$186 Billion Down the Drain: Inside the Federal Government’s Improper Payments Problem
Every year, the U.S. government sends out trillions of dollars — Social Security checks, Medicare reimbursements, unemployment benefits, tax credits, disaster aid. Most of it goes exactly where it’s supposed to. But a significant chunk doesn’t. It goes to the wrong person, in the wrong amount, or with no proof it should have been paid at all. Auditors call these “improper payments,” and they’ve quietly become one of the largest, most persistent sources of waste in the federal budget.
The Number: $186 Billion in One Year
According to the Government Accountability Office (GAO), federal agencies made an estimated $186 billion in improper payments in fiscal year 2025 — up roughly $24 billion from the year before. GAO is Congress’s independent, nonpartisan watchdog, and this figure comes straight from its April 2026 report on payment integrity.
To put that in perspective: $186 billion is more than the entire annual budget of NASA, the Department of Education, and the Department of Homeland Security — combined, several times over. And it’s not a one-year blip. Since 2003, when the government began systematically tracking this problem, agencies have reported an estimated $2.8 trillion in cumulative improper payments.
What Exactly Is an “Improper Payment”?
It’s a broader category than outright fraud, though fraud is part of it. GAO and federal agencies define an improper payment as any payment that:
- Went to the wrong recipient (including people who are deceased or no longer eligible)
- Was for the wrong amount (an overpayment or underpayment)
- Lacked sufficient documentation to verify it was correct
- Violated the statute or regulation governing that payment
About three-quarters of these errors are overpayments — money that went out the door and, in many cases, is never recovered.
Where Most of the Money Is Going
The problem isn’t spread evenly. Roughly 80% of improper payments are concentrated in a handful of programs, most of them large health and safety-net programs:
| Program | FY2025 Improper Payments |
|---|---|
| Medicare | ~$57 billion |
| Medicaid | ~$37 billion |
| Earned Income Tax Credit, Pandemic-era unemployment programs, and PPP loan forgiveness | remainder of the top-five total |
Thirteen federal programs across seven agencies have posted improper payment rates of 10% or higher for two consecutive years — meaning at least $1 out of every $10 spent through those programs was paid incorrectly. Six of those programs have held that dubious distinction for four straight years or more.
The DOGE Question
In 2025, the Department of Government Efficiency (DOGE) launched a high-profile effort to root out waste and fraud across the federal government. Despite that push, GAO’s own numbers show total improper payments increased in FY2025 compared to FY2024. Auditors and outside analysts have pointed to a specific reason: many of the programs with the highest error rates — like Temporary Assistance for Needy Families (TANF) — are administered by the states using federal block grants, and HHS currently lacks the legal authority to even collect improper-payment data on them. GAO has recommended Congress fix that gap. So far, it hasn’t.
GAO’s “High-Risk List”: The Government’s Own Warning List
Since 1990, GAO has kept a running “High-Risk List” of federal programs it considers especially vulnerable to fraud, waste, abuse, or mismanagement. The most recent update (February 2025) named 38 high-risk areas, ranging from Medicare and Medicaid to Pentagon weapons acquisition, IT modernization, and the management of federal real estate. Twenty-eight of the 38 have been on the list for at least a decade; five have been there since the very first list in 1990.
It’s not all bad news. GAO estimates that congressional and agency action on High-Risk List items has produced roughly $759 billion in documented savings since the program began — about $40 billion a year on average. The list is proof that oversight, when it’s actually acted on, does recover taxpayer money. The trouble is the pace: agencies still have thousands of open GAO recommendations they haven’t implemented, some dating back over a decade.
Why This Keeps Happening
A few structural reasons show up again and again in GAO’s reporting:
- Verification gaps. The Treasury Department’s “Do Not Pay” system is supposed to check payments against death records and eligibility databases before money goes out — but the Social Security Administration doesn’t share its complete death data with the system, and Congress hasn’t made that data-sharing permanent.
- State-administered, federally-funded programs. Programs like TANF and Medicaid are run by states but funded partly or wholly by Washington, which creates reporting and oversight gaps between the two levels of government.
- Under-resourced fraud units. Agency inspectors general and program-integrity offices are frequently understaffed relative to the size of the programs they’re supposed to police.
- No statutory teeth. Many of GAO’s recommendations require Congress to pass new legislation — extending statutes of limitations for fraud prosecution, mandating data-sharing, or requiring new agency reporting — and those bills often stall.
The Bottom Line
This isn’t a story about any single administration, party, or program — it’s a structural problem that has persisted across Republican and Democratic Congresses and White Houses alike for over two decades. The GAO, which does this accounting, is explicitly nonpartisan and reports to Congress as a whole, not to either party. The $186 billion figure represents money that taxpayers funded and that, by the government’s own definition, should not have gone out the way it did — whether due to fraud, error, or simple lack of verification.
Sources:
- U.S. Government Accountability Office, Payment Integrity: Agencies’ Estimated Improper Payments Increased to $186 Billion in Fiscal Year 2025, GAO-26-108694, April 27, 2026
- U.S. Government Accountability Office, High-Risk Series: Heightened Attention Could Save Billions More and Improve Government Efficiency and Effectiveness, GAO-25-107743, February 25, 2025
- U.S. GAO, “Fraud & Improper Payments” program page, gao.gov
- U.S. GAO WatchBlog, June 4, 2026