Assessing Elon Musk's misleading claims about fraud in US government spending

Washington: Elon Musk, the billionaire leading a government efficiency initiative, has for weeks made broad and unsupported claims of rampant fraud in federal spending.

In a series of interviews on conservative podcasts and television interviews, Musk has defended attempts by the Department of Government Efficiency to target popular entitlement programs like Social Security and access sensitive payment systems with a series of inaccurate claims. A representative for DOGE did not respond when asked for evidence of Musk's claims.

Here's a fact-check.

What was said

"The main reason is that entitlements fraud -- that includes like Social Security, disability, Medicaid -- entitlements fraud for illegal aliens is what is serving as a gigantic magnetic force to pull people in from all around the world and keep them here." -- in an interview with podcaster Joe Rogan in February

"The single biggest thing they're worried about is that DOGE is going to turn off fraudulent payments of entitlements -- I mean everything from Social Security, Medicare, you know, unemployment, disability, Small Business Administration loans -- turn them off to illegals." -- in an interview with Sen. Ted Cruz in March

This lacks evidence. Unauthorized immigrants are not eligible for most federal safety net benefits, and there is no evidence to suggest they are committing fraud en masse to obtain them. In fact, a number of independent and government analyses suggest that the opposite is true: Unauthorized immigrants pay more into Social Security and Medicare than they receive in federal benefits.

Federal law bars unauthorized immigrants from receiving Social Security or Medicare benefits, as well as most other federal government assistance programs, but they do pay taxes. (Immigrants, including those who those received asylum, refugee or humanitarian parole status, may be eligible for more programs.)

In a 2013 report, the Social Security Administration estimated that 3.1 million unauthorized immigrants were working and paying Social Security taxes, contributing about $12 billion to the trust in 2010 and about $100 billion over a decade. A 2016 study estimated that unauthorized immigrants contributed about $35.1 billion to Medicare from 2000 to 2011.

A 2024 study from the Institute for Taxation and Economic Policy, a left-leaning think tank, found that unauthorized immigrants paid nearly $100 billion in federal, state and local taxes in 2022, including $25.7 billion in Social Security taxes and $6.4 billion in Medicare taxes.

And the Congressional Budget Office estimated last summer that the surge in immigration from the 2021 to 2026 period would actually decrease the federal deficit by $0.9 trillion over a decade. The budget office projected that those recent migrants and their children will receive $0.3 trillion in federal benefits, but they will more than offset those costs by bolstering tax revenues by $1.2 trillion. (The $0.3 trillion, too, was an estimate of benefits these immigrants legally qualify for, not fraud.)

There is no evidence of mass entitlement fraud perpetrated by unauthorized immigrants. A 2018 report from the Niskanen Center, a libertarian-leaning think tank, noted that since 2011, there were fewer than 100 annual prosecutions of unauthorized immigrants where fraud was the leading charge.

The Center for Immigration Studies, which supports reducing immigration, has said that unauthorized immigrants "unambiguously" benefit Social Security and Medicare, but legalizing their status would harm both programs. The group has also argued that one group legally receiving some benefits -- immigrants fleeing troubled nations granted humanitarian parole, a temporary legal status -- would "for all intents and purposes be illegal aliens, were it not for the abusive parole practices of the Biden administration." This is a critique of policy choices though, not an accusation of entitlement fraud.

What was said

"There's a massive amount of fraud of basically people submitting Social Security numbers for Social Security benefits, unemployment, Small Business Administration loans and medical where those are fake Social Security numbers or they're stolen somebody else's Social Security number. And we're trying to put a stop to all of that. And that's the number, which is estimated to be on the order of 10 per cent of federal expenditures, which is half a trillion dollars.

"In fact, there was a report issued by the GAO, the Government Accountability Office last year, so during the Biden administration, which estimated the federal government fraud to be half a trillion dollars. So just to be clear, that's not a Trump administration thing. That's a Biden administration thing." -- in an interview on Fox Business Network in March

This is misleading. Musk repeatedly misrepresented the findings of that 2024 report from the Government Accountability Office.

