Every year, Washington may be losing half a trillion dollars to fraud—more than the entire economies of most nations worldwide. A new report from the Foundation for Government Accountability (FGA), released October 7, estimates annual fraud costs federal taxpayers at $521 billion, roughly seven percent of all federal spending.
This figure aligns with the upper bound of a 2024 Government Accountability Office (GAO) study, which first estimated nationwide fraud losses between $233 billion and $521 billion annually. Separately, the GAO reports that agencies have admitted to approximately $2.8 trillion in “improper payments” since 2003—funds paid to the wrong person, in the wrong amount, or for the wrong reason.
The most revealing statistic in the FGA report reveals that of more than 2,200 federal payment programs, only 64 are reviewed for improper payments each year. In essence, the government remains unaware of its losses because it scrutinizes just a fraction of what it spends.
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 that federal books could not be reconciled. In 2017, Skidmore, a Michigan State University economist, took up her challenge. His team analyzed reports from federal inspectors general and 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 originated or was expended.
Shortly after Skidmore’s work gained attention, the Pentagon conducted its first department-wide audit. It has failed every one since. By December 2025, it had failed for the eighth time in a row, unable to fully account for its roughly $4.7 trillion in assets. Its stated goal of achieving a clean audit now extends to 2028.
The Constitution anticipated this danger. Article I, Section 9 mandates 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 fails a constitutional duty.
The deeper problem lies in scale. James Madison promised in The Federalist, No. 45, that federal powers would be “few and defined.” A government with few defined powers can be audited. But one managing more than 2,200 payment programs—most never checked—has outgrown the capacity of anyone to understand it. No inspector general, task force, or new software can oversee an enterprise that has grown beyond comprehension.
Washington’s typical response to fraud is adding more bureaucracy to police the bureaucracy. The constitutional solution is simpler: Return federal government to its enumerated powers. Programs that do not exist cannot be defrauded.