U.S. Treasury Secretary Scott Bessent has warned that waste, fraud, and abuse are draining hundreds of billions of dollars from the federal budget every year, arguing that cutting these losses could free up funds for national priorities, including defense spending.

In a recent interview, Bessent said between 5 percent and 10 percent of total federal spending is lost annually to fraud and abuse, citing estimates from the Government Accountability Office. That range translates to roughly $233 billion to $521 billion lost each year, based on GAO data covering fiscal years 2018 to 2022, according to reports by the New York Post and Reuters.

“If we can narrow that number, President Trump asked for a $500 billion increase in the defense budget to fortify the 10 to 20 years of neglect,” Bessent said in the interview.
“If we need to flex up our military budget, if we can get rid of this waste, fraud, and abuse, we can finance a safer, sounder US with that, without taking on more debt. Sounds like a pretty good outcome to me.”

Federal spending has surged since the period covered by the GAO analysis. The U.S. government spent about $7 trillion in fiscal year 2025, ran a deficit of roughly $1.8 trillion, and paid nearly $1 trillion in interest on its $38 trillion national debt—more than total military spending, according to Reuters.

The renewed focus on waste comes as Donald Trump pushes for a sharp increase in defense outlays amid rising geopolitical tensions. It also follows high-profile fraud cases, including a massive welfare fraud scandal in Minnesota that prosecutors estimate may have cost taxpayers billions of dollars since 2018.

Last week, Vice President JD Vance said the Justice Department would step up fraud investigations nationwide, calling the issue widespread and systemic.

Beyond direct fraud, revenue losses remain a major concern. The Internal Revenue Service estimates the so-called “tax gap”—taxes owed but not collected—stood at about $606 billion as of fiscal year 2022.