War on Fraud A strategic framework for an effective, nonpartisan campaign to reduce fraud, waste, and abuse in federal government spending, derived from the recommendations of Donald F. Kettl. Submitter's Note: This StratML rendering was compiled from the source by Claude (Anthropic) and lightly edited in the form at https://stratml.us/forms/Claude/Part1.html War on Fraud Office WFO uuid-b3c7a1e2-4f58-4d09-a3e1-1d2e3f4a5b6c The office of the Vice President of the United States, designated by President Trump during the State of the Union address to lead the war on fraud, waste, and abuse in the federal government. Donald F. Kettl Plan Author | Professor Emeritus and Former Dean, University of Maryland School of Public Policy JD Vance Director of the War on Fraud | Vice President of the United States A federal government whose expenditures are managed with sufficient integrity, transparency, and accountability that fraud and improper payments are systematically identified, prevented, and recovered — yielding meaningful deficit reduction and restoring public trust in government stewardship of taxpayer dollars. uuid-c4d8b2f3-5a69-4e1a-b4f2-2e3f4a5b6c7d To identify, prevent, and recover improper federal payments through evidence-based, nonpartisan strategies; invest in enforcement capacity; deploy modern tools including AI; and distinguish between fraud and poor management in order to apply the right remedy in each case. uuid-d5e9c3a4-6b7a-4f2b-c5a3-3f4a5b6c7d8e Evidence Decisions about where to focus enforcement resources and what remedies to apply must be grounded in data and analysis, not political convenience. The rate of improper payments is a clue about where to look, not a partisan scorecard. Nonpartisanship Fraud exists across all geographies and political affiliations. Any campaign that targets political opponents will fail to achieve its financial goals and will undermine public legitimacy. Nobody has a monopoly on the problem — or the solutions. Prevention Building roadblocks to fraud before it occurs is far cheaper and more effective than recovering funds after the fact. Risk management and internal controls must be treated as investments, not bureaucratic overhead. Understanding Develop a rigorous, shared understanding of what fraud is and is not — distinguishing criminal fraud from sloppy bookkeeping, poor program management, and eligible-but-miscoded transactions — so that enforcement efforts are aimed precisely and do not destroy legitimate programs in the effort to excise abuse. 5f0910a9-6cd7-4d37-8912-d2f43cc28d41 1 Know the Enemy ~ Kettl's analogy: fraud is like fat marbled through a steak — a clumsy job of cutting it out can miss the fat and ruin the steak. The Minnesota day care example illustrates the problem: investigators found widespread overbilling and licensing violations but relatively few instances of outright fraud, even though 11% of payments contained errors. Fraud Establish clear, operationally useful definitions that distinguish outright fraud (intentional criminal conduct) from improper payments due to administrative error, from underpayments or overpayments due to program complexity, and from poor management capacity in recipient organizations. 78ba3e37-305a-406e-a660-40b704313dff 1.1 Uncertainty Acknowledge and publicly report the inherent uncertainty in fraud estimates. 65c958d3-50c7-43d6-9817-334446e4fac9 1.2 Quantify Uncertainty ~ The GAO range of $233–$521 billion reflects genuine measurement difficulty, not a failure of commitment. Set baselines and track trends rather than claiming false precision. Improper Payments Use GAO's "improper payments" framework — payments that should not have been made or were made in the wrong amount — as the primary operational entry point for the war on fraud, since this is the most measurable, auditable, and actionable category of financial loss. 884a9424-d262-4770-bde1-4bd5683b84e9 2 Target Improper Payments ~ GAO defines improper payments as payments that should not have been made or that were made in an improper amount. Not all improper payments are fraud, and not all fraud manifests as improper payments (e.g., fraudulently obtaining a passport). But improper payments represent the best-defined, most auditable starting point for remediation. Payment Flows Catalog all major federal payment streams, their current improper payment rates, and the primary causes of errors in each stream, drawing on existing agency reporting and Inspector General audits. 