$98 Billion Wasted

Government agencies misspent over $98 billion last year, $26 billion more than was wasted the previous year, the Associated Press reports. The White House attributes the increase in wasted money to a stricter interpretation of “improper payments” as well as greater levels of spending during the economic downturn. Yesterday, White House OMB Director Peter Orszag said:

“We need to protect taxpayer dollars because every dollar that goes to the wrong recipient or in the wrong amount is a dollar that is not available to help an unemployed worker or invest in education or other key priorities the administration has.”

Medicare and tax credits were the main sources of waste. Here is a list of the agencies and programs that misspent the most money, according to a breakdown posted by The Hill.

Sources of Improper Payments in FY 2009 (billions)

Program Cost Percent of Program
Department of Agriculture programs $4.3 5.9
Medicare Fee-for-Service $24.1 7.8
Medicare Advantage $12.0 15.4
Medicaid $18.0 9.6
Unemployment Insurance $12.3 10.3
Earned Income Tax Credit $12.3 25.5
Social Security (OASDI) $2.5 0.4
Supplemental Security Income $5.4 12.1
Other $7.5 1.4
Total $98.4 5.0

The Administration intends to sign an Executive Order in the near future that will be intended to reduce the number of mistaken payments.

One hundred billion dollars in waste is unacceptable from both a budgetary and governance standpoint; an effort should be made to reduce that number. However, no amount of cutting “waste, fraud and abuse” will put the budget on a sustainable path. Doing that will require making hard choices that affect real people, and specifically, going after the drivers of cost growth directly.