The watchdog agency projected that the federal government lost between $233 billion and $521 billion annually to detected and undetected fraud during the 2018 to 2022 fiscal years. The estimate also was governmentwide, and not limited to fraud in entitlement programs or fraud committed using false Social Security numbers. The report gave several other examples of fraud like falsifying invoices, trafficking benefits and overbilling.

It was unclear whether Musk was arguing that the report was issued under the Biden administration or if all the fraud occurred under the Biden administration, but the time covered in the report included about three years under the Trump administration and over a year and a half under the Biden administration.

The GAO also estimated this month that $162 billion in improper payments -- which includes but is not limited to fraud -- from 16 federal agencies that reported data. Medicare and Medicaid were, by far, the largest sources, totaling some $85 billion in improper payments. The vast majority of those improper payments occurred because of insufficient documentation or billing that did not demonstrate sufficient medical necessity, according to both the GAO and the inspector general's office at the Department of Health and Human Services. Neither watchdog agency mentioned the misuse of Social Security numbers.

Federal agencies and watchdog organizations have long recognized that Social Security number misuse and identity theft are serious issues. But credible estimates of fraud committed using fake or stolen Social Security numbers do not come close to half a trillion dollars annually or 10 per cent of expenditures, as Musk asserted.

A review of a random sample of identity verification transactions for government programs in 2024 by TransUnion, a major credit bureau, found that 2 per cent of transactions involved a Social Security number previously used for a death benefit, 0.4 per cent involved a number with an unusual number of inquiries for a short time span and 0.1 per cent involved an identity flagged as a high synthetic identity risk, according to Greg Schlichter, the director of research and consulting for TransUnion's public services sector.

This amounts to "fraud risk exposure of hundreds of millions of dollars for some programs," Schlichter said, adding that entitlement programs were more susceptible to fraud and government agencies could institute more robust fraud detection without sacrificing access to benefits.

A February report from the Social Security Administration's inspector general's office found that the agency issued $32.8 billion in overpayments from the 2020 to 2023 fiscal year, including $13.6 billion from the main Social Security program and $19.2 billion from the supplemental program for some older, blind and disabled people. About 4 per cent of overpayments in the main program were issued after death and 3 per cent for those who obtained benefits fraudulently or were not US citizens. (Certain immigrants, such as lawfully admitted permanent residents, are eligible for some Social Security benefits, but the agency stops those payments if the immigrant lives abroad for more than six months.)

And separately the Pandemic Response Accountability Committee, a panel of inspectors general, estimated in 2023 that nearly 70,000 questionable Social Security numbers were used to obtain stimulus benefits totaling more than $5.4 billion.

What was said

"The Treasury's main payment computer, which is called PAM, I think it's like Payments Account Manager or something like that -- but it's like almost 5 trillion a year, so about a billion an hour -- that the payments be coded with the congressional appropriation and that there'd be an explanation for the payment. Very basic stuff. And just doing that, we estimate we'll save $100 billion a year." -- in the interview on Fox Business

"We're looking at PAM, it's like the payments have no -- you could put a payment through with no payment categorization code and no description on the payment, like basically untraceable blank checks." -- in the interview with Rogan

This is misleading. A federal judge in New York in late February barred members of the DOGE team from regaining access to the sensitive payment systems operated by the Treasury Department's Bureau of the Fiscal Service, but Musk continues to criticize one of those systems.

The Payment Automation Manager, or PAM, is a payment processing system developed over a decade ago to streamline payments across the government and standardize fiscal data to provide better transparency. It issues checks and deposits for the vast majority of federal payments including Social Security benefits and tax refunds. PAM processed more than $4.7 trillion in payments in the 2024 fiscal year.

Government watchdogs have found issues with payment traceability across the federal government, and specific ledger lines in PAM may not include the level of detail Musk is requesting. But he is wrong that those payments amount to "untraceable blank checks" and Musk has provided no evidence that omitting those details has caused $100 billion annually in improper payments.

