Billionaire Elon Musk, the driving force behind President Donald Trump’s Office of Budget Reductions, has broached the delicate issue of reducing social security costs for the TV channel Fox business.
Musk told host Larry Kudlow, a former Trump economic adviser, that the government’s accountability agency estimated federal fraud in 2024 was “$50 trillion.”
While mentioning waste, “Most federal spending is qualifications.
Using the word “exclusion” in the same breath as “qualification,” raises an alarm among Trump and Musk’s democratic critics. White House press director Karoline Leavitt said during a news briefing on March 11 that Musk mentioned waste reduction, fraud and abuse in these programs, and that Trump is “trying to protect Social Security.”
At a March 11 event promoting Tesla cars at the White House, reporters asked if they could guarantee that masks would not be interrupted in Social Security benefits.
“We’re going to be very careful about every benefit,” Musk said. “In fact, only by tackling waste and fraud can we actually save these programs for the future.”
“Fraud” and “waste” mean different things. Waste refers to careless use, and fraud involves criminal misconduct.
Musk mentioned a report from the Government Accountability Office (GAO), the non-partisan audit unit of Congress that investigates federal spending. In 2024, the office estimated fraudulent payments of between $233 billion and $521 billion annually across the government.
The report is even further than Social Security, Medicare and Medicaid, accounting for about half of government spending. It covers the entire government, including pandemic-related relief programs that have led to record-breaking fraud.
Musk said fraud and waste reductions would help his efforts to cut $1 trillion from the federal budget. However, his estimate of fraud is at or exceeded the top of the GAO estimate. In the case of Social Security, inspectors in 2021 found that approximately $300 million was paid after the beneficiary died for about 20 years. About a third of that was collected. Federal officials have long recognized inappropriate spending as an issue, but that is not the main reason for the program’s disastrous financial outlook.
What does the government know about the overall fraud?
In April, the Government’s Accountability Office under President Joe Biden produced what they called “a government-wide estimate of federal dollars lost to fraud.”
Office estimates have been lost in $233 billion to $521 billion in fraud, with 2018-2022 scam data reported in reports from the agency’s inspectors and fraud reports submitted to the Office of Management and Budget.
Musk cited the high end of the range when he said “half a trillion.” The White House did not answer our questions about his sources of figures ranging from $600 million to $700 million.
GAO’s topline figures included estimates from the results of fraud investigations from legal proceedings as well as estimates from individual institutional fraud investigations. They also believed that the agency believed it represented an undetected scam.
Estimated losses account for around 3-7% of average federal spending.
The Bureau of Management and Budget, the agency that helps the president achieve his budget goals, has found federal fraud numbers between $4.4 billion and $7.31 billion a year, based on amounts confirmed through the judicial or arbitrary process.
Federal budget experts said it is important to pay attention to a complete analysis of the government’s reports.
Joshua Schwell, director of taxpayer research and policy for common sense, said taxpayers should look at these numbers in “huge salt grains.” The report is filled with warnings and may not represent other years due to increased pandemic spending.
“It’s a great report to try to turn numbers into an amorphous issue, but we can’t take high-end numbers as a definitive statement about the amount of dollars present in federal spending,” he said.
Approximately 5% of the annual federal budget is lost to fraud, with some programs likely having inappropriate payment rates above 10%, said Bob Westbrooks, executive director of the Pandemic Response Accountability Committee, which was created by the government committee five years ago. However, the phrase “inappropriate payment” does not necessarily mean fraud. It contains insufficient documentation scenarios.
“Whatever the number is, it’s huge in absolute terms,” Westbrooks said.
Westbrooks said Musk confuses fraud with waste and ignores it as, as the report itself pointed out, it is likely that Covid-19 era fraud is pushing the government’s estimated scope.
The government’s Accountability Office said the scope “reflects both the uncertainty associated with the presumption of fraud and the diversity of the risk environment that existed between 2018 and 2022.”
What do you know about Social Security fraud?
At a White House briefing on March 11, Leavitt cited the inspector’s general report from the Social Security Agency that discovered more than $70 billion in fraud on that program alone.
The 2024 report did not conclude that Social Security “fraud” had more than $70 billion. The program said it sent nearly $71.8 billion in “inappropriate payments” between 2015 and 2022. This is less than 1% of the overall payments for that time frame.
In the Fox business, Musk has said there is a huge amount of fraud, allowing people to submit fake Social Security numbers and receive a variety of government benefits, including Social Security, medical care, and unemployment assistance.
Most of the inappropriate payments revealed by inspectors were overpaid with some underwages. This is, for example, if the beneficiary is unable to report the required information, or if the administrator fails to update records, the 2024 General Inspector’s Report states. Neither of them necessarily represent criminal intent.
The Social Security Administration has long struggled to curb inappropriate payments.
“Without better access to data, increased automation, modernisation of systems, and policy or legislative changes, inappropriate payments will continue to be a future issue,” the report said.
In 2021, Social Security Office inspectors discovered $298 million in deaths to approximately 24,000 beneficiaries between 1998 and 2019. These beneficiaries were in suspended payment status, but payments were still sent as the technician had not followed all available death records. The report said it “did not identify any specific cases of fraud,” and provided death information to the Investigation Bureau.
The government has recovered about $84 million, the report said.
Just this year, the defendant was convicted or declared of fraudulent cash checks sent to deceased beneficiaries, theft of identity used to obtain Social Security benefits, and theft of social security payments aimed at children.
How did the Social Security Administration try to deal with fraud and waste?
Musk said in an interview with the FOX Business that the federal government has done “many good audits,” but the agency has not consistently implemented auditor guidance.
On March 3, Social Security Office inspectors released a status report on the latest recommendations.
Overall, inspectors have discovered 280 advance recommendations that were not implemented with a potential savings of $18.4 billion. In some cases, the Social Security Administration opposed the proposal. Unimplemented recommendations included detailed scrutiny of specific beneficiary groups for which the agency recognized the possibility of inconsistencies. Others have suggested changes to the alerts on the computer system.
Some of the government’s Accountability Office’s recommendations to Congress have not yet been realized. In 2022, GAO urged Congress to amend the Social Security Act, making it permanent to share full death data with the Treasury, but that has not happened yet.
Social Security has been facing financial problems in 10 years
Social security faces a difficult path. The existential funding issue is greater than the cases in which dead people undergo benefits checks.
The most important threat to the long-term viability of Social Security is the lack of workers supplying taxes to the system and the growing number of retirement-era Americans eligible to receive benefits.
Since the creation of Social Security in 1935, life expectancy in the United States has increased, and the number of eligible recipients has also increased. However, as the baby boomer generation (born 1946-1964) retires, fewer workers pay for the system.
The Social Security Trust Fund will not be able to pay 100% benefits by 2035, Social Security Councillors said in 2024. The trustee has issued similar warnings for over a decade.
Historically, most politicians on both parties have been disgusting to propose changes to social security. Political commentators often refer to it as the “third railway” in American politics. At least in the ballot box where older voters have the highest voters, you touch it and you die.
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