy amount of money too (mid 6 figures), but I digress. So, him and his partner wanted to expand so they pitched their idea to CMS. Now, I wasn’t there so I can’t say for sure that it happened this way, but I do trust the guy. Anyway, he says that the person they met with told them that they didn’t want to recover any money. That, if they did, they would just have to spend it again. Maybe it’s just confirmation bias, but I had similar experience in the military. My squadron would go on spending / flying sprees at the end of the fiscal year to make sure our maintenance and flight hour budgets didn’t go down.

      1. Similar things happen at the CDC? back when flat screen TVs were just becoming popular, the conference rooms get new big flat screen TVs.

      2. When I did supply for deck department on an LST in the Navy I caught hell in my first quarter for not spending every last penny and requesting more funds. I also caught hell for buying identical shackles at a supply store in town for $1.69 instead of $22.00 through the supply system. It was pretty hard to spend $90,000 (1983) per quarter, since major purchases (hawsers, wire rope, fight deck equipment, etc…) were covered by other funds, but I managed to figure it out.

        1. Once I was told by my division officer to throw a completely unused $3,000 (1983) steam cleaner over the side. I figured he just meant get rid of it so I gave it to the Marines to clean their LVTs. He found out and made me get it back and deep-six it.

  9. The EITC is just money for the taking.

    And 16 percent on school lunch improper payments? What, did the schools buy hot dogs with the money instead of kale dogs?

    1. Kale dogs cannot be a thing! No!

  10. One would think that $100B of government spending could do a lot of good in the Lefities’ world. May I assume they’re up in arms about this waste, and want to correct it so that the general welfare may be improved? Bueller? Bueller?

    1. Statists simply do not understand the concept of money; everything belongs to the State because it represents everybody. Monetary theft can only be fraud when it involves making money for oneself and not surrendering it to the government, either in whole or in what little part they deign to leave you.

      Seriously, I mean this. I consider money and prices to be the greatest invention of all times. It makes real markets possible beyond barter, and enables progress beyond a society of farmers and rulers.

      And then statists come along and treat prices as control levers instead of information indicators, and my brain weeps at their willful ignorance and the damage they do.

        1. I saw a poster on a university campus about a month ago, that obviously was hung on the wall by some leftist. It depicted a beehive and some happy bees buzzing around it. At the bottom was the caption:

          That which is not good for the hive, cannot be good for the bee.

          So, the answer is no, ProL, we’re not ants, we’re bees.

          1. Reducing man to the level of an insect. Yes, that sounds about right for the leftist program.

          2. That which is not good for the hive body, cannot be good for the bee cell.

            Leftists are trying to reinvent pre-WWII corporatism.

  11. For comparison, does anyone know what fraud figures are for private industry, I suppose mainly insurance companies and banks?

  12. Here are some words, strung together

    Even Ayn Rand detested libertarians, whom she identified with hippies and considered irrational, ineffectual opponents of true freedom. When it comes to polling libertarians, it certainly appears that they aren’t quite as socially liberal as their nomenclature might suggest. In a Pew survey last year, for example, libertarians polled as plenty supportive of police intervention in citizens’ daily lives, showing slightly greater support for stop-and-frisk policies than the general population:

    A baffling quarter of libertarians surveyed believe homosexuality should be discouraged, and 59 percent were opposed to same-sex marriage in a survey conducted by the Public Religion Research Institute in 2013. Meanwhile, the inexplicable libertarian appreciation for cops frisking people at will is mirrored by an equally bizarre fondness for U.S. military intervention in global affairs.

    All this while supporting privacy, though perhaps only for themselves, and not for those on the receiving end of police shakedowns and U.S. drones. The only thing libertarians really seem to agree with their label on is the subject of poverty, with 57 percent claiming that government aid to poor people does more harm than good, and 56 percent responding that government regulation of business does more harm than good.

