US Government Loses $521 Billion Annually to Fraud: Why Is the Trump Administration Targeting California and Minnesota?

The US federal government has once again imposed fiscal tightening measures on state governments. Former Republican Congressman Ken Buck recently wrote in a column that the Trump administration, citing suspected fraud and non-compliance, has suspended over $1 billion in Medicaid funding to California and Minnesota at the end of last month. He sharply criticized years of federal oversight failures, which he says have allowed government fraud and wasteful spending to persist unchecked.

Ken Buck, approximately 65 years old and originally from Colorado, joined the US Department of Justice in 1987 and served as a federal prosecutor for 15 years. From 2005 to 2014, he was elected three times as the District Attorney of Weld County, where crime rates dropped by 50% during his tenure. He represented Colorado's 4th congressional district in the US House of Representatives from 2015, serving on the House Judiciary and Foreign Affairs Committees, and as the Ranking Minority Member of the Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law. He resigned from Congress in March 2024 and is now a columnist and public speaker, focusing on limited government, fiscal discipline, and anti-monopoly issues.

Americans lose as much as $521 billion annually to fraud, according to reports. The funds now frozen follow an earlier move by the Centers for Medicare & Medicaid Services (CMS) earlier this year, which had already suspended $1.5 billion in payments to these two states. Buck stated that this sends a clear message: any state unwilling to seriously address fraud and wasteful spending will have the federal funding spigot swiftly shut off.

Citing estimates from the US Government Accountability Office (GAO), Buck noted that US taxpayers may lose up to $521 billion annually to fraud. The federal government made at least $186 billion in improper payments last year, more than half of which occurred in healthcare-related programs. Buck also mentioned that since 2003, the federal government has cumulatively made $3 trillion in improper payments, and a recent report found that just 20 federal programs account for nearly 90% of federal spending obligations and are classified as high-risk.

In his column, Buck criticized Democratic-led states for long failing to effectively crack down on such fraudulent claims, while arguing that common-sense measures to verify eligibility unfairly disadvantage vulnerable populations. Using the example of employees submitting documents to employers, he questioned why recipients of government benefits should not undergo similar identity verification. He also compared this to background checks, waiting periods, safety courses, and age restrictions required for gun purchases, criticizing the Democratic stance on welfare eligibility reviews as contradictory.

The report noted that the Trump administration’s focus on California and Minnesota is not arbitrary. Media reports cited in the article describe California under Governor Gavin Newsom as a 'fraud empire,' claiming the state has lost at least $180 billion due to fraud and mismanagement. During the pandemic, California’s unemployment insurance fraud exceeded $32 billion. The article also pointed out that California spent $24 billion on homelessness programs between 2019 and 2024, yet the homeless population increased rather than decreased. Recently, investigations revealed that some hospice care providers are suspected of large-scale fraud involving Medicaid and Medicare funds.

Buck further noted that under Newsom’s leadership, California’s public health program Medi-Cal saw its spending surge from $94 billion in 2018 to over $197 billion, while the state’s population declined during the same period. He views this as a clear warning sign, indicating either state government negligence or serious dereliction of duty.

As for Minnesota, Buck accused the state of becoming a breeding ground for fraud as well. The article mentioned that under Governor Tim Walz’s administration, fraudulent claims for social benefits were allowed to go unchecked, resulting in taxpayer losses exceeding $9 billion. A June report from the US House Oversight Committee also found that Walz failed to adequately address widespread abuse of the state’s social welfare programs despite receiving multiple warnings over the years. The report indicated that CMS’s current suspension of funding to Minnesota targets 14 programs identified by the state legislature’s auditors as high-risk and prone to fraud.

Buck emphasized in his column that defrauding public funds should not be ignored until major scandals erupt, as the severity is no less than armed robbery. However, he argued, left-wing groups choose to tolerate this phenomenon, preferring to allocate resources to criminals and undocumented immigrants rather than wisely using hard-earned taxpayer money, because accountability mechanisms do not help expand the scale of social welfare programs in their view.

At the end of the article, Buck praised the 'Fraud Elimination Task Force' established earlier this year and chaired by Vice President JD Vance. He noted that since its inception, the task force has uncovered $230 billion in government fraud and blocked $56 billion in improper payments, indicating broad public support. He believes the suspension of funding to California and Minnesota is an important step in preventing the draining of federal funds and hopes it will prompt other states to strengthen anti-fraud measures or reduce their overreliance on federal funding sooner.