The role of friction and the duty of Congress in fighting fraud, waste and abuse

For as long as there has been an American government, there have either been individuals making false claims on the government, or government officials who have used their power to steer government favors to supporters.

In the American civil war, contractors sold the Union Army poor quality horses, rifles and rations, put sawdust in the gunpowder and provided uniforms that fell apart in the rain.

In the Harding administration, the Teapot Dome scandal found that the Secretary of Interior provided certain oil companies sweetheart deals on leases, cheating the U.S. government out of revenue.

As the federal government grew, including the establishment of an income tax, Social Security, Medicare and Medicaid, the opportunity for fraud only increased.

In the mid-1970s, Wisconsin Sen. William Proxmire launched his Golden Fleece Awards, highlighting spending he deemed wasteful, such as a Department of Justice study that wanted to find out why prisoners wanted to escape. Most of that was small bore stuff.

However, one’s man’s (or party’s) important program is another man’s (or party’s) waste. Witness the Trump administration’s attack on diversity, equity and inclusion programs.

We know the federal government is being defrauded. Medicare and Medicaid are particularly ripe for false claims by both Americans and sophisticated international criminal organizations. The difference is Medicaid is administered by the individual states and some are better than others at stopping fraud. Then there is the issue of friction.

For example, Medicare provides electric wheelchairs to the disabled. HHS realized that scammers were applying for and receiving funds but providing no wheelchairs. HHS wanted to build another step into the process — friction — to reduce the number of false claims. The Congress said no. It wanted its constituents to get their wheelchairs without delay.

Every time you build a safeguard — such as asking for more information — you will get more bureaucracy, a slower response and pushback.

During the pandemic, the Paycheck Protection Program (PPP) was particularly open to fraud. The American economy was in free-fall. The Congress wanted the money to get out into the economic bloodstream ASAP so there was little friction. The result has been hundreds of billions of dollars in false claims — businesses inflating the number of employees or some creating companies out of whole cloth. The Biden administration put in more controls, but a lot of damage was done.

At the Defense Department, cost-plus contracts are routinely over budget, especially for major weapons programs. The consolidation of defense firms decades ago means there is little competition.

Then there is our tax system. The complexity of our tax laws means that individuals with clever accountants can game the system. Studies have shown that every dollar invested in tax enforcement can bring back between $5 and $12 in increased revenue. However, the Congress, particularly the GOP, has resisted such funding.

Not surprisingly, the president and Elon Musk have made many false claims about fraud in justifying their slash-and-burn approach to the federal government. As noted above, there are plenty of holes to plug without lying, but even if one could stop these major sources of fraud, it would not be nearly enough to balance the budget. That is a fantasy.

It is the Congress where most of the blame should fall. It has been years since the Congress has passed proper appropriations that include rigorous oversight. The General Accounting Office can only point. Congress must act. (Though all GAO reports prior to Jan. 20 have disappeared from the web.)

Tackling these problems is not easy. More inspectors and new technology would give the federal government a fighting chance, but it is doubtful the Congress will step up to provide the leadership or the investment.

• Keith Peterson, of Lake Barrington, served 29 years as a press and cultural officer for the United States Information Agency and Department of State. He was chief editorial writer of the Daily Herald 1984-86. His new book “American Dreams: The Story of the Cyprus Fulbright Commission” is available from Amazon.com.