    1. What fucking bullshit. I mean, we’ve got a good sample of libertarians right here, who are all over the place on various issues, but how many are pro-cop? Two? Even John, who in some respects is more of a conservative/libertarian, hates cops. And libertarianism has a major anti-interventionist streak. We’re rather well-known for that.

      I could see some questions not being clear, like the one about marriage. After all, when gay marriage first became a big political issue, plenty here first questioned why government should be involved in marriage at all. But this smells like total nonsense.

      1. It’s just propaganda to …. oh fuck, I just clicked the link. It’s New Republic, that’s all the explanation necessary. No one takes them seriously, they’ve devolved to the level that they’re pretty much the left wing version of WND.

        1. How can you tell? The mainstream left used to give lip service to most core American values, like at least somewhat limited government, civil liberties, and kinda-sorta free markets, but that’s not at all the case today. We’re seeing a large number of full-blown socialists, if not communists, and perhaps even a greater number of people who seem to want a totalitarian government in the U.S.

          1. The left always devolves into some sort of totalitarianism. That’s the end result. Paradise is so good that it must be forced upon a society, by any means necessary.

            1. They err in not accepting that the base unit of morality, ethics, happiness, creation, wealth, etc. is the individual.

      2. The precocious 11-year-old girl known as Elizabeth Stoker Bruenig (honestly, take a look at her pictures and tell me that she looks like someone who has finished puberty) has made an entire literary career out of shadow-boxing her conception of what she thinks libertarianism to be, rather that what it actually is.

        Go to her blog and find the post where she shits all over herself while completely misunderstanding the NAP. In the same argument she claims that libertarian morality would require someone to elect not to save someone from a burning building.

        Her breadth and depth of ignorance can only measured in parsecs. Then again, she’s only 11 years old.

        1. You know, I’m morally superior because I believe I’m responsible for my actions. Not the state. Not to mention that I don’t think the collective acting immorally magically becomes moral because a lot of people are okay with it.

        2. I agree, but frankly her article titles look eerily similar to “some” members of the Reason staff…

      3. 32% of non-libertarians described themselves as libertarians. More than a grain of salt is needed with this poll.

    2. Pew Research said “Libertarians are those who say term describes them well, and
      know what it means (11% of public).”


  13. If the New Republic doesn’t know what libertarianism is, who does?

    1. LOL, really. I swear a day doesn’t go by where there isn’t some prog somewhere delivering a pompous lecture on what “true libertarianism” consists of.

      1. Libertarianism means. . .never having to say you’re sorry.

      2. I was in a bookstore last year where one customer was discouraging another customer from purchasing Walden/Civil Disobedience because Thoreau was a crazy libertarian.

  14. The fraud-industrial complex seems to be running in high gear.

    1. That’s what it’s all about. For those who benefit, anyway.

  15. OK, yes, government waste. BUT, I want to know what percentage of this “Waste” is actual fraud and what is some poor schmoo who could qualify for a payout not making it all the way through the labyrinth. I’m not saying that isn’t a problem, but I would like some assurance that calling for a tightening of the controls is not going to result in a bunch of scalp-hunting prosecutors going after people who made honest and (considering the opacity of government regulations) understandable mistakes.

  16. Seriously, I mean this. I consider money and prices to be the greatest invention of all times. It makes real markets possible beyond barter, and enables progress beyond a society of farmers and rulers.


    And this is what pisses me off so much about the Fed. They have completely distorted the price signals in the market for money, investment, and financial risk.

  17. What are we, ants?


    1. I am not a number; I am a free man! [Runs away from a giant beach ball/drone.]



  19. “Error-ridden programs paid out $125 billion in improper payments last year.”

    Someone check my math here. But, isn’t that number more than a quarter of the budget deficit? So, basically we are just pissing away a quarter of all the money we borrow, with interest I might add. Man, I see why Nancy said “the cupboard is bare’ … because there is nothing left to cut”. Obviously, there is nothing left to cut.

  20. my best friend’s ex-wife makes $65 an hour on the computer . She has been without a job for seven months but last month her check was $13740 just working on the computer for a few hours. try this…………..


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