In 1971 Richard Nixon listed the qualifications for a chief of the Internal Revenue Service (IRS). “I want to be sure he is a ruthless son of a bitch,” he said, on tape. “That he will do what he’s told, that every income tax return I want to see I see, that he will go after our enemies and not go after our friends.” In the end the man he appointed, Johnnie Walters, did not comply. His copy of Nixon’s “enemies list” went into a safe until it was eventually delivered as evidence to Congress. Walters later argued that using the tax system to settle political scores would have threatened the very basis of America’s democracy.
In the half-century since then, the IRS has remained immune from political interference. That is, until February 16th, when the Washington Post revealed that Gavin Kliger, a 25-year-old software engineer associated with Elon Musk’s Department of Government Efficiency (DOGE) is to be given access to the IRS’s computer systems. No political appointee has had this since Nixon. The decision followed a court order which has, for now, kicked DOGE out of the equally sensitive Treasury payments system. And on February 17th it emerged that Michelle King, the acting commissioner at the Social Security Administration, had resigned over DOGE’s access to that agency’s data.
DOGE’s rationale for accessing all of this information is to eliminate “waste, fraud and abuse”. Indeed, in the past few weeks this has become a MAGA obsession. Politicians across the Republican Party have argued that DOGE’s unprecedented access to government IT systems is needed to stop a tidal wave of thievery. Donald Trump himself, during a Fox News appearance with Mr Musk on February 18th, said that the billionaire was uncovering “hundreds of billions of dollars’ worth of… fraud, waste and abuse”. Fundraising emails sent by Republican campaign groups ask recipients to participate in “audits” themselves, by donating money.
Yet the Nixon precedent helps to explain why many people—including senior civil servants—mistrust the Trump administration’s campaign. And experts say that although fraud is a big problem in the federal government, and that Mr Musk is right to raise it, what he is doing is unlikely to improve the situation. In fact, some fear that the sloganeering about “waste, fraud and abuse” is designed to create political cover for unilateral cuts of congressionally mandated spending Mr Musk and Mr Trump do not like and for gaining access to sensitive data systems.
On the face of it, Mr Musk is right: fraud has boomed in recent years. The government is an especially vulnerable target. It is now possible to buy Social Security details online, on the dark web, and then apply for benefits en masse. Crooked doctors can search for potential patients to claim for health care that is not necessary or that they do not deliver. Pandemic-era programmes have been particularly lucrative to scammers. But so too are ongoing distributions, such as disaster relief. Artificial intelligence (AI) is helping fraudsters speed up their attacks.
According to a study by the Government Accountability Office (GAO) published last year, fraud could cost the Treasury between $233bn and $521bn a year. That is a lot less than the $2trn Mr Musk has claimed he can cut from the budget, but the higher figure is still nearly 8% of annual federal spending. Another survey of improper payments—including but not limited to fraud—found that the figure in 2023 came to $236bn.
Until now, there has been only limited effort to fix this. “Federal government agencies would not use the word ‘fraud’,” says Linda Miller, a former GAO official. Politicians generally refused to acknowledge the extent of the problem, she says. Mr Musk, she says, is bringing focus to problems “I’ve been highlighting this myself and saying in testimonies for years, and no one really listened”.
Yet Mr Musk’s claims about fraud so far have had only a limited relationship with the reality of the problem. He has regularly described as “fraud” authorised programmes he doesn’t like, such as everything paid for by USAID. “You might not want the government to invest in DEI training in Ireland, but that isn’t fraud,” says Ms Miller. “Somebody made the decision to invest that money.”
Mr Musk has also raised nonsensical concerns, such as the idea that there are millions of dead people claiming Social Security (the real figure is probably in the low tens of thousands), or that Democrats are conniving to give benefits to illegal immigrants. Ms Miller says she is worried that his misguided allegations may ultimately undermine the fight.
There are real reasons why fraud has been tricky to take on, says Danny Werfel, until last month the commissioner of the IRS. The major one is that preventing it creates friction for beneficiaries of government services, which politicians do not like. He gives the example of power wheelchairs paid for by Medicare. Criminals realised that they could make a hefty profit finding patients to buy these and then overbilling the government. Yet a plan to create a waiting period for claims to be examined was rejected by Congress. It decided “too many innocent people that need their power wheelchair would have to wait”, recalls Mr Werfel.
A second problem is that many of the programmes targeted by fraudsters—unemployment insurance and Medicaid, for example—are largely administered by the states. The federal government pays the bills, but it is state governments that assess whether someone is eligible and telling the truth. States have only the barest of incentives to prevent fraud, especially if it means spending their own money on bureaucrats to run audits. The “Department of Labour can’t just go to a state and go like, do a better job, right?”, says David Mader, a former chief finance officer at the Office of Budget Management. States have to be coaxed.
Mr Musk may think that tech will solve these problems. And in theory it could. AI could identify and “pre-audit” risky payments, for example. But to get there, you need civil servants who understand the systems and the laws that govern them. In reality, decades of underinvestment mean the government is not ready.
What nobody can explain is why fighting fraud requires inexperienced political appointees to have direct access to IRS or Social Security data. The “IRS holds the holy grail of federal government data”, says Don Moynihan of the Ford School at the University of Michigan. Even the IRS commissioner does not have access. Yet the DOGE man now seeking it, Mr Kliger, is a computer-science graduate with no government experience, who cites a far-right writer as his inspiration for joining Mr Musk’s new department. He is an unlikely fraud detective.■
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