Bureaucracy Times

All the news fit to be declassified.

Category: Bureaucracy in Focus

  • The Federal Budget Works Until 2056, Provided Social Security Keeps Paying Benefits After Its Trust Fund Runs Dry

    The Congressional Budget Office has published its latest look at the federal government’s finances over the next three decades.

    The numbers do not improve with scrutiny.

    Under CBO’s February 2026 long-term projections, federal debt held by the public rises from roughly 101 percent of gross domestic product in 2026 to 120 percent in 2036. By 2056, it reaches 175 percent of GDP.

    That is an extraordinary number. Yet buried inside the spreadsheets supporting the projection is another problem that arrives much sooner.

    Social Security’s largest trust fund runs out of reserves in 2032.

    The combined Social Security trust funds follow in 2033.

    And CBO’s long-term federal budget projection generally assumes scheduled Social Security benefits continue to be paid anyway.

    That does not make the projection wrong. It does, however, make understanding what CBO is actually projecting rather important.

    CBO describes its long-term budget outlook as an illustration of what federal finances and the economy would look like over the next 30 years if current laws generally remained unchanged. It is a baseline, not a prophecy.

    The distinction becomes particularly important when Social Security enters the spreadsheet.

    The Revenue Line Barely Moves

    CBO published a separate workbook containing its 2026 long-term Social Security projections as a supplement to its broader Long-Term Budget Outlook data.

    Reading the two together provides a clearer picture than either does alone.

    One of the most striking findings is what does not happen.

    Social Security tax revenues do not collapse.

    In 2026, CBO projects Social Security tax revenues equal to approximately 4.51 percent of GDP.

    By 2030, the figure is approximately 4.53 percent.

    In 2036 it remains about 4.52 percent.

    Even in 2056, Social Security tax revenues are projected at roughly 4.46 percent of GDP.

    The revenue line is remarkably stable.

    The spending line is not.

    Scheduled Social Security outlays equal approximately 5.26 percent of GDP in 2026.

    They rise to about 5.61 percent in 2030.

    By 2036, that figure reaches 5.91 percent.

    By 2056, scheduled outlays remain around 5.79 percent of GDP.

    That produces a persistent structural gap between dedicated Social Security tax revenues and scheduled benefits.

    In 2026, that difference amounts to approximately 0.75 percent of GDP.

    By 2030 it exceeds 1 percent.

    In 2036, it reaches approximately 1.38 percent.

    The basic problem is therefore not disappearing revenue. It is a system whose scheduled expenditures increasingly exceed the dedicated tax revenues supporting them.

    The demographic explanation is not particularly mysterious. In CBO’s 2026 demographic outlook, the agency projects that the population will continue aging while growth slows substantially. Beginning in 2030, CBO expects deaths to exceed births annually. The number and age distribution of Americans directly affect both the workforce paying Social Security taxes and the population receiving retirement benefits.

    The economy, meanwhile, continues growing.

    CBO’s Social Security tables project nominal GDP increasing from roughly $32.3 trillion in 2026 to approximately $96.5 trillion in 2056.

    Taxable payroll rises from about $11.3 trillion to $32.6 trillion.

    This is not a projection built around economic collapse.

    The economy becomes much larger.

    The financing gap survives anyway.

    Then the Reserves Disappear

    The trust fund numbers make the timeline considerably less abstract.

    CBO projects the Old-Age and Survivors Insurance trust fund ratio at 1.53 in 2026. It falls to 1.07 in 2028, 0.60 in 2030, 0.36 in 2031 and 0.12 in 2032.

    Then the number disappears.

    CBO projects that the OASI trust fund will be exhausted during fiscal year 2032. When the Disability Insurance trust fund is included, combined Social Security reserves are projected to be exhausted in 2033.

    Those findings are also laid out in CBO’s March 2026 testimony to the Senate Budget Committee on Social Security’s finances.

    Trust fund exhaustion does not mean Social Security suddenly has no money.

    Payroll taxes and other Social Security revenues continue arriving after the reserves disappear. The problem is that those revenues would not be sufficient to pay all scheduled benefits.

    CBO’s supplemental spreadsheet shows just how large that difference could become.

    If benefits after trust fund depletion were limited to amounts payable from available Social Security revenues, combined OASDI benefits would be approximately 23 percent below scheduled benefits in 2034.

    The reduction reaches roughly 24 percent during several subsequent years.

    The situation is even sharper when OASI is examined independently. CBO’s tables show payable benefits approximately 26 percent below scheduled benefits in 2033, 28 percent below in 2034 and 2035, and 29 percent below in 2036 and 2037.

    Those are not predictions that Congress will cut Social Security benefits by those amounts.

    They illustrate what the financing mechanism can support if scheduled benefits are compared with revenues available after reserve depletion. CBO’s Social Security testimony specifically describes this as a payable-benefits scenario and emphasizes the uncertainty surrounding long-term projections.

    And that distinction leads directly into one of the stranger features of the federal government’s long-term budget projections.

    Two Futures Inside the Same Spreadsheet

    For purposes of its federal budget baseline, CBO generally assumes that Social Security will continue paying scheduled benefits.

    Its Social Security analysis simultaneously calculates what benefits would look like if payments were instead limited by available program revenues after trust fund exhaustion.

    Both calculations are useful.

    They are also very different futures.

    In one, scheduled benefits continue after the reserves financing the existing gap have disappeared.

    In the other, payable benefits fall substantially below scheduled benefits.

    Congress does not have to accept either outcome untouched. Lawmakers could change taxes, alter benefits, transfer money, restructure portions of the program, adopt some combination of those approaches, or pursue other legislative changes.

    CBO is not predicting what Congress will do.

    It is displaying the arithmetic of what happens under specified assumptions.

    That distinction becomes increasingly important because Social Security is only one part of the government’s larger fiscal problem.

    Interest Eventually Costs More Than Social Security

    According to CBO’s 2026 Budget and Economic Outlook, federal debt held by the public reaches approximately 120 percent of GDP in 2036.

    The annual federal deficit reaches roughly $3.1 trillion that year, equal to about 6.7 percent of GDP.

    Then the interest bill becomes a problem of its own.

    By 2056, CBO projects net federal interest spending equal to approximately 6.9 percent of GDP.

    Social Security spending is projected at roughly 6 percent.

    Put differently, under CBO’s long-term baseline, the federal government eventually spends a larger share of the entire national economy servicing its debt than it spends on Social Security.

    Interest does not provide retirement benefits, build roads, purchase aircraft, inspect food, or prosecute crimes.

    It services previous borrowing.

    And as debt accumulates, interest becomes another source of deficits, which can require additional borrowing, which produces additional interest.

    By 2056, debt held by the public reaches 175 percent of GDP.

    Yet the most consequential decisions may arrive more than two decades before that endpoint.

    The Fiscal Collision Arrives Earlier Than 2056

    The timelines from CBO’s two workbooks can be placed beside each other.

    Social Security already spends more than its dedicated tax revenues in 2026.

    The OASI trust fund is projected to exhaust its reserves in 2032.

    Combined Social Security trust fund reserves are projected to be exhausted in 2033.

    By 2034, payable combined benefits would be roughly 23 percent below scheduled benefits if payments were limited by available Social Security financing.

    By 2036, federal debt reaches approximately 120 percent of GDP while the annual deficit reaches 6.7 percent.

    Then the debt and interest burden continue climbing for another 20 years.

    The Social Security financing decision does not wait for the broader debt problem to arrive.

    It gets there first.

    That makes the headline number of 175 percent debt-to-GDP somewhat deceptive as a measure of when the problem becomes important.

    Washington does not have 30 years before it encounters the arithmetic.

    According to CBO’s own projections, one of the largest federal programs reaches its financing crossroads within roughly seven years.

    And Then Reality Changed Five Days Before Publication

    There is one final wrinkle in CBO’s 30-year outlook that demonstrates just how carefully these projections should be interpreted.

    CBO released its long-term outlook data on February 25, 2026.

    The agency included an unusual but important qualification.

    Its projections did not incorporate the budgetary or economic effects of the Supreme Court’s February 20 ruling concerning tariffs.

    Five days.

    CBO produced a federal fiscal projection extending three decades into the future while acknowledging that a major event occurring five days before publication had already changed part of the landscape underlying the baseline.

    That is not a criticism of CBO. Producing long-term economic projections requires freezing assumptions at some point. Otherwise, the spreadsheet would never leave the building.

    It is, however, an excellent demonstration of what a baseline actually represents.

    And we no longer have to speculate about whether the omitted tariff developments were financially meaningful.

