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Big Government Fuels Fraud: Cut It by Two-Thirds and Save Billions

AP Photo/Damian Dovarganes

Our federal government has grown out of control. Spending has surpassed GDP. Our national debt approaches $39 trillion - that's "trillion" as in a "T" followed by a "rillion." This is completely beyond the bounds of what our founders envisioned, beyond what they could have imagined, beyond the worst nightmares they ever had.

Mind you, the United States isn't a small collection of 13 states clinging to the Atlantic coast anymore and depending on agriculture for much of its economic activity. We are the big kids on the block now, and the best efforts by generations of Democrats notwithstanding, we are still the greatest military and economic power in the world. Uncle Sam stands astride the world like a Colossus, and that is going to mean that our national government has to expand to make that military and international trade power work.

The problem is, our government has grown all out of proportion to its constitutional boundaries. Military and international trade are properly in the purview of the national government, but many other things that Washington handles today are not, and that is leading to a lot of problems, not the least of which are the rampant welfare frauds that are costing our nation billions of dollars. A recent editorial over at Issues & Insights makes a good point:

Bandits have been defrauding of the U.S. government on such a colossal scale that even the legacy media has had to cover it, at least somewhat. The Minnesota Somalis looting the public fisc blew the lid so high that now smart folks are finding institutionalized fraud far, wide, high and low.

As noted in a March executive order, “the Government Accountability Office estimates that the federal government loses between $233 and $521 billion annually to fraud.” That higher number might be in reality a low-end estimate, because the money flows from Washington from a number of orifices outside the Treasury Department, and an accurate tracking is simply not possible.

That's almost certainly a low estimate. The more money passes through the fists of Washington's bureaucracy, the more is siphoned off. This isn't all criminal; some of it is just inefficiency. If you're going to be anything, you should be efficient, and Washington, well, isn't. Bureaucracy is inefficient by nature, and this practice of grants to states to fund these programs is an inefficiency that makes the 1970s Italian driver's license application system look like a model of efficiency in action. 

Washington takes money from the citizens with the threat of implied force. Yes, really; if you don't believe me, stop paying your federal taxes, and wait and see; they will, sooner or later, send men with guns out looking for you. That money goes into the treasury and is parceled out through the various layers of bureaucracy, each of which siphons off some of the increment. Then, in the case of these welfare programs and other functions, some of it is parceled out to the states in the form of grants, and then, at the state level, the same thing happens - and again at the county/municipal level. There are so many layers here that the opportunities for waste and fraud are legion. 

Cutting the biggest, most disorganized layer out of this foul cake could help a lot.

Here's the onion:

A government as immense as the monster in Washington that sends grants to state and local governments creates a multitude of gateways for graft and corruption.

“Large increases in grant revenues (i.e., windfalls) provide opportunistic actors with an expectation that they can engage in corrupt practices before such systems are adequately implemented,” say the authors – three of them from George Washington University in our nation’s capital – of an academic paper published in 2024.

They suggested “the appointment of a new federal oversight agency” would have a “deterrence effect,” as it would be able to put “fresh eyes” on the process and monitor local government more closely. But as J.D. Tucille noted in a review of the paper for Reason, “reining in corruption isn’t easy.”

The only logical solution is to limit the possibilities by thoroughly downsizing the beast, which has grown well beyond the point to which its size has nurtured and sustained the “professionalized the pathways of corruption” and “is doing many more things than can be done with tolerable honesty.”

We can certainly do that, and should. But there's a more compelling reason.


Read More: 'People Will Be in Handcuffs': Karoline Leavitt on WH Response to Minnesota Fraud Under Walz

The Trump/Bondi DOJ Is Aggressively Pursuing Multiple Fraud Investigations in MN; Here Are the Details


This is the reason:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

The problem is that the 10th Amendment has been mostly ignored by Washington since at least 1860. Oh, now and then, a politician will make some noise about the proper roles of the federal government, or a minor court case may reflect on the 10th in resolving the matter. But look at what's been going on in Minnesota, with the rampant fraud sucking away millions in taxpayers' dollars in programs that were intended to subsidize day care centers and meals programs; there is nothing in the Constitution that names these things as an enumerated power of the Executive or Legislative branches of the federal government.

That means that, according to the Constitution, they can't do it.

The solution? Devolve all these programs to the states. No block grants; no federal involvement at all. Cut federal taxes. Tell the states, "you're on your own." Not only will this help in returning Washington to its proper constitutional prerogatives, but it will also reduce the runaway waste involved in the many and varied levels of bureaucracy. Best of all, if Minnesota decides to look the other way while massive fraud is undertaken in a welfare program, it will only be the people of Minnesota who are stuck with the tab, not the taxpayers in the other 49 states. Minnesotans then may deal with their own elected officials.

While these matters would then be up to the states, the second opportunity here is to return the system to what "relief" originally was: A minimum, to keep people who are temporarily down on their luck from freezing or starving to death. That's all. It shouldn't be a lifestyle; as the saying goes, a hand up, not a handout.

Of course, the likelihood of any of this happening is essentially nil. But it makes too much sense, so I will maintain my advocacy of ideas like this; and, honestly, the world has no shortage of windmills to tilt at.

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