Every year, Washington may be losing half a trillion dollars to fraud, more than the entire economies of most nations. This figure stems from a new report by the Foundation for Government Accountability (FGA), released October 7, which estimates annual fraud costs federal taxpayers at $521 billion—roughly seven percent of all federal spending.
The number aligns with the upper bound of a 2024 Government Accountability Office (GAO) study, the first government-wide assessment of fraud losses. That report placed annual thefts between $233 billion and $521 billion. Separately, the GAO notes agencies have admitted to some $2.8 trillion in “improper payments” since 2003—money sent to the wrong person, in the wrong amount, or for the wrong reason.
The most revealing statistic from the FGA report is this: Of more than 2,200 federal payment programs, only 64 are reviewed annually for improper payments. In other words, Washington does not know how much it is losing because it checks only a sliver of its spending.
None of this would surprise Catherine Austin Fitts or Dr. Mark Skidmore. Fitts, a former assistant secretary of Housing and Urban Development (HUD), spent years warning federal books could not be reconciled. In 2017, Skidmore, a Michigan State University economist, took up her challenge. By analyzing reports from federal inspectors general, his team tallied some $21 trillion in “unsupported adjustments” at the Department of Defense and HUD between 1998 and 2015—accounting entries with no documentation showing where money came from or went.
Shortly after Skidmore’s work drew attention, the Pentagon conducted its first department-wide audit. It has failed every one since. In December 2025, it failed its eighth attempt, unable to fully account for roughly $4.7 trillion in assets. Its stated goal of a clean audit is now 2028.
The Constitution anticipated this danger. Article I, Section 9 requires that “a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.” A government that cannot account for its own money is not merely inefficient—it is failing a constitutional duty.
The deeper problem is size. James Madison promised in The Federalist, No. 45 that the powers of the federal government would be “few and defined.” A government with few defined powers can be audited. But one running more than 2,200 payment programs—most never checked—cannot. No inspector general, task force, or new software can oversee an enterprise that has outgrown anyone’s capacity to understand it.
Washington’s usual answer to fraud is more bureaucracy to police the bureaucracy. The constitutional answer is simpler: Return the federal government to its enumerated powers. Programs that do not exist cannot be defrauded.
