US President Donald Trump has claimed that exposing and eradicating fraud nationwide will eliminate the country’s deficit.
President Trump specifically highlighted allegations of fraud in public services by Somalis in Minnesota, saying that fraud also exists in “many other places.”
“If we stop this fraud, this massive fraud, we will have a balanced budget,” President Trump said Tuesday in a speech at the Detroit Economic Club.
In Minnesota, investigators identified fraud involving federal funds for housing programs, autism services, and child nutrition. Federal prosecutors have indicted dozens of defendants since 2022, before President Trump’s current term, and have filed more charges since Trump took office a year ago.
So far, fraud charges in Minnesota have involved at least hundreds of millions of dollars. Assistant U.S. Attorney Joe Thompson, who led the Minnesota fraud prosecution, said in December that Medicaid fraud in the state could reach $9 billion, but not all of it goes to federal funds. Mr. Thompson resigned on Tuesday.
But even if you add in the dollars lost to fraud in Minnesota and the federal government’s losses elsewhere (estimated at $521 billion a year), the total won’t come close to the federal deficit. The fiscal year 2025 deficit, or the difference between revenues and expenditures for that year, was $1.775 trillion.
“It’s impossible to make up for the waste, fraud and abuse,” said Steve Ellis, president of Taxpayers for Common Sense, a group that tracks the federal budget. “Eradicating it is important, but the only way we can get closer to a balanced budget is through fiscal restraint.”
The White House did not immediately respond to inquiries for this article.
2024 federal report reveals hundreds of billions of dollars in fraud
In April 2024, during former President Joe Biden’s term in office, the Government Accountability Office (GAO) produced what it called “the first government-wide estimate of federal dollars lost to fraud.”
The bureau estimated fraud losses range from $233 billion to $521 billion annually, based on 2018-2022 data from the agency’s inspector general and fraud reports filed with the Office of Management and Budget.
GAO’s top-line numbers include estimates based not only on official misconduct findings from legal proceedings, but also on individual agency misconduct findings. The agency also estimated a number that it believes represents undetected fraud.
Estimated annual losses ranged from 3% to 7% of average government spending at the time.
Joshua Sewell, director of research and policy at Taxpayers for Common Sense, previously warned that the GAO report was full of red flags, including overlap with the COVID-19 pandemic, which led to increased spending.
Still, Chris Towner, policy director at the Committee for a Responsible Federal Budget, a fiscal hawkish group, said it’s “very unlikely that there would be enough fraud within the federal government to balance the budget.” “If that year’s $1.775 trillion deficit was due to fraud, that would mean either a quarter of federal spending was fraudulent or some combination of fraudulently lost tax revenue and federal spending added up to that amount.”
Another challenge is that completely eradicating fraud is not easy. Historically, “the government actually recovers only a fraction of the taxes lost to fraud,” said Bob Westbrooks, a fraud and corruption risk expert and former executive director of the federal government’s Pandemic Response Accountability Board.
Trump administration seeks to investigate fraud in blue states
In recent weeks, Trump, a Republican, has focused the spotlight on fraud in blue states, states that tend to vote Democratic, such as Minnesota. However, there are other notable high-value fraud investigations underway in other states as well.
In solidly Republican Mississippi, a trial is underway over a welfare scandal in which the auditor said $100 million in federal funds were lost between 2016 and 2020.
In 2024, the U.S. Sentencing Commission identified the Southern District of Florida as the most fraud-prone district in the nation, adding that the number of crimes nationwide related to government benefit fraud has increased by 242 percent since 2020. Florida is also a red, or Republican, state.
This month, the U.S. Department of Health and Human Services froze access to child care and family assistance funds in California, Colorado, Illinois, Minnesota, and New York (all blue states) over concerns of fraud. A federal judge temporarily blocked it.
our verdict
“If we stop this fraud, this massive fraud, we will balance the budget,” Trump said.
Although the amount of fraud perpetrated against federal programs is large, it does not match the federal budget deficit.
The highest national fraud estimate is $521 billion in fraud losses. Even if all of this could be recovered, it would still be less than one-third of the 2025 budget deficit.
We rate this statement False.