    In an August update to its tariff projections, CBO estimated that trade-policy changes through July 31 would increase cumulative federal deficits during fiscal years 2027 through 2036 by approximately $900 billion compared with the agency’s February baseline.

    About $700 billion of that difference comes from larger primary deficits. Another $200 billion comes from additional debt-service costs.

    CBO said the increase was largely driven by the removal of tariffs imposed under the International Emergency Economic Powers Act following the Supreme Court decision. The administration subsequently imposed other tariffs, but CBO projected that those would generate less revenue than the tariffs removed after the ruling.

    That $900 billion should not simply be pasted onto CBO’s 2056 debt number. Tariff policy affects revenue, prices, trade, economic activity and debt-service costs, and the policies themselves have changed repeatedly.

    But the episode provides a useful reminder.

    Thirty years is a very long time in federal budgeting.

    Apparently, five days can be enough.

    The Spreadsheet Is Not the Future

    None of CBO’s projections establish that federal debt will equal exactly 175 percent of GDP in 2056.

    CBO itself warns that its baseline projections are subject to considerable uncertainty and that future legislation, administrative actions, judicial decisions and economic developments could produce markedly different results.

    They do not establish that Congress will allow scheduled Social Security benefits to exceed dedicated financing indefinitely.

    Nor do they establish that lawmakers will permit payable benefits to fall roughly one-quarter below scheduled amounts after trust fund depletion.

    Those are policy questions that remain unresolved.

    What CBO’s spreadsheets do establish is the scale of the arithmetic confronting whoever eventually has to resolve them.

    Social Security’s dedicated revenue remains relatively stable while scheduled expenditures exceed it. Trust fund reserves absorb the difference for a while. Those reserves eventually disappear.

    At roughly the same time, the broader federal government is running persistent deficits, accumulating more debt and devoting an increasingly large share of national economic output simply to paying interest.

    CBO can project that process all the way to 2056.

    Congress does not have the luxury of waiting that long to decide what happens next.

    Sources: CBO, The 2026 Long-Term Budget Outlook (February 2026); CBO, The Budget and Economic Outlook: 2026 to 2036; CBO, The Demographic Outlook: 2026 to 2056; CBO, Social Security’s Finances: March 2026 Senate Budget Committee testimony; CBO, August 2026 update on tariff revenue effects.

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  • The Postal Service Knew. It Filed a Meeting Agenda Instead.

    The United States Postal Service lost $9 billion in fiscal year 2025. Somewhere between $3.6 billion and $5 billion of the surrounding rot, spread across counterfeit shipping labels, counterfeit stamps, and a payment system nobody bothered to fraud-test before launch, was not a mystery to the agency while it happened.

    It was, by the Postal Service’s own admission, something people inside the building had flagged, discussed, and in at least one case warned about in writing more than a year before anyone shut anything down. This is not a story about an agency that failed to notice a problem. It is a story about an agency that noticed, formed a working group, and kept mailing.

    A Timeline That Reads Like a Confession

    Start with the number that should embarrass everyone involved. From March 2024 through February 2026, the Postal Service’s own Office of Inspector General says counterfeit package labels drained $3.1 billion in unrecoverable revenue, with another $520 million projected through 2028. Ninety seven percent of counterfeit labels identified in that window made it all the way to delivery.

    The detection system built to stop them, the Counterfeit Postage Intercept Process, caught the labels it was designed to catch in 2023 and then sat still while counterfeiters moved on, the institutional equivalent of reinforcing the door after the windows had been open for a year.

    The Enterprise Payment Account fraud embedded in that mess has its own paper trail, and it is the most damning document in the pile. Corporate Treasury warned Postal Service stakeholders about the vulnerability in January 2025. The agency did not officially identify the fraud until May 2025.

    The Inspector General discovered it independently that August, during unrelated site visits, which is its own small humiliation; the watchdog found the fire before the fire department did. The agency did not shut down the roughly 2,800 fraudulent accounts responsible until January 2026, a full year after Treasury’s first warning, by which point December alone had bled $125 million in a single month, 14 percent of that month’s entire label revenue.

    The Inspector General’s own words on the agency’s response were blunt: “the measures have not been timely or robust enough to counter this fraud scheme.” OIG’s audit traced the root cause to something administratively poetic. Treasury, the office responsible for catching fraud, had no consultation rights and no decision authority over the very payment system fraud was flowing through. The system was never tested for fraud prevention before it went live.

    A Machine That Cannot See What It Was Built to See

    If the label fraud is a story about warnings ignored, the companion audit on counterfeit stamps is a story about equipment deliberately blinded. The Postal Service’s primary stamp authenticator, the Advanced Facer Canceller System 200, can run in a mode that catches nearly everything or a mode that catches almost nothing, and management chose the second one to save processing time.

    When the Inspector General ran its own controlled test, feeding the machine counterfeit stamps in its low-revenue protection setting, the machine caught none of them. Zero. Management’s defense amounted to a cost argument, and a fair one on its own terms, except that nobody then bothered to implement any interim check, such as basic sample testing, to find out how much fake postage was sailing through in the meantime. That gap alone, OIG estimates, put $337 million at risk in a single fiscal year.

    The stamp fraud also has an online dimension that makes the agency look almost quaint. A contractor hired to scan the internet found 8,895 instances of counterfeit stamps being marketed or sold in under two months. The Postal Service takes over 30 days to disable an online threat once found; the contractor’s industry benchmark is eight.

    The Inspector General points out, not unkindly, that the agency already uses the Lanham Act aggressively to sue people selling unlicensed eagle-logo T-shirts and baseball caps, and applies it far less often to people selling fake postage using the same logo. Priorities, evidently, are a choice.

    Ninety Seven Cases, Nine Convictions, One Percent Recovered

    Here the story stops being about detection and becomes about consequence, or the near total absence of it. Between 2020 and 2025, the Postal Inspection Service presented 44 counterfeit label cases to the Department of Justice for prosecution.

    Nine were accepted. All nine won convictions, a perfect record on the cases federal prosecutors bothered to take, which only sharpens the question of why 35 others were turned away and why the agency still cannot say. The Inspector General recommended a simple fix, a structured data field to track why DOJ accepts or declines a case, so patterns could inform future referrals.

    The Postal Service disagreed, arguing the information “is not provided” by DOJ in the first place, an answer that concedes the problem while declining to solve it.

    Of the $57 million in losses the Inspection Service actually identified through investigation over that same five year window, it recovered $572,250. About one percent. The delay between a search warrant and a seizure warrant runs four to five months, plenty of time for a suspect whose bank has already tipped him off to walk the money elsewhere.

    The agency had two untapped options available to it. One was the Revenue Deficiency Process, an administrative billing mechanism. The other was simply referring cases to state prosecutors. It has used neither with any consistency. When OIG recommended exploring both, management disagreed with that too, and pointed to a prior report about stamps as though it had already answered a different question.

    The Working Group That Was Not a Program

    None of this happened for lack of meetings. The Postal Service assembled a “Fraud Analytics and Mitigation” team, held regular cross-functional sessions, and produced slide decks. What it did not produce, across two years and two separate audits, was a signed program charter, a clear line of decision authority, or meeting minutes documenting what was decided and why.

    Management’s own response to the recommendation that it fix this was that formal governance amounted to unnecessary overhead given how fast fraud moves, an argument that would carry more weight from an agency that had, in fact, moved fast.

    The Postal Service agreed with eight of the eleven recommendations in the label audit and rejected three, all in the section on prosecution. It agreed to all four recommendations in the stamps audit and all five in the payment account alert, mostly after the money was already gone.

    Every implementation date attached to a real fix lands sometime between April 2026 and August 2027. The Inspector General will keep filing reports. The agency will keep filing agendas.

    The $3.62 billion did not wait for either.

    Sources: Efforts to Mitigate Counterfeit Postage (USPS OIG, Report 25-072-R26, September 10, 2026); Counterfeit Stamps (USPS OIG, Report 25-121-R26, June 16, 2026); Management Alert: Enterprise Payment Account Fraud (USPS OIG, Report 25-072-2-R26, February 10, 2026)

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  • The Ten-Year Plan That Forgot to Have an End Date

    In March 2021, the United States Postal Service unveiled Delivering for America, a ten-year plan promising, in essence, that a 246-year-old delivery monopoly could be reengineered into something resembling a modern logistics company, if only it was allowed to consolidate a few hundred facilities, reroute the mail through fewer hubs, and quietly stretch the definition of “on time.”

    Five years and roughly $40 billion in projected investment later, the Postal Service’s own Office of Inspector General has produced a report that reads less like a progress update and more like a diagnosis delivered with the studied gentleness reserved for patients who are not going to like the prognosis.

