Combating Improper Payments in Federal Spending

Improper payments have long been an avoidable drain on the federal budget and are often prominently featured as an example of wasteful spending.  It is therefore not surprising that in the August 12, 2025, Government Accountability Office (GAO) updated report on open recommendations to improve government operations, reducing fraud and improper payments was first on the list.  GAO reported that in fiscal year (FY) 2024, the federal government squandered about $162 billion across 68 programs in improper payments.

Federal agencies have been obligated to report problems with federal improper payments, which either should not have been made or were made in an incorrect amount, since the passage of the Improper Payments Information Act of 2002.  Since then, four more bills have been signed into law that are supposed to reduce improper payments.  Nonetheless, GAO reported that the total amount of improper payments since FY 2003 is about $2.8 trillion, and that total is likely higher since a limited number of programs report that information.  Five programs accounted for 75 percent of the improper payments in FY 2024; Medicare ($54.3 billion) and Medicaid ($31.1 billion) combined were $85.4 billion, or 52.7 percent of the $162 billion total.

GAO recommended that the Department of the Treasury employ more efficient data searching tools and expand fraud estimation for high-risk program areas in cooperation with the Office of Management and Budget and inspectors general.  Other efforts to reduce improper payments include the introduction of S. 1991 and H.R. 4311, the Delivering on Government Efficiency (DOGE) Act,  introduced by Sen. Joni Ernst (R-Iowa) and Rep. Aaron Bean (R-Fla.), which includes additional mechanisms for preventing fraud and improper payments.  The Improper Payments Transparency Act, S. 747 and H.R. 1771, introduced by Sens. Pete Ricketts (R-Neb.) and Jacky Rosen (D-Nev.), and Rep. Rudy Yakym (R-Ind.), would mandate executive agencies to provide more detailed reports on the nature of improper payments made under their jurisdiction.

The scourge of improper payments persists across the federal government despite repeated executive branch and legislative efforts to cut them down.  Taxpayers should be somewhat encouraged by the new attempts to reduce improper payments but would be far more satisfied if there was a substantial reduction over the next several years.