Forget Waste, Fraud and Abuse. Focus on Improper Payments

Why measurable improper payments beat a familiar but slippery budget catchphrase

“Waste, fraud and abuse” is one of Washington’s safest promises. It sounds tough, offends almost no one and suggests that better government is mostly a matter of finding obviously bad spending.

It’s what the Department of Government Efficiency (DOGE) was founded on. It’s a major source of savings in budget resolutions. And the president has ordered agencies to stop it and created a new task force to eliminate it.

But little has been accomplished to show for it.

The reason is straightforward: Waste, fraud and abuse are difficult categories to define, challenging to measure and costly for politicians to monitor.

In other words, the phrase “waste, fraud and abuse” is politically poignant but effectively meaningless. Until better measurements become available, policymakers should retire this popular catchphrase and focus their attention exclusively on improper payments. Doing so would replace vague promises with measurable accountability for how taxpayer dollars are spent.

The Problems with “Waste, Fraud, and Abuse”

Beginning first with fraud: Fraud is relatively well-defined as “willful misrepresentation,” but it is difficult to measure in a way that is useful for ongoing oversight. Looking at fiscal years (FY) 2018–22, the Government Accountability Office (GAO) estimated that the government incurred annual losses of between $233 billion and $521 billion to fraud.

But as GAO explained in that report, this estimate is not predictive. The actual level of future fraud depends on a variety of factors including future threats and new emergency spending. It also overlaps with the COVID years, when emergency programs experienced substantial fraud.

Unfortunately, as GAO notes, “It is not possible to break out a subset of our government-wide estimate to describe pandemic program fraud.” Consequently, it is unlikely that GAO’s estimated fraud range represents either pre- or post-COVID norms.

The inherently subjective nature of waste and abuse makes them even more problematic metrics than fraud. That does not mean questionable spending never exists; it means there is no neutral or consistently measurable standard for identifying it across the federal government. Further, spending that appears wasteful to taxpayers broadly is not wasteful to the beneficiaries of that spending.

For every obvious example of abuse, such as a $10,000 toilet seat cover, there are numerous high-cost contracts that require judgements Congress is poorly positioned to make about quality, necessity and tradeoffs. Other seemingly clear-cut examples of waste—such as $240,000 in funding for a Pakistani cartoon climate series or $375,000 for a dance festival—exist because there are government officials, including politicians, who choose to fund them.

This subjectivity makes impartial and consistent measurement of waste and abuse effectively impossible. Combined with its lack of reliable estimates of fraud, Congress is left with little reason to rely on the phrase “waste, fraud and abuse.” This is where improper payments become handy.

What Does Improper Payment Data Tell Us?

In contrast to the limitations of “waste, fraud and abuse,” improper payments are objectively measurable, breakable into categories and reported regularly—providing a useful operational metric for policymakers. Improper payments include the following:

• overpayments and underpayments, which are payments made in the wrong amount or to the wrong person

• technically improper payments, which are those that fail to meet statutory or regulatory requirements even if they are for the right amount and to the right person

• unknown payments, when an agency cannot determine whether payment was proper or not

Federal agencies estimated $185.8 billion in improper payments in FY 2025, with roughly 82% attributable to overpayments. Since FY 2004, estimated improper payments have totaled $3 trillion, as shown in Figure 1.

Overpayments have comprised the vast majority of improper payments. Between FY 2015 and FY 2018, overpayments accounted for 92.3% of all improper payments, and since FY 2021 they have averaged 82.4%. The exceptions are FY 2019 and FY 2020, when agencies first began recording improper payments as “unknown” and “technically improper.” This breakdown is shown in Figure 2, starting in FY 2015.

The improper payments data also points to where payment integrity breaks down. Starting in FY 2021, Office of Management and Budget guidance instructed agencies to categorize improper payments into one of the following root causes:

1. when the required data or information to verify eligibility do not exist

2. the data exist but are not accessible to the agency or payor

3. the data exist and are accessible, but the agency or payor fails to access them

4. insufficient documentation, such as from states, vendors, or applicants

5. technically improper payments

These root causes are illustrated in Figure 3.

Since 2021, the largest cause of improper payments has been failure to access the data or information necessary to verify eligibility, averaging $142 billion in improper payments per year, or $712 billion total over five years, equal to 64% of all improper payments.

The second largest cause of improper payments has been inability to access data needed to verify eligibility, at $27.4 billion per year ($137 billion total or 12% of all improper payments).

The third and fourth largest causes were substantially smaller: data not existing at $23.9 billion per year ($120 billion total or 11%) and insufficient documentation at $21.7 billion per year ($109 billion total or 10%), respectively. Technically improper payments averaged just $6.8 billion per year ($33.9 billion or 3%).

Failure to access data plays an even greater role when looking just at overpayments, as visualized in Figure 4. In FY 2025, 74% of all overpayments resulted from a failure to access the necessary data to verify payment accuracy, compared to just 8% caused by an inability to access the necessary data. Since FY 2021, failure to access data has accounted for $671 billion in overpayments, equal to 73% of all overpayments and 60.3% of all improper payments.

Overpayments can be further classified by whether the payment was “within agency control” or “outside agency control”—that is, whether it was within the agency’s power to prevent the improper payment or not. In FY 2025, 93% of all overpayments were categorized as being outside of agency control compared to just 7% within agency control.

And of course, we can categorize improper payments by federal program, as in Figure 5. The bulk of improper payments in FY 2025, $126 billion or 68%, were concentrated in just a handful of programs: Medicare, Medicaid, the Earned Income Tax Credit and SNAP. The remaining $60 billion were spread across 58 other programs.

Conclusion

In total, improper payment estimates tell us that:

1. improper payments are substantial and rising

2. most improper payments are overpayments

3. they are mostly due to a failure to access existing and accessible data or information

4. they are almost entirely outside of agency control

5. they are concentrated in a handful of programs

Congress should spend less time promising to eliminate “waste, fraud and abuse” and more time focusing on the payment errors agencies already estimate, categorize and report. Improper payments are not a perfect measure, and they should not be treated as the same thing as fraud or guaranteed savings. But they offer a better starting point than the usual catchphrase. They are measurable, concentrated in a small number of programs and often tied to a failure to use information that already exists. That makes improper payments a more useful target for oversight than a phrase that is politically useful precisely because it can mean almost anything.

In subsequent posts I will discuss the limitations of improper payment estimates, explore additional information we can gather beyond the aggregate data, and attempt to assign responsibility over improper payments.