    The topline finding, stated with bureaucratic understatement, is this: the Postal Service has cut costs, reorganized its network, and reduced transportation and processing expenses by roughly $2.75 billion combined. Its annual net loss has not moved. It stood at $9.18 billion in FY 2020 and sits at $8.98 billion in FY 2025, a rounding error’s worth of improvement bought with five years of institutional upheaval.

    Meanwhile the controllable loss, the metric management prefers because it excludes the pension obligations Congress has never fixed, grew to $2.75 billion. The organization has, in other words, gotten leaner and no less broke.

    Rural America Gets the Extra Day

    The plan’s central mechanism, the Regional Transportation Optimization initiative, works by no longer whisking mail from small post offices into the processing stream the same day it is collected. Instead, mail from offices more than fifty miles from a processing facility waits, gaining the Postal Service a cheaper truck schedule and gaining the customer an extra day of transit that did not exist before.

    When fully deployed, RTO will touch 72 percent of ZIP codes in the contiguous United States, and its distribution is not evenly shared: 86 percent of rural populations are affected against 45 percent of urban ones. Five entire states (Louisiana, South Dakota, Vermont, West Virginia, and Wyoming) will be RTO in full.

    The OIG’s examples do the rhetorical work no press release ever will. First-Class Mail crossing Vermont, a state 157 miles long, now takes four days instead of two. A letter from Pierre to Rapid City, South Dakota, 172 miles apart, went from a three-day standard to five.

    The report also traces a piece of mail from Providence, Rhode Island, to Akron, Ohio, a route that now detours through Massachusetts and Indianapolis before it can reach Ohio, the postal equivalent of routing a phone call through three area codes to save money on the switchboard. None of this is malfunction. It is the plan working as designed, which is precisely the problem the OIG is pointing at.

    The Postal Service says it expected 95 percent on-time delivery under the redesigned network. Performance improved briefly after the changes began, then declined again across every mail class in FY 2024 and stayed down through FY 2025, ticking upward only in the first half of FY 2026.

    RTO ZIP codes trail non-RTO ZIP codes by roughly eight percentage points on First-Class Mail, a gap that widened even after management padded the delivery standards in 2025 to make the numbers look better on paper. When the target keeps moving to meet the outcome, the outcome stops meaning very much.

    A Ten-Year Plan Without a Program Manager

    Here the report shifts from documenting outcomes to documenting something closer to institutional negligence. Delivering for America was sold to Congress, employees, and the public as a structured ten-year plan with $40 billion in investment and $22 billion to $31 billion in projected savings.

    In FY 2024, quietly and without much public notice, the Postal Service updated the plan and removed the savings targets and budget goals entirely. Management now describes DFA as a “strategic direction” rather than a plan with numbers attached, which is a remarkably convenient thing to decide once the original numbers stop being achievable.

    There is no centralized program office tracking the transformation as a whole, no overarching timeline, and no mechanism to report how much of the ten-year plan has actually been completed.

    The OIG had to calculate that figure itself: as of March 2026, fourteen of sixty planned regional processing centers were operating, along with seventy-three of a planned one hundred ninety local processing centers and a hundred fifty-four of four hundred planned sorting and delivery centers. Less than half of the network redesign is finished, five years into a ten-year plan, and nobody at USPS headquarters can currently tell you, in dollars, what finishing the rest will cost.

    Management has acknowledged total costs may exceed the original $40 billion estimate. By how much, it will not say, because it no longer tracks the number.

    The report is even less forgiving on modeling. USPS built its network redesign, including the Atlanta and Richmond processing centers, on volume projections that ignored trailer counts, loading times, and dock space, resulting in mail trucks idling for up to thirteen hours waiting to unload.

    Separately, USPS signed an air cargo contract with volume minimums it then discovered it could not meet with packages alone, forcing it to divert First-Class Mail back onto planes, directly undoing the surface-transport strategy the rest of the plan depends on. An organization that cannot model its own truck bays is now being asked to manage a ten-year, $40 billion transformation on the honor system.

    Standardization: The Part of the Plan Nobody Finished

    The most damning finding is also the driest. The entire premise of the redesigned network was that new regional processing centers would be functionally interchangeable, standardized boxes that could be measured, compared, and managed from a national dashboard.

    Instead, the OIG found that the Atlanta and Indianapolis centers, both purpose-built at a combined cost exceeding $700 million, perform entirely different functions. Atlanta consolidates local mail collection, cancellation, and express mail processing in one building. Indianapolis spreads the same functions across three separate facilities. Table 6 of the report lists fourteen regional centers using five different sorting machine types with no consistent pattern for what gets done where.

    The Postal Service built a national network and ended up with fourteen local ones, which is precisely the fragmented, custom-solution architecture Delivering for America was supposed to replace.

    Layered on top of that is a persistent scanning problem, flagged across five separate OIG audits, in which manual, error-prone scanning at modernized facilities undermines the very tracking visibility the new network was supposed to deliver. The OIG recommends automation. Management’s response, that full standardization is “impractical” given legacy infrastructure, is the kind of sentence that would have sounded more convincing before the agency spent five years and $40 billion trying to do exactly that.

    The Verdict, Such As It Is

    To its credit, the Postal Service agreed with all five OIG recommendations, which is the bureaucratic equivalent of nodding solemnly at a doctor while reaching for a cigarette on the way out.

    It will build a five-year program schedule by mid-2027.

    It will standardize efficiency measurement by 2027.

    It will look into automated scanning by 2027.

    All of it is achievable, none of it is new, and all of it should have existed before the agency spent a decade’s worth of political capital and public patience rerouting the mail through more hubs than the routes require.

    Delivering for America has, by its own auditor’s account, delivered cost savings without delivering solvency, and standardization without delivering standards. The plan has five years left to prove it was worth the wait.

    Rural Vermont, waiting an extra two days for a letter to cross a state you can drive in three hours, is not optimistic.

    Source: USPS Office of Inspector General, Delivering for America: Five-Year Assessment (Report 26-042-R26, September 2026).

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  • Congress Just Voted to Create a DOJ Fraud Division. DOJ Already Created It.

    The House overwhelmingly approved a new National Fraud Enforcement Division. The Justice Department has already assembled roughly 500 attorneys and staff, shifted authorities from existing components and asked for another $30 million to expand it.

    WASHINGTON — On September 16, the House of Representatives voted 352-72 to pass legislation establishing a National Fraud Enforcement Division within the Department of Justice.

    According to the official House Clerk roll call, H.R. 9576 passed with 352 yeas, 72 nays and nine members not voting.

    It sounds straightforward enough.

    There is a great deal of fraud. Congress wants a Justice Department division dedicated to fighting it. Republicans and Democrats overwhelmingly agreed. Every Republican who cast a vote supported the legislation, as did 139 Democrats and the House’s lone independent.

    There is just one peculiar wrinkle.

    The National Fraud Enforcement Division already exists.

    The Justice Department created it months ago, began transferring personnel and prosecutorial authority into it, established its organizational structure, put it to work and announced plans for substantial expansion.

    Congress, in other words, has voted overwhelmingly to create an organization the executive branch has already created.

    Welcome to federal organizational management.

    A 352-72 Vote That Wasn’t Quite Bipartisan Uniformity

    H.R. 9576, the National Fraud Enforcement Division Act of 2026, was introduced July 2 by Reps. Brad Finstad of Minnesota and Derek Schmidt of Kansas.

    The bill is remarkably brief for legislation establishing an organization of this scale.

    It creates the National Fraud Enforcement Division under the Attorney General and places it under an Assistant Attorney General appointed by the president and confirmed by the Senate.

    That official would lead DOJ efforts to investigate and prosecute fraud affecting the federal government, federally funded programs and American citizens. The division would coordinate multi-district and multi-agency investigations, assist U.S. Attorneys’ Offices, develop national fraud enforcement priorities and recommend legislative and regulatory changes.

    The final House vote was lopsided.

    Republicans voted 212-0 in favor. Democrats divided 139-72, with three not voting. The House’s lone independent also supported the bill, according to the House Clerk’s voting record.

    The opposition therefore came entirely from Democrats, although roughly two-thirds of Democrats casting votes supported passage.

    The result is notable because the rule governing consideration of H.R. 9576 and several other measures had passed only 214-211 the previous day, largely along party lines.

    Whatever disagreements surrounded the legislative package, H.R. 9576 itself attracted broad support.

    That may have something to do with the size of the problem.

    There Really Is an Enormous Fraud Problem

    The federal government’s fraud problem is not particularly controversial.

