TL/DR –
The Republican mantra of “Fraud, waste and abuse” in government programs is being used to justify cuts to programs that serve Americans, such as the Federal Food Stamp budget (SNAP), without addressing specific acts of fraud. This strategy rewards states with high “payment error rates” by reducing their contribution to SNAP, leaving other states to cover the 20% reduction in Federal payments for this program. Additionally, the IRS budget has been reduced by over 30% from 2010 to 2021, with proposals for further cuts, undermining its ability to perform audits and collect taxes owed, especially from high-income individuals and corporations.
Fraud, Waste, and Abuse in Government Programs
The phrase “Fraud, waste, and abuse” has been used repetitively by Republicans, particularly under the Trump administration, as a justification for slashing government programs. Despite the lack of concrete evidence of such malpractices, these programs, including the Federal Food Stamp program (SNAP), have seen budget cuts of up to 20%. Regrettably, these cuts seem to overlook actual instances of waste. For instance, states with “payment error rates” higher than 1.5 times the national average – such as Alaska – received favorable treatment during Trump’s bill negotiations. This favorable policy means the most error-prone states will pay less for SNAP, forcing other states to cover the 20% cut in Federal payments. The Center on Budget and Policy Priorities calculated that Iowa would have paid an additional $53 million for SNAP under this policy last year.
Significant IRS Funding Cuts
Amidst efforts to reduce costs, the IRS has seen its budget slashed by over 30% between 2010 and 2021. The Inflation Reduction Act proposed an $80 billion appropriation, spread over ten years, to modernize and improve the IRS’s services and enforcement. However, this proposal was halved by Republicans, with further cuts by DOGE, and Trump considering rescission. These decisions disregard the fact that increased enforcement (i.e., audits) can significantly reduce the $690 billion tax gap – the difference between taxes legally owed and those actually paid.
With proper funding, the IRS could conduct more audits on high-income returns, leading to rapid increases in collections. A study by Stanford showed that returns from some complex corporate returns could reach up to $20 for every $1 invested in auditing. However, due to IRS staff reductions, high-income audits have seen a 71% decline in recent years.
While some argue that government budget cuts reduce fraud, waste, and abuse, cutting IRS support seems to prove otherwise. Not only does it risk leaving money on the table, it weakens the deterrent effect of a higher audit rate, potentially encouraging potential tax evaders.
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