There’s More to “Improper Payments” Than Meets the Eye


Here’s an interesting thing. I was browsing over at The Corner and came across a post from Veronique de Rugy, who was unhappy about the federal government’s rate of improper payments, which totaled $137 billion last year. That’s fair enough. Here are the six worst programs:

This is the kind of thing that liberals should care about too—in fact, we should care about it more than conservatives if we want people to trust government to handle their tax dollars competently. Still, it got me curious. What exactly does this mean? $137 billion in waste and fraud last year? As it turns out, no. Here’s one interesting methodological tidbit:

Another prevalent misunderstanding is that all improper payments are a loss to the government, but that is not always the case. For example, although most of the $137 billion in improper payments was caused by overpayments (payments that are higher than they should have been), a significant chunk of that total amount was caused by underpayments (payments that are lower than they should have been). The difference between these two amounts (that is, overpayments minus underpayments) equals the net amount of payments that improperly went out the door.

Huh. So if the feds overpay Joe $10 and underpay Jane $10, that counts as $20 in improper payments. This is a reasonable thing to track, since we’d like all the payments to be correct, but it doesn’t give us much insight into how much money we’re losing to improper payments. My guess based on a bit of googling is that underpayments are a smallish part of the whole number, but for some reason there’s no official tally of this. Roughly speaking, though, you can probably shave 10-20 percent off the top and get pretty close.

What else? There’s this:

Also, many of the overpayments are payments that may have been proper, but were labeled improper due to a lack of documentation confirming payment accuracy.  We believe that if agencies had this documentation, it would show that many of these overpayments were actually proper and the amount of improper payments actually lost by the government would be even lower than the estimated net loss discussed above.

An entire payment is labeled improper if complete documentation is not available. This appears to account for somewhere in the neighborhood of 50-60 percent of all improper payments. Most likely, though, once the documentation is in place, the vast majority of these payments turn out to be correct.

Put this all together, and the net value of genuinely improper payments is probably about $50 billion or so. Still high, but not quite as outrageous as it seems at first glance.

Something about this whole exercise seems kind of weird to me, though. We’re only a few months into 2016 and we already have numbers for FY2015. That’s fast work—too fast to be anything but a preliminary cut at flagging payments that might be incorrect. But how many of them really are incorrect? Nobody knows. For that, you’d have to wait a year or two and then re-analyze all the payments in the sample.

I’d be a whole lot more interested in that. $137 billion makes for a fine, scary headline—especially when the headline leaves the vague impression that this is all due to fraud and waste—but why don’t we ever get a follow-up number that tells us how much the feds ended up paying improperly once all the documentation is rounded up and the final audits are done? Wouldn’t that be a better number to care about?

DOES IT FEEL LIKE POLITICS IS AT A BREAKING POINT?

Headshot of Editor in Chief of Mother Jones, Clara Jeffery

It sure feels that way to me, and here at Mother Jones, we’ve been thinking a lot about what journalism needs to do differently, and how we can have the biggest impact.

We kept coming back to one word: corruption. Democracy and the rule of law being undermined by those with wealth and power for their own gain. So we're launching an ambitious Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption, and asking the MoJo community to help crowdfund it.

We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We want to dig into the forces and decisions that have allowed massive conflicts of interest, influence peddling, and win-at-all-costs politics to flourish.

It's unlike anything we've done, and we have seed funding to get started, but we're looking to raise $500,000 from readers by July when we'll be making key budgeting decisions—and the more resources we have by then, the deeper we can dig. If our plan sounds good to you, please help kickstart it with a tax-deductible donation today.

Thanks for reading—whether or not you can pitch in today, or ever, I'm glad you're with us.

Signed by Clara Jeffery

Clara Jeffery, Editor-in-Chief

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate

Share your feedback: We’re planning to launch a new version of the comments section. Help us test it.