2286caac-94a5-41e9-afa5-cf81a0802b5b 2.1 Map Payment Flows Error Types For each major payment stream, disaggregate improper payments into subcategories: administrative/clerical errors, program complexity and eligibility confusion, systemic underfunding of verification capacity, and intentional fraud — and assign different remediation strategies to each. a237cdf8-2474-44ae-ae5e-348c53a6f4db 2.2 Separate Error Types Enforcement Concentrate the greatest enforcement and management improvement resources on the programs that account for the largest shares of improper payments — principally Medicare, Medicaid, and SNAP — following the principle that effective reform starts where the money is. 2b82ac6c-56ce-4d60-ade6-b4b33dbbb978 3 Prioritize by Scale ~ 53% of all federal improper payments originate in Medicare and Medicaid combined. SNAP accounts for an additional 7%. The remainder of the federal government accounts for approximately $41 billion. Focusing initial efforts on Medicare and Medicaid alone addresses the majority of the problem. Sources of Medicaid fraud include billing for unnecessary or unprovided services, upcoding, card sharing, and diversion of drugs for resale. Medicare/Medicaid Launch intensive fraud detection and prevention initiatives in Medicare and Medicaid, the two programs that together account for more than half of all federal improper payments, with a particular focus on billing fraud, upcoding, card sharing, and drug diversion. a5ef23ce-ddfa-4cab-8d80-3a960639fe38 3.1 CMS Centers for Medicare and Medicaid Services — the primary federal agency responsible for administering Medicare and Medicaid. Each CMS employee oversees approximately $252 million in program expenditures, making personnel investment highly leveraged. SNAP Address the approximately 7% of improper payments attributable to SNAP through improved eligibility verification, retailer authorization controls, and transaction monitoring. fc1b3a8c-abcb-4556-9a8f-e11cc2a8d63c 3.2 Reform SNAP Controls EITC Target the earned income tax credit and other tax-related improper payments through improved verification at the point of filing and post-filing audit selection, recognizing both intentional fraud and legitimate complexity-induced errors. aafafc31-8f3f-4f66-8b10-883ddfc3d0d8 3.3 Investment Shore up the human and institutional capacity to detect and deter fraud — primarily by strengthening Inspectors General and ensuring that key program agencies have sufficient trained staff to exercise meaningful oversight over the enormous financial flows they manage. ec5321bd-a01a-4f6d-b1fe-0a32f6e23144 4 Enforcement personnel are highly leveraged investments. At CMS, each employee oversees an average of $252 million in expenditures. Inspectors General are the government's primary fraud-fighting cops and must be politically insulated and adequately resourced to be effective. IGs Ensure that all federal Inspectors General are adequately funded, politically independent, and empowered to pursue findings wherever they lead, including against politically connected recipients of federal funds. 4d031bbc-3c44-4fa9-a86f-c3ea91ee88bd 4.1 Inspectors General Federal Inspectors General serving as the government's primary internal fraud-detection and deterrence mechanism across all major agencies. Staff Increase the number of trained oversight and compliance personnel at high-risk program agencies — particularly CMS — recognizing that the return on investment for each additional enforcement employee far exceeds their salary cost. abaeeaf6-ef43-4e29-bdc3-c7a06a8cc568 4.2 Controls Build systematic risk management and financial control processes that intercept fraud before payments are made, rather than relying primarily on post-payment recovery — recognizing that prevention is both cheaper and more effective than remediation. ac0c4593-3994-4687-b9f1-b3ae4e2414ae 5 Kettl notes that risk management "sounds boring" but is essential infrastructure. The key is building roadblocks to fraud before it occurs. Pre-payment controls cost far less than post-payment recovery and send stronger deterrence signals to would-be bad actors. Pre-Payment Screening Implement or strengthen pre-payment screening systems for all major federal benefit programs, including identity verification, eligibility confirmation, provider credentialing, and cross-referencing against known-fraud databases before funds are released. ed6760ea-803e-423d-8055-d1e590143907 5.1 Financial Reporting Ensure that all major programs have accurate, timely, and auditable financial reporting systems that allow management to know where money is going, identify anomalies quickly, and generate the data needed for ongoing risk assessment. 