Government fraud is America’s biggest scam. Stopping it is key to our future.
President-elect Donald Trump has announced the creation of a Department of Government Efficiency, tapping Elon Musk and Vivek Ramaswamy to lead this bold initiative.
As the new administration enters the White House, it faces an under-the-radar crisis that dwarfs most budget debates. While Washington debates potential program cuts, organized criminals are orchestrating one of the largest ongoing thefts in history — exploiting outdated government systems to siphon hundreds of billions annually from American taxpayers, particularly from federal programs like SNAP.
With the national debt exceeding $35 trillion and debt payments now surpassing defense spending, the federal government’s current fiscal trajectory is unsustainable. Collecting $4 trillion annually while spending $6 trillion has created a pattern that cannot continue without dire consequences.
Numbers from the Government Accountability Office reveal the staggering reality: Criminal groups — both domestic and international — have turned government programs into pipelines for illegal activities, including drug trafficking, child exploitation and even election interference.
In the post-COVID era, these groups increasingly target funds intended for American citizens, treating them as easy prey. Every tax dollar lost to fraud is a dollar that could have been invested in healthcare, infrastructure, or economic growth.
The root cause lies in convoluted systems that invite misuse. Take SNAP, which operates under a 10,000-page rulebook — a level of complexity unimaginable in the private sector.
While companies like Amazon securely process billions of transactions daily, government agencies still struggle with basic verification steps that could prevent fraud. This inefficiency not only wastes taxpayer dollars but also directly funds criminal and terrorist activities, posing risks to national security.
We stand at a pivotal moment where technology could change everything.
Advanced artificial intelligence and data analytics allow fraud to be detected and prevented at its source, moving beyond the outdated "pay-and-chase" model where funds are disbursed first and fraud is addressed later. Tools like asset verification, front-end identity checks, and real-time validation of self-reported information can enable the government to operate with the security and efficiency of the private sector, creating a seamless experience for users.
Imagine interacting with government programs as effortlessly as using a top tech platform. Advanced technology could reduce the improper payment and fraud rate from 20 percent to as low as 3 percent, saving hundreds of billions of dollars annually. However, for this transformation to succeed, Congress must allocate resources specifically for these tools in future budgets, ensuring that agencies have the funding to prioritize fraud prevention.
Elon Musk recently highlighted inefficiencies and waste in government spending, advocating for greater accountability and streamlined processes. The contrast between private-sector agility and government bureaucracy is stark.
If the federal government operated with the same efficiency Musk demands from his ventures, the financial drain caused by fraud and improper payments could be drastically reduced. Treating public funds with the same scrutiny as private capital would not only rein in waste but also free up resources for critical services and economic growth.
However, technology alone is not enough. Agencies must also simplify their processes by replacing bloated rulebooks and outdated protocols with streamlined, enforceable policies that those in need can easily follow.
A 10,000-page rulebook might as well be no rulebook at all, if it’s too complex to enforce. Simplifying these programs will close the gaps that criminals exploit, creating a more transparent and efficient system for all Americans.
To further incentivize efficiency, Congress should consider restructuring funding through block grants or returning a portion of the savings from reduced fraud to the agencies or states that achieve results. This realignment of incentives would encourage agencies to prioritize fraud prevention, focus on accountability, and ensure taxpayer dollars are used effectively.
As Charlie Munger famously said, “Show me the incentive, and I’ll show you the outcome.” By aligning incentives to reward agencies for preventing fraud and ensuring funds reach those who truly need them, billions of taxpayer dollars could be redirected from waste to meaningful public benefit.
The new administration has a unique opportunity to set a course for a sustainable, secure future by tackling government fraud head-on. Embracing modern technology and streamlining complex processes can protect taxpayer dollars, strengthen essential services, and make a meaningful impact on the deficit.
Preventing half a trillion dollars in fraud presents a rare opportunity for bipartisan action. As President Trump begins his second term, he has the chance to lead by example, demonstrating that effective governance transcends party lines.
By tackling waste and protecting taxpayer resources, this administration could rebuild public trust while saving hundreds of billions of dollars — a legacy of fiscal responsibility that could transform the government for generations to come.
Haywood Talcove is CEO of LexisNexis Risk Solutions' Government division.