Contrary to What Trump Said, Even DOGE Does Not Claim To Have Identified 'Hundreds of Billions' in Fraud

The president's assertion is divorced from reality, and so are the "estimated savings" touted by Elon Musk.

"We found hundreds of billions of dollars of fraud," President Donald Trump claimed in his speech to Congress on Tuesday night, referring to the cost-cutting efforts of the so-called Department of Government Efficiency (DOGE). That figure is far bigger than the total "estimated savings" reported by DOGE itself, only part of which it describes as a result of "fraud and improper payment deletion." And DOGE's estimate is itself dubious in light of the many errors that journalists and analysts have discovered in its published data—so dubious that Manhattan Institute budget expert Jessica Riedl describes the project as "government spending-cut theater."

Last year, the Government Accountability Office estimated that "the federal government could lose between $233 billion and $521 billion annually to fraud." So it is theoretically possible to do what Trump claims. But it would not be realistic to expect such results just a few months after getting started, and DOGE does not claim to have identified anything like "hundreds of billions of dollars" in fraud.

According to the DOGE website, the project so far has found $105 billion in "estimated savings," consisting of "asset sales, contract/lease cancellations and renegotiations, fraud and improper payment deletion, grant cancellations, interest savings, programmatic changes, regulatory savings, and workforce reductions." DOGE does not say how much of that total is attributable to "fraud and improper payment deletion," but it is obviously much less than "hundreds of billions of dollars."

One problem with DOGE's estimate is that it does not distinguish between one-time savings and annual savings. When it comes to reining in federal borrowing, it's the latter that really matters. Another problem is that much of DOGE's calculation remains mysterious. "Regulatory savings," for instance, are not specified. And while lifting unnecessary burdens on businesses would certainly be welcome, the resulting private savings would not amount to a federal spending cut.

The most fleshed-out components of the estimated savings are grant and contract cancellations, which DOGE has touted on its website and X account. But news outlets have repeatedly identified embarrassing and consequential mistakes in those numbers, including contracts that had not been awarded yet, contracts that were not actually canceled, contracts that were canceled before Trump took office, contracts that were counted multiple times, conflation of contract caps with actual spending, the inclusion of past spending in estimates of future savings, and overvaluation of contracts, such as the notorious data entry error that transformed an $8 million Immigration and Customs Enforcement contract into an $8 billion cut.

What about "workforce reductions"? The Office of Personnel Management reports that 75,000 or so employees accepted the Trump administration's "deferred resignation" offer, agreeing to quit in exchange for "a severance package of eight months of pay and benefits." Those departing workers represent about 3 percent of the federal government's civilian employees, who together cost about $300 billion a year in salaries and benefits. The annual savings therefore could amount to something like $10 billion—one-tenth the savings that Elon Musk, the unofficial head of DOGE, projected.

Layoffs of probationary employees could add to the savings. Those employees represent about 11 percent of the federal government's civilian work force, so sacking all of them might generate annual savings in the neighborhood of $30 billion. But as Riedl notes, the potential savings even from "a massive reduction in the federal work force" are "smaller than commonly believed." If the Trump administration managed to eliminate a quarter of federal civilian employees, which would be a tall order, it would "save around $75 billion" a year, she says, "or a little more than 1 percent of federal spending—and many of those savings would likely be reprogrammed into new federal contractors to plug the gaps."

So far, in any case, the Trump administration has not achieved anything close to such personnel savings, and it's not clear how many job cuts DOGE included in its calculation of "workforce reductions." Overall, Riedl said in a recent interview with New York Times columnist David French, DOGE's efforts look like "a distraction" from serious attempts to deal with the federal government's looming fiscal crisis.

At that point, DOGE was claiming $55 billion in total savings. But "most of what is claimed to be spending cuts are just accounting errors," Riedl said. She thought the actual number was "perhaps $2 billion," or "one-thirty-fifth of 1 percent of the federal budget, otherwise known as budget dust."

That figure corresponds with NPR's February 19 estimate of savings from confirmed contract cancellations out of $16.5 billion in contract savings that DOGE was claiming. If we credit some of the unspecified savings that also figure in DOGE's calculation, the total may be substantially higher than $2 billion. Still, if Riedl is right that DOGE's advertised savings are off by this much, it is hard to see how Musk can possibly hit his avowed target of reducing annual spending by $1 trillion (which always seemed improbable) before DOGE sunsets on July 4, 2026.

During last night's speech, Reason's Christian Britschgi notes, "Trump's government-cutting zeal was focused squarely on comparatively small pots of money spent on ungrateful foreigners," which "pale in comparison to the portions of government Trump either is happy to keep around or is eager to expand." That includes major drivers of federal borrowing such as Social Security and Medicare, which Trump has promised to leave untouched, and military spending, which he seems bent on boosting. Although Defense Secretary Pete Hegseth is trying to identify savings in the Pentagon budget, that money is already earmarked for other military purposes.

Riedl sees a similar problem with the Trump administration's cost-cutting priorities. She had hoped that DOGE would make a serious attempt to tackle "waste fraud, and abuse," as Trump has described its mission. While such efforts would not be nearly enough on their own to eliminate the annual budget deficit or control the ever-expanding national debt, Riedl wrote last November, "DOGE can potentially save taxpayers hundreds of billions of dollars by reducing government waste and improving program efficiency." But she added that such a project would be "hard work" requiring "deep expertise in public administration across multiple subfields."

Instead, Riedl told French, DOGE is taking the easy way out. "The targets they're going after are not where the money is," she said. Targets such as "DEI [diversity, equity, and inclusion] contracts, Politico Pro subscriptions, federal employees, [and] foreign aid…hit a lot of cultural touchstones for a lot of conservatives," she noted, but they don't amount to much in fiscal terms. As Riedl sees it, "DOGE is really a distraction from the spending increases and tax cuts" that Congress seems determined to approve.

As Britschgi notes, "the same House members who applauded Trump's list of wasteful spending…just passed a continuing resolution filled with deficit spending." That plan, Reason's Eric Boehm reported, "will pave the way for trillions of dollars in additional borrowing over the next 10 years." In this context, DOGE is a tiny fig leaf that cannot begin to cover the federal government's naked fiscal incontinence.