1de7ff3b-963b-45be-8872-7ef059b07f80 5.2 AI Tools Harness artificial intelligence to detect fraud patterns across the massive transaction volumes of federal benefit programs — particularly the needle-in-a-haystack problems of Medicare and Medicaid — where AI can identify anomalous billing patterns, provider networks, and beneficiary behaviors that no human workforce could review at scale. 70f7e8a3-8b24-46a5-adb0-086618946496 6 Kettl writes that "artificial intelligence seems invented to fight the war on waste." In Medicare and Medicaid, key AI use cases include: detection of billing for services never rendered, upcoding detection, card-sharing pattern recognition, and identification of drug diversion networks. The challenge is identifying "the right haystacks" before finding individual needles. Detection Deploy AI-based anomaly detection tools across Medicare, Medicaid, and other high-volume payment programs to flag providers, suppliers, and beneficiaries exhibiting billing patterns inconsistent with legitimate service delivery, prioritizing cases for human investigator review. 51548b4d-e357-4c44-a685-e5953075db7f 6.1 Analytics Develop AI-enabled cross-program and cross-agency analytics that can detect fraud schemes operating simultaneously across multiple federal programs — a pattern that single-program reviews routinely miss. 47d58351-1492-4362-b6d0-88530d3596a1 6.2 Fraud & Mismanagement Develop differentiated remediation strategies that treat criminal fraud and poor management capacity as the distinct problems they are — reserving criminal prosecution and debarment for bad actors while providing technical assistance, training, and improved systems to small nonprofits and other organizations that lose federal funds due to inexperience rather than dishonesty. 9c36eece-d705-4134-a3c2-9578d22b293e 7 Billions in federal funds flow to small nonprofits lacking experience in financial management and program compliance. Treating all improper payments as fraud will alienate legitimate service providers, undermine program delivery, and generate costly litigation. A tiered response — technical assistance for the inexperienced, prosecution for bad actors — is more effective and more just. The distinction is often genuinely difficult to draw, and that difficulty must be acknowledged in program design. Triage Develop a systematic triage process for recipients of federal funds exhibiting high error rates that distinguishes those needing management capacity-building from those warranting referral for criminal investigation or civil fraud proceedings. d63d951d-703d-498c-8cf2-d12bde388cda 7.1 Grantee Capacity Create or expand federal technical assistance programs that help small nonprofits and other inexperienced recipients of federal grants and contracts build the financial management, record-keeping, and compliance systems necessary to administer federal funds correctly. bdb60250-3631-46df-bce0-c00439cdd89b 7.2 Nonpartisanship Structure the war on fraud so that enforcement follows financial evidence rather than political geography or affiliation — recognizing that improper payment problems are distributed across both red and blue states at comparably high rates, and that a politically selective campaign will fail both financially and in terms of public legitimacy. 62303544-c557-4e91-8f7d-22cb7c7f5297 8 State-level improper payment rate data illustrates the nonpartisan nature of the problem. Blue-state average: 6.3% (Connecticut 19.8%, Delaware 19.6%). Red-state average: 5.7% (Wyoming 20.7%, South Carolina 20.5%, Idaho 18.7%). The national average is 5.9%. Minnesota, which prompted recent headlines, has a rate of 2.2% — less than half the national average. Targeting high-error states will require enforcement against both red and blue jurisdictions at roughly equal rates. Prioritization Establish a public, transparent methodology for selecting enforcement priorities based solely on improper payment rates, fraud risk scores, and evidence of intentional wrongdoing — not on the political affiliations of recipient states, organizations, or individuals. 857d9d12-0e52-41ba-a029-a7a5ae846a10 8.1 Follow the Data Reporting Publish regular, transparent reports on enforcement actions, recoveries, and program error rates by program and jurisdiction — providing the public accountability necessary to sustain credibility and deter both fraud and politically motivated enforcement. 875e22fc-ea55-4f64-b62a-cb28ca81f5c8 8.2 2026-02-26 2028-09-30 2026-03-01 https://www.govexec.com/oversight/2026/02/memo-jd-vance-war-waste/411722/ Owen Ambur owen.ambur@gmail.com