    The Government Accountability Office estimates that direct annual fraud losses to the federal government range from $233 billion to $521 billion, based on data from fiscal years 2018 through 2022.

    Federal fraud enforcement, however, was hardly nonexistent before someone thought of creating a National Fraud Enforcement Division.

    The Justice Department’s Criminal Division already maintained a Fraud Section. Within it were specialized operations dealing with health care fraud and market, government and consumer fraud.

    U.S. Attorneys’ Offices prosecute fraud throughout the country. The FBI investigates it. Federal inspectors general investigate fraud involving their agencies and programs. DOJ’s Civil Division maintains its own Fraud Section for civil matters including health care, defense contracting, procurement, grant, customs and disaster-relief fraud.

    The old Criminal Division Fraud Section was hardly idle, either.

    According to DOJ’s 2025 Fraud Section Year in Review, the section charged 265 defendants during the year, with more than $16 billion in aggregate intended fraud losses. DOJ’s 2025 national health-care fraud takedown alone involved charges against 324 defendants in alleged schemes involving more than $14.6 billion in intended losses.

    So what exactly has Washington created?

    The answer turns out to be more interesting than simply another office.

    DOJ Started Rearranging the Furniture First

    Acting Attorney General Todd Blanche formally created the National Fraud Enforcement Division in April.

    His April 7 memorandum establishing the division directed DOJ to consolidate and realign existing resources into the new organization, arguing that doing so would reduce duplication, establish clearer lines of responsibility and centralize expertise.

    The department then began moving additional personnel and authority.

    By August, DOJ had formally rewritten its organizational regulations to give the Fraud Division jurisdiction over criminal fraud, criminal tax proceedings, trade and customs fraud, fraud involving federal money, health-plan fraud, health care fraud and certain related controlled-substance cases.

    The department’s August 18 Federal Register rule explicitly amended Criminal Division authority to accommodate responsibilities assigned to the new Fraud Division.

    One jurisdiction has had an especially busy trip around the organizational chart.

    Criminal tax enforcement moved from the Tax Division to the Criminal Division during a December 2025 reorganization.

    Eight months later, DOJ moved it again.

    The new destination was the National Fraud Enforcement Division, whose regulations now assign it “all criminal proceedings arising under the internal revenue laws.”

    Tax Division to Criminal Division to Fraud Division in less than a year.

    Somewhere in Washington, an organizational chart is probably asking for mileage reimbursement.

    This Is Bigger Than a Renamed Fraud Section

    It would be equally misleading, however, to dismiss the new division as nothing more than bureaucratic rebranding.

    DOJ has built something considerably larger.

    The department’s official organizational chart places an Assistant Attorney General at the top of the National Fraud Enforcement Division, supported by a Principal Deputy Assistant Attorney General and five Deputy Assistant Attorneys General.

    DOJ’s August enforcement priorities memorandum describes specialized litigating and support operations covering health care fraud, tax enforcement, public trust and financial integrity, trade and commerce enforcement, national enforcement, corporate enforcement, asset recovery, appellate work, investigations, data science and litigation support.

    The department has taken existing fraud authorities and personnel and built around them centralized analytical, investigative, and technological capabilities.

    The same DOJ memorandum makes the scale unusually clear.

    The department said it was reorganizing “substantial resources” from other DOJ components into the new division and expected the organization to reach approximately 500 attorneys and staff by August 24.

    And 500 apparently isn’t the destination.

    It is the starting point.

    DOJ said the division would continue growing rapidly during the following two years.

    The department has also launched a National Fraud Detection Center, described as a prosecutor-led, multi-agency operation designed to combine law-enforcement and analytical capabilities to identify fraud across federal programs.

    Then Comes the Money

    H.R. 9576 itself does not contain an appropriation for building the division.

    The Justice Department’s budget documents fill in that blank.

    DOJ’s FY2027 congressional budget submission contains a separate budget account for the National Fraud Enforcement Division.

    The department’s detailed budget justification requests $30 million for the division in FY2027.

    More significantly, DOJ is requesting 140 new positions, including 100 attorneys. Because of hiring timing, the department estimates those positions would account for 70 full-time equivalents during the fiscal year.

    But that 140-position request is separate from the workforce already being assembled.

    DOJ has described much of that initial workforce as coming from reorganizing “substantial resources” from existing Justice Department components. The 140 requested positions represent an additional personnel increase sought through the FY2027 budget.

    That distinction matters.

    DOJ first consolidated hundreds of existing personnel and functions. It then sought additional money and employees to grow the resulting organization.

    Only after that machinery was moving did the House vote to establish the division in statute.

    Not Every Fraud Prosecutor Is Moving In

    There are limits to the consolidation.

    DOJ’s Civil Division still maintains its own Fraud Section, which investigates and litigates major civil fraud cases involving federal programs, health care, defense contracting, procurement, grants and other government expenditures.

    The Civil Division has continued operating that machinery even while the new criminal Fraud Division has been taking shape. In May, for example, DOJ announced new procedures for accelerating False Claims Act cases involving benefits fraud.

    U.S. Attorneys’ Offices also remain responsible for prosecuting cases within their districts.

    The National Fraud Enforcement Division therefore does not place every federal fraud investigator and prosecutor beneath one organizational roof.

    What it does is centralize a substantial portion of criminal fraud enforcement at a much higher organizational level within DOJ.

    The former Criminal Division Fraud Section existed inside another DOJ division.

    The National Fraud Enforcement Division sits separately under its own Assistant Attorney General.

    That is not merely a name change.

    It is a significant redistribution of authority.

    Congress Arrives at the Construction Site

    There is an unusual constitutional and bureaucratic sequence underlying all of this.

    The executive branch announced the concept.

    DOJ administratively created the division.

    Existing personnel and functions were transferred into it.

    DOJ changed its regulations to accommodate the new organizational structure.

    The division began operating.

    The department requested additional money and personnel to expand it.

    Then the House passed legislation establishing it.

    The Federal Register rule provides an especially interesting footnote to that chronology. DOJ characterized the reorganization as involving agency management, personnel and organization. The department concluded that the action therefore did not constitute a “rule” for purposes of the Congressional Review Act and was not subject to that law’s reporting requirement.

    H.R. 9576 would therefore do something important, but different from what the phrase “establish a National Fraud Enforcement Division” might initially suggest.

    It would give statutory footing to an executive-branch reorganization already underway.

    That could matter well beyond semantics. An organization created administratively can generally be reorganized administratively. Putting the division into federal law would give Congress a direct role in establishing its continued existence and leadership structure.

    Whether the Senate will agree remains to be seen.

    But the House has spoken rather decisively.

    The federal government has an enormous fraud problem. DOJ believes consolidating prosecutors, investigators, analysts and data capabilities into a national division will improve its ability to attack that problem. A substantial bipartisan majority of the House has now endorsed putting that structure into law.

    The interesting question is not whether Washington should combat fraud.

    It already was.

    The question is whether moving existing fraud fighters into a new centralized division, adding personnel and building another Assistant Attorney General-led bureaucracy will make the government better at finding fraud.

    The National Fraud Enforcement Division may eventually answer that question.

    It just didn’t wait for Congress before getting started.

    Fediverse Reactions

  • Washington’s Poverty Ledger: Millions Lifted, Billions Paid Improperly

    The federal government is remarkably good at keeping millions of people above the poverty line, and considerably less tidy when asked to account for every dollar it spends doing it.

    Those two facts are not contradictory.

    New data released by the U.S. Census Bureau show that Social Security alone kept an estimated 28.8 million people from falling below the Supplemental Poverty Measure in 2025. Refundable tax credits kept another 6.1 million above the line. The Supplemental Nutrition Assistance Program, better known as SNAP, accounted for 3.1 million. Supplemental Security Income accounted for 2.2 million, while housing subsidies accounted for another 2.1 million.

    That is the good side of the ledger.

    On the other side sits a federal payment system that reported an estimated $186 billion in improper payments during fiscal year 2025, including tens of billions associated with some of the same enormous programs intended to improve Americans’ economic security.

    It would be tempting to choose one number and tell a simple story.

    The numbers refuse to cooperate.

    Two Ways to Measure Poverty

    The Census Bureau reported Monday that the official U.S. poverty rate fell from 10.7% in 2024 to 10.2% in 2025, leaving about 34.5 million people below the official poverty threshold.

    But Census maintains another measurement called the Supplemental Poverty Measure, or SPM.

    Unlike the traditional measure, the SPM attempts to account for considerably more of the economic machinery surrounding a household. Government benefits such as SNAP, housing subsidies and refundable tax credits count as resources. Taxes, work expenses and medical expenses reduce those resources.

