State financial officers back Trump's 'war on fraud,' expert calls for program reforms

(TNND) — A coalition of conservative state financial officers has pledged its support to the Trump administration's newly declared "war on fraud."

President Donald Trump announced the so-called war on fraud during his State of the Union speech this week, though he said the battle has been raging for months already.

Trump singled Minnesota out during his State of the Union speech, accusing the state’s Somali community of stealing an estimated $19 billion from American taxpayers.

And he tapped Vice President JD Vance to lead the charge against fraud.

Friday, the State Financial Officers Foundation sent a letter to Vance, along with a copy of its new report on how state treasurers and auditors safeguarded taxpayer money and stopped about $5.7 billion in waste, fraud and abuse last year.

The group, which is comprised of 40 conservative state financial officers from 28 states, applauded the president’s efforts to stamp out fraud and pledged its support for Vance’s work on that front in the months to come.

SFOF CEO OJ Oleka told The National News Desk that his group’s oversight report shows that accountability matters in protecting taxpayer dollars, but that accountability isn’t automatic.

“In the cases where fraud was able to fester and spread, proactive leadership could've made a difference,” Oleka said in an emailed statement. “That's exactly the kind of leadership we're seeing now in Washington from President Trump and Vice President Vance and their administration. The State Financial Officers Foundation looks forward to fighting alongside them in the War on Fraud in the months and years ahead. We're all on the frontlines together, and we cannot win alone. By combining our energy, expertise, and resources, we can prevail and make America financially safer than ever."

Romina Boccia, the director of budget and entitlement policy at the Cato Institute, a libertarian-leaning think tank, said the Trump administration is right to focus its energies on fighting fraud. And she said support from the states will be critical to the fight’s success.

A lack of oversight contributed to much of the “fraud crisis” we see today, Boccia said.

State administrators are closer to these problems than the federal government and are therefore more apt to catch financial mismanagement.

“However, the best solution is to give states more financial skin in the game,” Boccia said via email. “So long as states have the option to spend money that isn’t theirs, the perverse incentives that come with it will continue to be present.”

Enforcement alone won’t fix the problem, Boccia said. She called for program reforms.

Welfare fraud persists largely because states run programs fueled by federal dollars, Boccia said. When states are spending Washington’s money, they have weaker incentives to prevent waste and abuse, she said.

*SEE ALSO: *Minnesota first battlefield in administration's new 'war on fraud'

Minnesota first battlefield in administration's new 'war on fraud'

Government programs with open-ended entitlement structures allow states to “game the system” so they can draw more federal dollars and expand benefits, Boccia said. She mentioned “legal gimmicks,” like provider taxes in Medicaid, or broad-based categorical eligibility for food stamps.

She said converting Medicare to a cash-transfer program similar to Social Security would be the best way to curb waste, fraud and abuse in that program. That’s because seniors receiving Medicare subsidies as direct payments would have stronger incentives to avoid scams and wasteful expenditures than federal middlemen.

She also advocated for block-granting programs like the Supplemental Nutrition Assistance Program (SNAP) and Medicaid. Under a block grant, the federal government would give states a fixed amount of money. That would cap the federal government’s financial liability and give states more flexibility in how the money is used. But it could also result in benefit cuts if states can’t or are unwilling to cover rising costs or needs.

Boccia said the block grant approach would give states a stronger incentive to combat fraud within the programs.

“But the ideal solution is to eliminate federal funding for these programs such that states that choose to provide food or healthcare assistance fund state aid with state taxpayer dollars,” Boccia said. “True accountability in America’s welfare programs begins with states answering directly to their constituents by paying the full financial consequences of running them poorly.”

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