NY Times – No proof of government fraud

Eyes rolling. Here's a short editorial from the WSJ yesterday. Glad they pointed to the prior administration reporting that “federal government could lose between $233 billion and $521 billion annually to fraud.”

“At Oval Office, Musk Makes Broad Claims of Federal Fraud Without Proof,” said a New York Times headline this week. The White House retorted: “Apparently, the Times and other like-minded outlets lack access to a newfangled research tool called Google.” 

A Government Accountability Office report last spring estimated the “federal government could lose between $233 billion and $521 billion annually to fraud.” The federal auditor said “a government-wide approach is required to address it,” and recommended that the Treasury “leverage data-analytics capabilities” to stop questionable payments. That’s what DOGE is trying to do. 

GAO earlier estimated that 11% to 15% of unemployment benefits during the pandemic were fraudulent, totalling between $100 billion and $135 billion. Some went to transnational gangs, prisoners and state-sponsored hackers. The Labor Department inspector general estimated at least $191 billion in improper pandemic unemployment payments.

The Secret Service found hackers linked to the Chinese government stole at least $20 million in Covid benefits. The pandemic employee retention tax credit (ERTC) has been another ripe target. According to the Internal Revenue Service, a California prisoner claimed more than $550 million from the ERTC.

The IRS paused processing of new ERTC claims in 2023 because of rampant fraud. Initially estimated at $55 billion, the program’s costs have ballooned to $230 billion and counting. One culprit is outdated government IT systems that lack fraud controls such as identity verification.

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It’s ironic to say the least that Democrats have lambasted the peer-to-peer payment app Zelle for not doing enough to prevent fraud on its network. Zelle’s estimated fraud rate (0.1%) is 99% lower than the goal for government programs, which many agencies don’t achieve. Maybe they need a “know your customer” rule so they don’t send money to criminals.

The political left’s hostility to Mr. Musk’s antifraud campaign is hard to understand. But the partisan times are such that if Mr. Musk said the sky is blue, liberals would probably also say he has no proof.