NCPA - National Center for Policy Analysis

Federal Agencies Wasted Billions Last Year

September 12, 2002

According to congressional auditors, the United States government wasted billions of dollars last year on erroneous payments. The mistakes occurred when government officials paid people twice, miscalculated the amount individuals should receive or sent checks to people who weren't eligible, according to the report. Improper Medicare payments accounted for more than half the money identified, according to the General Accounting Office, the investigative and auditing arm of Congress. The government also paid out more than it should in housing subsidies and tax refunds.

It's difficult to estimate to true amount of waste since agencies are loath to reveal these kinds of mistakes, the GAO said.

Among the waste identified:

  • A half-dozen of the largest federal agencies squandered $19 billion through erroneous payments last year.
  • The amount wasted last year was down from about $20 billion two years ago. However fewer agencies revealed their improper payments this time around.
  • Although the Agriculture Department's acknowledged improper payments in the food stamp program last year, it did not identify an amount -- although the year before it acknowledged paying out $1.1 billion erroneously for food stamps.

Few agencies publicly report improper payment rates, causes and strategies for better managing their programs. Consequently, the actual amount wasted probably will probably be far greater than GAO estimates.

Source: "Report: Federal Agencies Wasted $19 Billion Last Year," Fox News Channel (Associated Press), September 06, 2002; "Financial Management: Coordinated Approach Needed to Address the Government's Improper Payments Problem," GAO-02-749, August 9, General Accounting Office.

For GAO report


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