(Washington, DC) – Treasury Secretary Scott Bessent warned that hundreds of billions of taxpayer dollars may be lost annually to waste, fraud, and abuse, estimating that as much as 10% of the federal budget is siphoned off each year by improper or fraudulent activity.
Speaking in a recent interview, Bessent cited findings from the Government Accountability Office, which estimates that between 5% and 10% of total federal spending is lost annually to fraud alone.
“If we can narrow that number, we can strengthen the country without taking on more debt,” Bessent said, arguing that curbing wasteful spending could help finance national security priorities. He pointed to President Donald Trump’s push for a significant boost in defense spending after what the administration has described as years of underinvestment.
A GAO analysis found that federal agencies lost an estimated $233 billion to $521 billion per year to fraud during fiscal years 2018 through 2022. Separately, improper payments- which include overpayments and payments made in error, have cost taxpayers roughly $2.8 trillion since 2003, according to the watchdog agency.
Federal spending has continued to grow since that period. In fiscal year 2025, Washington spent approximately $7.01 trillion, running a deficit of about $1.8 trillion. Interest payments on the national debt- now approaching $38 trillion, totaled roughly $970 billion, exceeding annual U.S. military spending.
Last week, Trump said he wants Congress to prepare for a $1.5 trillion defense budget, citing what he described as “troubled and dangerous times” globally.
The administration previously tasked Elon Musk with leading the Department of Government Efficiency, an initiative aimed at rooting out wasteful spending across federal agencies. Musk stepped away from the role earlier this year, and the office has since scaled back operations.
Concerns over government fraud have intensified amid revelations of widespread abuse in Minnesota’s welfare system. Federal prosecutors estimate that as much as $9 billion may have been stolen since 2018 through fraudulent social service programs. Nearly 100 individuals have been indicted since 2022 in connection with schemes involving sham nonprofits that billed the state for services never delivered.
One case, involving the now-defunct nonprofit Feeding Our Futures, represents the largest known COVID-era relief fraud, with losses exceeding $250 million.
In response, Vice President JD Vance announced that the Justice Department is appointing a new assistant attorney general to lead a nationwide effort targeting large-scale public fraud.
“This is not confined to one state,” Vance said. “The American people have been defrauded on a national scale.”
Beyond spending abuses, the Treasury Department also faces persistent revenue losses. The Internal Revenue Service estimates that unpaid and underpaid taxes- known as the “tax gap,” totaled roughly $606 billion as of fiscal year 2022.
Bessent said addressing both fraudulent spending and uncollected taxes will be critical as lawmakers debate future budgets amid rising deficits and mounting debt obligations.