    Under that broader calculation, the poverty rate was 13.1% in 2025 and did not change significantly from 2024.

    The distinction allows Census to perform an unusually revealing exercise: remove individual benefits or expenses from the calculation and see how many people cross the poverty line.

    It amounts to something resembling an antipoverty ledger.

    And Social Security owns the largest entry.

    Without Social Security benefits, Census estimates another 28.8 million people would have been in SPM poverty in 2025.

    Refundable tax credits reduced the number by 6.1 million. Within that category, the Earned Income Tax Credit accounted for about 4 million. SNAP reduced it by 3.1 million, SSI by 2.2 million and housing subsidies by 2.1 million.

    Other noncash benefits—including energy assistance, WIC and school lunch—collectively kept about 1.5 million people above the threshold. Other cash benefits accounted for another 1 million.

    These estimates overlap and cannot simply be added together. A household can receive more than one benefit, and Census specifically warns that the individual components are not mutually exclusive.

    Still, the direction is unmistakable.

    Federal assistance changes measured poverty substantially.

    Then the Bills Arrive

    Census’s ledger also runs in reverse.

    Medical out-of-pocket expenses pushed approximately 7.7 million people into SPM poverty in 2025. Payroll taxes, or FICA, added roughly 4.5 million. Work expenses added about 4 million, and federal income taxes pushed another 1.4 million below the threshold.

    The medical number is particularly striking because it increased from approximately 7.5 million in 2024.

    At the same time, several government benefits became somewhat less consequential in the poverty calculation.

    Refundable tax credits kept 6.8 million people out of poverty in 2024, compared with 6.1 million in 2025. SNAP’s effect declined from 3.6 million to 3.1 million. SSI declined from 2.5 million to 2.2 million.

    Social Security, meanwhile, barely moved: 28.7 million in 2024 and 28.8 million in 2025. Housing subsidies remained at approximately 2.1 million.

    So while the topline SPM poverty rate barely changed, some of the machinery underneath it did.

    That is one advantage of looking below the headline number.

    Another is discovering what happens to all the money.

    $186 Billion in Improper Payments

    Federal agencies reported approximately $186 billion in improper payments during fiscal year 2025, according to the Government Accountability Office.

    About $153 billion—roughly 82%—were overpayments.

    The total was $24 billion higher than the previous fiscal year. GAO says the $186 billion does not represent the entire universe of improper federal payments because some programs susceptible to significant errors were not included in the total.

    Several programs connected to the poverty ledger appear prominently in those numbers.

    Medicaid reported an estimated $37.39 billion in improper payments, representing a 6.12% error rate.

    The Earned Income Tax Credit reported approximately $21.1 billion in improper payments and an estimated error rate of 32.7%.

    SNAP’s fiscal 2025 payment-error rate was 10.62%, representing approximately $10.1 billion in improper payments.

    SSI’s latest available payment-integrity estimate, covering fiscal 2024, found approximately $7.33 billion in improper payments from $63.29 billion in outlays.

    Those are enormous numbers.

    They are not, however, enormous fraud numbers.

    Improper Does Not Mean Stolen

    An improper payment can involve fraud. It can also involve an innocent eligibility mistake, the wrong payment amount, missing paperwork, an underpayment or even a payment made to the correct person for the correct amount through a process that failed to satisfy federal requirements.

    Medicaid provides an almost absurdly useful example.

    Of the program’s $37.39 billion in estimated fiscal 2025 improper payments, CMS says 77.17% resulted from insufficient documentation, which the agency says is generally not indicative of fraud or abuse.

    That does not make the problem imaginary.

    It means the government could not demonstrate that those payments satisfied all applicable requirements.

    The distinction becomes even stranger in the Affordable Care Act premium-tax-credit program. CMS reported that approximately 43% of that program’s improper payments involved situations in which the government paid the right recipient the right amount—but violated a statutory or regulatory requirement while doing it.

    Financially correct.

    Procedurally improper.

    There may be no phrase more suited to the federal government.

    Actual fraud nevertheless exists, and treating every payment error as innocent would be just as misleading as calling every error theft.

    The Holes in the Fence

    SNAP provides a good illustration of the difference between a known improper payment and a potential control weakness.

    USDA reported $10.1 billion in SNAP payment errors for fiscal 2025. The agency says its payment-error rate measures whether states correctly determine household eligibility and benefit amounts and includes both overpayments and underpayments.

    A separate USDA program-integrity review found something different.

    Reviewing eligibility information from 29 state agencies, USDA identified records involving dummy or missing Social Security numbers, duplicate participation within states, interstate duplication and deceased individuals appearing as active participants.

    The agency estimated that dummy Social Security numbers and intrastate duplication alone represented more than $1.5 billion in annual financial exposure.

    “Exposure” is not the same as confirmed loss, and neither is synonymous with fraud.

    But it identifies holes in the fence.

    The distinction matters because a prosecution can tell taxpayers how much one fraudster stole. A control weakness raises the more consequential question of how many fraudsters the government might not have identified.

    And What About Noncitizens?

    Immigration status creates another place where the numbers require more care than the political shorthand normally permits.

    Some noncitizens are legally eligible for particular federal benefits. Others are not. Mixed-status households may contain an ineligible adult and eligible U.S.-citizen children.

    A benefit received by such a household therefore cannot automatically be described as money improperly paid to a noncitizen.

    Social Security Administration records provide an unusually clear example.

    In December 2025, 7,392,201 people received federally administered SSI payments.

    Of them, 7,082,134 were citizens and 310,067 were noncitizens—about 4.2% of recipients.

    Noncitizen recipients received a lower average monthly payment: $596.77 compared with $719.70 for citizens. Nearly 252,000 of the noncitizen recipients were 65 or older.

    Those figures establish that noncitizens receive a measurable share of SSI benefits.

    They do not establish that those payments were illegal.

    That requires a separate eligibility determination.

    And fraud cases involving noncitizens using false identities or otherwise defeating eligibility controls should likewise be categorized as fraud—not used to characterize every lawful noncitizen beneficiary.

    The distinction may be less satisfying than a sweeping conclusion, but accounting generally is.

    The Government Knows Some Things Better Than Others

    The federal government can estimate with remarkable specificity how individual programs affect poverty.

    Census can tell us that Social Security moved 28.8 million people across its Supplemental Poverty Measure threshold.

    It can estimate that SNAP moved 3.1 million.

    It can tell us that medical expenses pushed 7.7 million the other direction.

    Elsewhere in Washington, however, the accounting becomes considerably fuzzier.

    GAO says federal agencies identified $186 billion in improper payments during fiscal 2025—and also says that total does not capture the full government-wide universe.

    Treasury estimates that nearly one-third of EITC payments were improper. USDA reports a SNAP error rate above 10%. CMS reports tens of billions in Medicaid errors while explaining that most resulted from inadequate documentation rather than apparent fraud.

    And the Social Security Administration can tell us exactly how many SSI recipients are noncitizens, while that fact alone tells us almost nothing about whether their benefits were properly or improperly paid.

    The deeper one digs into the ledger, the harder it becomes to reduce it to “government programs work” or “government programs waste money.”

    Both propositions are too simple.

    What Taxpayers Are Buying

    Census’s new statistics establish something important.

    The American safety net has a measurable effect.

    Remove Social Security, SNAP, refundable tax credits, SSI, housing subsidies and other assistance from household resources and millions more people fall below the Supplemental Poverty Measure.

    That is not an ideological claim. It is what the government’s own statistical model measures.

    The government’s other records establish something equally important.

    Programs distributing hundreds of billions of dollars make mistakes. Agencies send money in incorrect amounts, fail to maintain required documentation, pay people who are not eligible, underpay people who are eligible and sometimes get defrauded.

    The scale is large enough that even small error rates produce numbers measured in billions.

    In fiscal 2025, the government estimated $186 billion in improper payments across 64 programs. GAO says federal improper-payment estimates since fiscal 2003 total roughly $3 trillion.

    Those numbers do not erase the 28.8 million people Social Security kept above the SPM threshold.

    And those 28.8 million people do not erase the payment errors.

    The more useful accountability question is what lies between them:

    How much poverty is the federal government preventing, how much does it spend doing so, how much money leaves the system improperly, how much of that represents actual fraud—and how confidently can Washington tell taxpayers the difference?

    Census has provided a surprisingly good answer to the first question.

    The federal government’s own auditors suggest there is considerably more work to do on the rest.

