Federal agencies made $186 billion in improper payments during the last fiscal year, according to a Government Accountability Office report. The actual figure likely exceeds this number because some agencies failed to report their data to the GAO.
Improper payments span a range of errors. They include duplicate payments, payments to ineligible recipients, and mathematical mistakes. Medicare and Medicaid account for a substantial portion of these errors, with both programs struggling to accurately track beneficiary eligibility and prevent fraud.
The Department of Defense, Social Security Administration, and Veterans Affairs also contributed significantly to the improper payment total. Defense Department accounting systems remain outdated in many cases, making it difficult to catch errors before money leaves federal accounts.
The GAO has flagged improper payments as a persistent problem for nearly two decades. Federal law requires agencies to report these figures annually, but compliance remains inconsistent. Some agencies claim they lack adequate technology or staffing to properly audit their disbursements.
This waste occurs against a backdrop of congressional budget debates where lawmakers dispute every dollar of discretionary spending. Republicans have long pointed to improper payments as evidence that federal agencies cannot manage existing resources efficiently before requesting additional funding. Democrats generally acknowledge the problem but argue that increased investment in auditing systems would reduce errors over time.
The White House Office of Management and Budget has directed agencies to implement corrective action plans. Progress has been mixed. Some agencies have reduced improper payment rates, while others have seen their error rates increase year-over-year.
The scale of improper payments raises questions about internal controls across the federal government. With roughly 2.9 million federal employees managing trillions in annual spending, the challenge of preventing errors remains substantial. Fixing legacy technology systems and improving data-sharing between agencies could reduce the problem, but these solutions require upfront investment that competes with other budget priorities.