Contrary to Musk's claims, PAM requires agencies to submit payment data in a standard format and include a "Treasury Account Symbol" and "Business Event Type Code," which identify an individual appropriation or fund account.

In fact, DOGE and the Bureau of the Fiscal Service used TAS codes to identify foreign aid payments for the State Department to review and halt under Trump's broad funding freeze, according to a February sworn statement from Tom Krause, a software executive recently appointed as an assistant secretary at the Treasury Department.

Krause, an ally of Musk's, also said that many Type B payments -- which he described as "lower value, higher volumes" ones -- processed in PAM are missing TAS codes. Krause noted that this has hampered the accuracy of the Treasury Department's bookkeeping. (The Treasury Department did not respond to a request for more detail.)

Type B payments are made in bulk, and details are provided for the entire batch, not for individual payments, according to the Treasury Department.

The Government Accountability Office, in annual audits, has identified "significant" deficiencies in how the government keeps track of these payments. Some federal agencies submit identification codes at a summary level, record transactions without the codes in their own ledgers, or revise data after submitting -- all of which make it difficult for the Bureau of the Fiscal Service to track individual payments across different government ledgers.

There has been progress in improving governmentwide traceability of individual payments, the accountability office said in its latest report, and the Bureau of the Fiscal Service has said it hoped to enact a uniform way of recording payments by the 2029 fiscal year, but would need the cooperation of other agencies to do so.

Neither the GAO nor Krause has estimated that lack of reporting detail in PAM leads to $100 billion annually in improper payments.

Nathan Tankus, an expert on payment systems who has reported extensively on the Bureau of the Fiscal Service, questioned Musk's figure. "The only way to get to $100 billion is to facilitate impoundment" and give PAM the power to stop congressionally appropriated payments, he said.

"But that's not the purpose of the system," Tankus said. "We want it to process payments as long as they're valid payments authorized by Congress, just like we want our bank to process our payments at the local grocery story without going, 'Huh? Why are you spending $200 at the grocery store? What about $150 instead?'"

What was said

Musk: "For example, like the simple survey that was literally a 10-question survey that you could do with Survey Monkey that costs you about $10,000, the government was being charged almost $1 billion for that."

Bret Baier, Fox News host: "For just a survey?"

Musk: "A billion dollars for a simple, online survey: Do you like the National Park?"

-- in an interview on Fox News on Thursday

This lacks evidence. Later in the interview, another member of the DOGE team specified that Musk was referring to $830 million in spending identified in conjunction with the Interior Department. This appears to have been a reference to the purported dissolution of a directorate in the Interior Department, not just one 10-question survey.

In a social media post this month, DOGE wrote that the Interior Department was dissolving its Federal Consulting Group, a little-known directorate that since 1987 has provided and procured consulting, executive coaching and survey services for other agencies. According to the post, the group had brokered a $75 million contract to design satisfaction surveys, and DOGE said it had canceled $830 million in unsigned "similar contracts" to be awarded by the group.

But there is no single contract for one 10-question web survey worth $75 million, let alone $830 million or $1 billion listed in DOGE's own list of terminated contracts as of Monday.

The largest contracts for surveys altered or canceled on DOGE's website were a Labor Department contract to survey agricultural workers (potential value of $32 million), a Department of Veterans Affairs contract for customer service surveys of medical disability exams (value of up to $20 million) and another Veterans Affairs contract for a patient satisfaction survey (up to $16 million).

The DOGE database, which has repeatedly included numerous errors, lists about $442 million worth of Interior Department contracts, with savings of about $144 million. That includes about $7 million worth of surveys with savings of about $400,000, the largest of which was a $2 million contract to help the Agriculture Department conduct surveys about food stamps.

Public government spending databases show about $87 million of contracts with award language referring to the Federal Consulting Group since the 2010 fiscal year. It is possible that the group was involved in other contracts canceled by DOGE but was not cited in award language. For example, the group works with a private company to administer surveys tracking satisfaction with federal services across a number of agencies. That company has received about $4 million to $5 million annually in contracts.