    Fediverse Reactions

  • The Actuary’s Gift: How a $316 Billion SSI Expansion Got Pre-Scored While the Inspector General Was Still Counting the Last Round of Overpayments

    The Social Security Administration’s Office of the Chief Actuary keeps a very particular kind of stationery: dry, unfailingly polite, and capable of detonating a fiscal grenade. On September 15, 2026, Chief Actuary Karen P. Glenn sent one of these letters to Speaker Emerita Nancy Pelosi, scoring a Supplemental Security Income overhaul that would cost the federal government an additional $316 billion over the next decade.

    It arrived, as these things do, with a straight face and a clean conscience — and an awkward footnote: the same week the letter went out, the SSA’s own inspector general was still trying to explain why the agency cannot stop overpaying people whose bank accounts it never bothered to check twice.

    An Actuary’s Gift, Itemized

    The letter to Pelosi scores a seven-provision proposal drafted by Dr. Wendell Primus of the Brookings Institution, and it is, structurally, a marvel of quiet generosity.

    Provision A raises the SSI federal benefit rate by $70 for individuals and $105 for couples.

    Provision B triples the general income exclusion.

    Provision C triples the earned income exclusion.

    Provision D excludes 40 percent of Social Security benefits from the SSI income calculation entirely.

    Provision E quintuples the countable resource limit, from $2,000 to $10,000 for individuals, while sheltering up to $50,000 in retirement savings from counting against eligibility at all.

    Provision F eliminates the consideration of in kind support (food, shelter, a couch to sleep on) as income.

    Provision G has the IRS hand SSA a list of people who might qualify but haven’t applied.

    Total combined cost through 2034: $316 billion, layered on top of a baseline SSI program the actuaries already project will cost $722 billion over that same window. The single largest line item is not the benefit increase everyone will read about in the press release; it is Provision G, the outreach provision, at $135 billion, more than the benefit hike and the resource limit changes combined.

    Glenn is admirably honest about the uncertainty here, noting flatly that “the actual effect that this provision would have on participation is uncertain.” One might call that the actuarial equivalent of a shrug, delivered at a cost of $135 billion.

    A Proposal With a Long, Familiar Résumé

    None of this is new, and that is precisely the point worth dwelling on. Provision D, the 40 percent Social Security exclusion, is lifted nearly verbatim from a 2024 Brookings paper by Primus and coauthors. Primus, notably, already has a different SSA-scored proposal circulating through Congress; a broader solvency package he sent to then Minority Whip Steny Hoyer produced its own actuarial letter in January 2025, one dealing with the OASDI trust funds rather than SSI alone.

    Provision E, the resource limit increase, is essentially the text of the SSI Savings Penalty Elimination Act, and the broader package overlaps substantially with the SSI Restoration Act, reintroduced this past March by Rep. Adelita Grijalva, Sen. Elizabeth Warren, Rep. Jan Schakowsky, and Rep. James Moylan, with 30 cosponsors.

    What is missing from the Pelosi letter is a bill number. This is not legislation being scored, rather an idea being pre-scored, run through the actuary’s office by a private economist working through a member’s office, presumably so that whoever eventually introduces the combined package can wave around a $316 billion figure with an official SSA letterhead attached to it.

    It is a perfectly normal way to legislate in Washington, and it is also, if you squint, a way of credentialing an idea through an agency whose job is arithmetic, not politics, so that the arithmetic can later be cited as though it settled the politics.

    The Resource Limit and the Inconvenient Auditor

    Here is where the story gets uncomfortable for everyone involved. The SSA’s own Office of the Inspector General published its Fiscal Year 2024 compliance audit under the Payment Integrity Information Act in May 2025, and it found that SSA failed two of the ten reporting requirements, both in the SSI program specifically.

    The SSI improper payment rate climbed from 9.41 percent (roughly $5.3 billion) in 2019 to 10.62 percent (roughly $6.5 billion) in 2023, moving in exactly the wrong direction despite years of corrective action plans that read, in retrospect, like a to do list nobody finished.

    The leading cause, according to the OIG, is unreported resources sitting in financial accounts above the current limit, and the agency’s own data shows that 89 percent of those overpayments occurred because a recipient’s circumstances changed after their initial approval, in the gap between reviews where nobody was looking.

    The OIG estimates $2 billion in overpayments could have been prevented in 2023 alone had SSA simply run its existing verification tool more often. It has not implemented that recommendation. A separate OIG audit released the same month documents the mechanism in detail: 63 unresolved SSI earnings alerts sat for an average of 733 days, long enough for the agency’s own finality rules to erase $664 million in overpayments from collectability entirely.

    Into this specific, well documented gap, Provision E proposes to quintuple the resource limit and exempt up to $75,000 in retirement accounts for couples from ever being counted.

    But it is worth noticing that Congress is being asked to widen precisely the category of asset that its own watchdog just identified as the single largest driver of a persistent, unresolved overpayment problem, at the same moment SSA is finally rolling out zero dollar tolerance verification for the old, much smaller limits.

    A Program on Autopilot, Redirected

    The 2025 SSI Annual Report, which supplies the baseline assumptions for Glenn’s letter, tells a story of a program quietly shrinking relative to everything around it. SSI expenditures were 0.22 percent of GDP in 2024 and are projected to fall to 0.17 percent by 2049, a decline attributed to a shrinking pool of eligible citizens and benefits growing slower than average incomes. Recipient numbers actually dropped slightly between January 2024 and January 2025, from 7.30 million to 7.26 million.

    Against that backdrop, the Primus proposal does not merely add to the program; it reverses its trajectory. The letter’s own table shows $104 billion in new costs against a $339 billion baseline for 2025 through 2029, a roughly 30 percent acceleration over five years, applied to a program the actuaries themselves describe as coasting toward relative irrelevance.

    That may well be defensible policy. Poverty among elderly and disabled Americans is a real and measurable thing, and $688 a month, the current average SSI payment, buys considerably less than it did when the resource limits were last touched in 1989. But it is not the same claim as “modest technical fix,” which is how proposals like this tend to be marketed once the actuarial letter gets attached to a press release.

    Somewhere between the Brookings paper, the Grijalva bill, and Karen Glenn’s very polite letter, the size of the ask got lost in translation, and it is the sort of thing a $316 billion program deserves to have said about it plainly, in public, before anyone votes on it.

    SSA Chief Actuary Letter to Speaker Emerita Pelosi (September 15, 2026)Download

  • Washington Finally Measured Your Unpaid Labor. It Used Data Older Than Your Car.

    The Government Accountability Office wants Congress to know that unpaid household work, the cooking, the cleaning, the eldercare, the endless negotiation with a toddler over pants, was worth somewhere between $5.6 and $7.4 trillion in 2024 (GAO-26-107871). That is up to a quarter of gross domestic product, generated by nobody the Bureau of Economic Analysis has bothered to formally price since 2020.

    Six years is not a long time in most contexts. It is an eternity in economic statistics, where the whole point is to tell you what is happening now, not what was happening when “Encanto” was still in theaters. GAO’s new report, delivered to the Senate Special Committee on Aging, is framed as a straightforward exercise in economic measurement. Read past the tables and it becomes something else, a case study in two federal statistical agencies quietly deciding that a trillion-dollar blind spot in how America understands its own economy is somebody else’s problem.

    The Bureau That Waited to Be Asked

    The Bureau of Economic Analysis has known the answer to this question for a while. Its household production satellite account, the official government attempt to price unpaid domestic labor, has been running in some form since the 1960s. As of May 2026, per GAO’s own accounting, BEA’s most recent published estimate covered the years 1965 through 2020. Four years of a rapidly reshaping post-pandemic labor market went unmeasured by the agency built to measure exactly this.

    Then, conveniently, something happened. GAO circulated a draft of this report to the Department of Commerce for comment. Commerce’s response, reproduced in the report’s own Agency Comments section, notes that BEA “issued a staff working paper in June 2026 that included updated household production estimates.” June 2026. Three months before GAO’s report went public. The timing invites an uncharitable but not unreasonable reading; an agency that had gone half a decade without updating a core national account found the motivation to do so only once its homework was about to be checked by outside auditors.

    To be fair to BEA, updating this account is genuinely hard. It requires linking American Time Use Survey data to Current Population Survey wage data, choosing a valuation method that will be second guessed regardless of which one you pick, and defending the whole exercise to an audience that half suspects the entire project is ideological. None of that explains why the fix showed up on a GAO deadline instead of a public one.

    The Bureau That Didn’t Bother

    BEA’s lag is embarrassing. The Bureau of Labor Statistics’ position is worse, because at least BEA has an account to be late on. Buried in a footnote of GAO’s report is the admission that BLS “has explored developing estimates of the value of unpaid household work but has not yet produced them.” The agency describes this as part of a larger effort to improve its Consumer Expenditure Surveys, the survey that underpins how the government understands what American households actually consume.

