Principles for Fighting Waste, Fraud, Errors, and Abuse in Reconciliation

As the House considers whether to move forward on a new reconciliation package, there is talk of using reconciliation to significantly reduce government waste, fraud, errors, and abuse (WFEA) – as we suggested recently. While this is welcome news, it will require appropriate follow-through to ensure program integrity efforts lead to meaningful spending and deficit reductions as opposed to being window dressing.  

In crafting a reconciliation package to fight waste, fraud, errors, and abuse, we suggest lawmakers abide by the following principles:

1. Ensure reconciliation produces substantial net deficit reduction, with all offsets including WFEA policies producing enough savings to not only offset any new spending but also to begin addressing the unsustainable growth of our national debt. We previously suggested reconciliation produce $600 billion to $1.4 trillion in net savings to at least recover the savings required by the House but not achieved under the One Big Beautiful Bill Act (OBBBA) and possibly also make up for some of the tariff revenue lost after the Supreme Court’s ruling on presidential tariff authority.
2. Recognize the importance of reducing waste, fraud, errors, and abuse in lowering deficits, making government more efficient, building trust, and ensuring scarce dollars go where they are needed. The federal government made an estimated $186 billion in improper payments alone in 2025 – though only a fraction could be reasonably recovered and not all is necessarily WFEA – and loses much more in total WFEA on the tax and spending sides of the ledger.
3. Look beyond just fraud and focus on also reducing waste, errors, and abuse. Fraud against the federal government is a criminal act and a real problem, and Congress should do what it can to facilitate the prevention and prosecution of such fraud. However, the government loses far more money from abuse of parameters in existing laws to go beyond their intended purpose than from outright violation of the laws. The government also loses a significant amount of money from making erroneous payments, and it spends far more than is necessary for certain purchases and services. To generate larger savings, reconciliation should also focus on closing loopholes and reducing excessive payments, not just fighting criminal fraud.
4. Enact scoreable policy changes to reduce waste, fraud, errors, and abuse, with a particular focus on health care where practices such as Medicaid provider taxes, Medicare Advantage upcoding, differential site-of-service payments, and fraudulent enrollment in Affordable Care Act exchanges will cost the federal government well over $2 trillion over the next decade. Lawmakers should also address WFEA in the tax code – where numerous tax loopholes and a substantial tax gap result in hundreds of billions in lost revenue each year – as well as WFEA in the defense budget, the Supplemental Nutrition Assistance Program (food stamps), unemployment, disability programs, and veterans’ benefits, among other areas. Reconciliation can also incorporate a variety of common-sense anti-fraud policies that produce little in terms of scoreable savings but have potential to improve overall program integrity – such as those recently approved by the House Ways & Means Committee – so long as they are compliant with the Byrd rule; these should be in addition to large scoreable policies, not in place of them. See the table below for examples of scorable policies that reduce WFEA.
5. Fund specific anti-fraud efforts throughout government, where they are estimated to produce net savings. This could include funding for IRS tax enforcement, the Health Care Fraud and Abuse Control Program, Social Security Continuing Disability Reviews and investments, unemployment eligibility assessments and reemployment services, child support enforcement, and certain Inspector General funding. Lawmakers could also provide funding to the Government Accountability Office, the Office of Management and Budget, or other entities charged with identifying government waste, but should fully offset any funds that don’t provide a direct positive return on investment and avoid establishing large slush funds without specific directives for how the funds will be used to reduce WFEA.
6. Rely on official scores and estimates, not wishful thinking. Although some program integrity efforts cannot be “scored” as savings under official scorekeeping rules, the Congressional Budget Office can estimate the fiscal impact of these changes – as it has many times before. Lawmakers should rely on these official scores and estimates in determining how much savings to realistically expect from a specific proposal; they should not rely on outside estimates, particularly ones that are partisan in nature. To the extent any proposals end up saving more than estimated, the fiscal dividend can help further reduce the massive annual deficit.
7. Understand that reducing WFEA won’t be enough to fix the debt, and hard choices will still be needed. In order to simply reduce deficits to 3% of Gross Domestic Product (GDP), lawmakers will have to find nearly $10 trillion in savings over the coming decade. Even if lawmakers were able save a record amount in WFEA savings, much more will be needed. Fixing the debt will inevitably require tough policy choices about how and how much to raise and spend as a country. While reducing WFEA is an important place to start, it cannot be used as an excuse to avoid the more difficult work necessary to fix the debt.

With a national debt now larger than the economy and annual deficits double the 3% of GDP target, lawmakers should make deficit reduction a primary focus. This includes using the budget reconciliation process for its originally intended purpose of deficit reduction, rather than how it has been used in recent years to do the exact opposite.

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Examples of Scorable WFEA Reduction Policies

Note: Savings estimates are rough and dependent on details and final scores.
*Close SDP grandfathering loopholes, reduce SDP cap to 100% of Medicare in all places, restrict use of IGTs, enact other smaller reforms