    As of March 2026, GAO writes, BLS officials “were unsure if the agency will produce a consumption measure that includes valuing unpaid household work due to resource constraints.” Read that sentence twice. This is not a promise of future data with a vague timeline attached, the customary bureaucratic dodge. It is a federal statistical agency telling its own auditor that it might simply never finish work it has already acknowledged would improve its data, because the money isn’t there and nobody has made it a priority.

    For an agency whose entire mandate is producing the numbers policymakers use to make decisions, “we might not get to it” is a strange thing to say out loud, even in a footnote. It is stranger still when the number in question, by GAO’s own estimate, represents up to a quarter of GDP. BLS has effectively conceded that a measurement problem of that scale sits below the line on its priority list, indefinitely, and saw no reason to soften that admission for the record.

    Why This Isn’t Just an Economist’s Argument

    It would be easy to file this under abstract methodology, the kind of dispute that stays contained to journal articles and BEA working papers. It doesn’t stay contained. GAO’s report specifically flags that better data on unpaid caregiving could help set stipend levels for family caregivers of disabled veterans, citing a 2024 study in Social Science & Medicine that found VA caregiver stipends were largely offset by reduced healthcare spending for the veterans in question (Jacobs et al., 2024).

    That is not a new insight for GAO. This publication has covered agencies that keep rediscovering their own prior recommendations, and this is another entry in that file. GAO flagged the retirement security angle of unpaid caregiving back in 2019, in a report on parental and spousal caregivers facing financial risk in retirement (GAO-19-382), and flagged VA’s family caregiver program specifically that same year (GAO-19-618). Seven years later, the underlying data those recommendations depended on is still six years stale at one agency and nonexistent at the other. The policy questions did not go away while the measurement infrastructure sat idle; they just kept getting answered with worse information than they deserved.

    There is a version of this story where BEA and BLS are simply under resourced agencies doing their best with limited budgets, and there is real truth in that version. But “under resourced” is a description of a condition, not an excuse that dissolves the consequence. Congress asked a fair question about how the economy actually works, and the honest answer required an outside audit, six years of catch up work quietly rushed out ahead of publication, and a footnote confessing that the other half of the problem may never get solved at all.

    The Ledger Nobody Kept

    GAO’s report closes, as these reports do, with the polite fiction that agency comments were received and considered. The Department of Labor had nothing to say. The Department of Commerce pointed to a working paper that happened to appear right on schedule. Nobody at either agency was asked, on the record, why it took a congressional audit to produce data that should have existed already.

    The caregivers, the cooks, the people quietly propping up a quarter of the American economy in the background of their own lives, were never actually the ones being audited here. The agencies were. They passed, technically, in the way a student passes an exam by cramming the material the night before because they knew it was coming. Whether that counts as understanding the subject is a separate question, and it’s the one Congress should be asking next.

    Fediverse Reactions

  • Born in Bailout, Raised in Denial: The Fannie and Freddie Story Washington Still Can’t Finish

    A Subsidiary Trying to Forget Its Parent

    Every family has one relative nobody wants to bring up at dinner. For Fannie Mae, that relative is the Reconstruction Finance Corporation, the New Deal lending machine this series covered two weeks ago, the one that spiraled into a corruption scandal so severe it forced Congress to write the Government Corporation Control Act of 1945 just to contain the damage.

    Fannie Mae was not inspired by the RFC. It was chartered on February 10, 1938, as a wholly owned subsidiary of the RFC itself, capitalized with roughly ten million dollars in RFC funds and tasked with buying up FHA insured mortgages so banks would keep lending during the Depression, according to a detailed institutional history of the entity compiled from congressional records. Seventeen years after its parent got shut down for operating as an unaccountable financial power center, Fannie Mae is still around, still backed by an implicit federal promise nobody in Washington will fully admit to, and still, as of this writing, technically a ward of the state. Its sibling, Freddie Mac, has been along for the ride since 1970. Between them they now guarantee or hold something like 7.7 trillion dollars in mortgage debt, more than the debt of every company and government on earth except the United States and Japan, according to researchers at the University of Florida’s Warrington College of Business.

    The Vietnam War Era Accounting Trick That Still Runs the Mortgage Market

    Here is where the story gets genuinely absurd. In 1968, the Johnson administration needed to make the federal budget look smaller while paying for the Vietnam War and the Great Society simultaneously. Fannie Mae, still a line item on the government’s books, was an inconvenient liability. So Congress passed the Housing and Urban Development Act of 1968, split Fannie Mae into two pieces, spun off the fully government owned mortgage insurance function into a new entity called Ginnie Mae, and turned the rest into a nominally private, shareholder owned corporation. Fannie Mae’s debt vanished from the federal balance sheet essentially overnight, a maneuver policy analysts have bluntly described as a clever accounting solution driven by budget politics rather than any free market conviction that Fannie Mae belonged in private hands.

    The new “private” Fannie Mae kept a two billion dollar line of credit with the Treasury, stayed exempt from state and local income taxes, and never had to register its securities with the SEC, the kind of privileges no actual private mortgage company enjoys. Congress created a second entity, Freddie Mac, in 1970 specifically to give Fannie some competition, using the identical hybrid structure. The Competitive Enterprise Institute summarized the resulting arrangement about as bluntly as anyone has: the model privatized the profits to shareholders while socializing the losses onto taxpayers, and it stayed that way for four decades because nobody in either party had much incentive to change it while the mortgages kept performing.

    They stopped performing in 2007. By the time the subprime crisis hit full force, Fannie and Freddie together held or guaranteed 5.3 trillion dollars in mortgage backed securities and debt, an amount roughly equal to the entire publicly held debt of the United States government at the time, according to congressional testimony from then FHFA Director James Lockhart. On September 6, 2008, with both companies unable to raise capital and staring down eighty nine billion dollars in debt coming due within months, their own boards agreed to hand control to the newly created Federal Housing Finance Agency under the Housing and Economic Recovery Act, according to FHFA’s own history of the conservatorships. The federal government had spent forty years pretending Fannie Mae was not its problem. It became the government’s problem again in a single weekend, and Treasury ultimately pumped in 191.5 billion dollars to keep both entities solvent.

    The Entities Built to Dodge the Law Written to Catch Them

    This is the part that should genuinely bother anyone who followed the Fourth Branch piece in this series. Congress wrote the 1945 Government Corporation Control Act specifically to make sure entities like the RFC could never again grow into unaccountable, off books financial power centers without mandatory budgets, GAO audits, and borrowing limits. Fannie Mae and Freddie Mac sidestepped that entire accountability regime by design, not by accident. Because the 1968 restructuring made them nominally private, shareholder owned companies, they were never classified as government corporations under Title 31 at all. They are government sponsored enterprises, a separate legal category invented specifically to capture the benefits of a federal charter, the implicit backstop, the tax breaks, the cheap funding, while dodging the exact oversight machinery Congress built after the RFC scandal.

    In other words, Washington did not just fail to learn the lesson of the RFC. It engineered a structure explicitly designed to route around that lesson, and the result was an entity that grew larger and more systemically dangerous than the RFC ever was, precisely because nobody was legally required to watch it the way the 1945 Act required watching TVA or the FDIC. The GSE model is the RFC’s most consequential offspring not because it repeated the RFC’s mistakes, but because it corrected for the wrong ones.

    Eighteen Years of “Temporary”

    Conservatorship was supposed to be a stabilization measure. As of this writing it has run eighteen years, longer than the RFC itself lasted from birth to liquidation. Fannie and Freddie returned to profitability by 2012 and have since paid the government back many times over in dividends, which has only intensified the political fight over what to do with them next. Treasury Secretary Scott Bessent said in 2025 that ending the conservatorships was an explicit administration goal, and FHFA Director Bill Pulte has spent 2026 signaling that the arrangement should not continue indefinitely. In late June, Representative Scott Fitzgerald introduced the Sustainable Homeownership Act, a bill aimed at establishing statutory guardrails for a formal release, according to National Mortgage Professional’s coverage of the legislation. Hedge fund manager Bill Ackman has been buying the common stock of both companies for years on the bet that release is coming, and named it his best investment idea heading into 2026.

    Nobody involved seems eager to just let the conservatorship expire on its own terms, because nobody can agree on what happens to the implicit government guarantee once it does. Release Fannie and Freddie without an explicit backstop from Congress and investors may demand higher returns to compensate for the added risk, which likely means higher mortgage rates for every homebuyer in the country, a concern serious enough that both Bessent and Pulte have said publicly they will not move forward if the data shows rates going up.

    That is the real inheritance the RFC left behind. Not a single scandal or a single bailout, but a durable federal habit of building financial entities that look market disciplined on paper while carrying government risk in practice, then discovering decades later that unwinding the arrangement is far harder than creating it ever was. The RFC took twenty five years from founding to liquidation. Fannie Mae and Freddie Mac have already outlasted that timeline twice over, and the exit ramp is still being drafted in real time, in Congress, this year, while the rest of us wait to see who actually ends up holding the risk when the paperwork finally clears.

    This is Part 3 of our series on U.S. government corporations. Read Part 2: The Slush Fund That Ate Washington: How the RFC Invented the Modern Government Bailout.

    Next in the series: the entities that never broke this way, TVA and the FDIC, and what it actually takes for a government corporation to do the one thing it was designed to do without becoming somebody’s eighteen year headache.

  • Energy Department Confirms July and August Successfully Occurred

    At 4:05 p.m. on September 16, an email arrived from the U.S. Department of Energy’s Office of Cybersecurity, Energy Security, and Emergency Response bearing important news.

    July and August happened.

    The subject line, “CESER News & Updates – July & August 2026,” was refreshingly honest about the situation. There would be no September news in this September 16 news email. Instead, CESER had assembled a collection of developments stretching all the way back to July 2, presumably after allowing sufficient time for the news to mature.

    This might be unremarkable coming from an office devoted to historical preservation. CESER, however, is responsible for cybersecurity, energy security and emergency response, fields in which the phrase “we’ll get back to you next month” generally lacks a certain operational appeal.

    The newsletter opened with a collection of grid reliability actions. DOE issued an emergency order for the Carolinas on July 2 amid hot weather. Another followed for the Southwest Power Pool on July 21. There was another on July 26 covering 17 states, followed by August actions involving Guam, Puerto Rico, the Midwest and the Mid-Atlantic.

    These are not trivial subjects. Grid emergencies, blackout risks and extreme weather are exactly the sort of matters the public might reasonably associate with timely information.

    The cybersecurity section was similarly urgent in subject matter. CESER highlighted Stormbreaker, a testbed developed with Lawrence Livermore National Laboratory to evaluate large language models and agentic artificial intelligence in power systems and operational technology environments. It also pointed readers toward cybersecurity threat guidance, operational technology security, software bills of materials and reports of cyber incidents affecting water and wastewater systems.

    All useful material. All arriving in an email on September 16.

    The newest dated CESER event in the email was an August 27 appearance by Principal Deputy Director Emily Burdick at a National Governors Association summer meeting. That means even the freshest item in the “News & Updates” package had enjoyed nearly three weeks to contemplate its journey to our inbox.

    The newsletter even contains a particularly delightful sentence from an August 5 event at the National Lab of the Rockies. CESER Director Andrew McClure emphasized the office’s guiding principle of providing “timely and actional information to the energy sector.”

    We assume “timely” is being used here in the federal sense.

    To be fair, there is nothing inherently wrong with a periodic retrospective newsletter. Agencies routinely compile activity over weeks or months, and CESER did not disguise what it was sending. The words “July & August 2026” were right there in the subject line. Nobody promised breaking news.

    That may actually make it funnier.

    Somewhere in the machinery of the federal government, an office dedicated to responding to rapidly developing threats compiled its July and August news, shepherded it through whatever process was required, and successfully delivered it halfway through September.

    The grid remained standing. The email arrived. And Bureaucracy Times can now independently confirm that July and August 2026 successfully occurred.

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  • The $664 Million SSA Chose Not to Collect

    A federal agency losing money to fraud is a story as old as the ledger. A federal agency losing money because it declined, for years at a stretch, to open its own mail is something rarer, and considerably more damning. That is the finding buried inside the Social Security Administration Office of the Inspector General’s latest audit, “Supplemental Security Income Earnings Alerts” (Report 022310, September 2026), a document that manages to be both bone dry and quietly incendiary.

    The Alert Nobody Answered

    SSI recipients are supposed to report their income every month, since the program exists for people with limited means and the payment shrinks as earnings rise. When the IRS or a state agency reports wages that don’t match what SSA has on file, the system throws an earnings alert. An employee is then required to contact the recipient, verify the discrepancy, and adjust the record accordingly. This is not an exotic obligation; it is described in plain terms in SSA’s own Program Operations Manual System (POMS SI 02310.005, SI 02310.062).

    OIG pulled a random sample of 100 SSI recipients out of a population of 417,291 who had at least one earnings alert pending as of September 2024. The results were not flattering. Employees fully resolved alerts for 20 of the 100. For 63 recipients, reviews were either never started or never finished, and as of April 2025 those alerts had been sitting for an average of 733 days, roughly two years of an unopened envelope. Nine of them had been pending for more than five years. For another 17 recipients, staff cleared the alert but failed to record all the earnings that should have changed the payment, which is less “resolved” and more “closed and mislabeled.”

    The Fine Print That Makes Delay Profitable

    Here is where the report stops being merely embarrassing and becomes structurally interesting. SSA operates under an administrative finality rule, and absent a finding of fraud, the agency generally cannot reopen and revise eligibility determinations more than 24 months old. If an employee reviews an alert within six months of its creation, that counts as diligent pursuit, and SSA can reach back a full 24 months from the original alert date to recover an overpayment. If the employee does not meet that standard, the 24 month window instead runs from whenever the review finally happens, however late. Every month of institutional foot dragging is a month of debt quietly aging out of collectability.

    OIG’s own example makes the mechanism vivid. A father’s 2017 earnings discrepancy triggered an alert in July 2018. An SSA employee scheduled two appointments in 2019, the father missed both, and the file simply sat there. By 2026, the alert had gone unresolved for over seven years, and the agency estimated it had paid the child recipient roughly $36,000 that hinged on the father’s unreported income. Because nobody picked the file back up until 2026, SSA could only recover approximately $19,000 of it. The other $19,000 became, in the agency’s own language, correct, a status it acquired not through verification but through neglect.

    A Billion Dollars, Filed Under Never Mind

    Projected across the full population, OIG estimates SSA paid about 333,800 recipients roughly $1 billion they were not eligible to receive, because employees did not complete, or did not correctly complete, the earnings reviews required to catch it. Of that billion, the administrative finality clock has already rendered approximately $664 million permanently uncollectable, absent a fraud determination the agency has shown no particular urge to pursue. The remaining $344 million is, for now, still theoretically recoverable, assuming anyone gets around to it.

    It is worth sitting with that arithmetic for a moment. Two thirds of the overpayment total identified in this single sample projection is not merely uncollected; it is uncollectable by design, a feature of the agency’s own finality doctrine rather than a bug in enforcement. SSA did not lose this money to a sophisticated fraud ring. It lost it to a filing cabinet.

    Nobody Home

    Perhaps the most telling line in the entire report is the one OIG offers almost in passing, that auditors “could not determine why employees did not initiate or complete reviews of earnings alerts in accordance with Agency policies, and Agency subject-matter experts could not provide an explanation.” Not a bad explanation. No explanation. The people whose job it is to know why their own agency’s controls failed had nothing to offer.

    This is also not SSA’s first rodeo with this exact problem. A 2012 OIG review found the agency was not timely developing earnings alerts and estimated roughly $110 million in preventable or recoverable SSI overpayments. SSA responded then with the standard bureaucratic liturgy, reminders issued, guidance reissued, a promise to do better. Fourteen years later, the same failure mode reappears at nearly ten times the estimated cost. SSA has once again agreed to implement OIG’s three recommendations, namely clean up the 63 unresolved cases and the 17 incomplete ones, figure out why staff aren’t pursuing alerts, and implement corrective action. The agency’s official comment, from Chief Risk Officer Chad Poist, characterizes some of the flagged cases as simply not yet due for redetermination under existing timelines, and notes that corrective action has already been completed on a portion of the cited cases, a caveat OIG’s own report does not credit.

    Whether this round of promises fares any better than the last is not a question this audit answers, and it is not one the agency seems especially eager to answer either. What the report does establish, in the agency’s own numbers, is that the cost of that uncertainty is not abstract. It has a dollar figure, it has a 24 month expiration date, and as of the report’s own projections, most of it will be gone before anyone in Baltimore gets around to reading the file.

    Source: SSA Office of the Inspector General, “Supplemental Security Income Earnings Alerts,” Report 022310 (September 2026).

    For related coverage, see The Actuary's Gift — on how SSA's chief actuary pre-scored a $316 billion SSI expansion for Speaker Emerita Pelosi's office the same week this audit landed, including a provision that would quintuple the resource limit SSA already cannot reliably verify.

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