One of many first casualties of the second Trump administration has been the US Company for Worldwide Growth (USAID).
The company, which funds and operates humanitarian help applications all the world over, has rapidly grow to be a goal for Republicans. Over the previous 4 weeks, the White Home has been pursuing a plan to cut back USAID’s workforce from over 10,000 folks to simply about 290. The hassle has gone to date that, in Washington, DC, indicators for the company have both been lined in black tape or eliminated solely.
There are many explanation why the Trump administration — and Elon Musk’s so-called Division of Authorities Effectivity (DOGE) — is perhaps so fixated on USAID particularly. It might be a part of their effort to dramatically cut back federal spending, utilizing USAID as a trial run earlier than dismantling different authorities businesses. Or it might be that Trump and his allies see little worth in international help. But when this actually was a case of saving taxpayer cash, as they declare, it doesn’t make a lot sense; within the final fiscal yr, USAID spent lower than 1 % of the federal finances.
However the Trump administration’s assault on USAID does inform us one thing broader about Republicans’ view on authorities spending — particularly, what they could take into account to be wasteful spending: applications that assist the poor. And the way in which they’ve justified the dismantling of USAID — by categorizing it as rife with fraud and mismanagement — could give us a glimpse into how they are going to method home welfare applications.
A press release from the White Home earlier this month lamented that USAID has, apparently, “been unaccountable to taxpayers because it funnels large sums of cash to the ridiculous — and, in lots of circumstances, malicious — pet tasks of entrenched bureaucrats.”
It doesn’t matter that the billions of {dollars} that USAID spends have supported life-saving meals distribution and STD-prevention applications. And it doesn’t matter that USAID’s famine warning system helps organizations around the globe decide the place to deploy humanitarian reduction. What issues to Trump and his allies are the tales — a few of which, it must be famous, aren’t even true — that help their argument that primary humanitarian help applications are riddled with waste and abuse.
Successfully shutting down USAID could have main penalties for tens of millions of individuals overseas, and it also needs to function a warning for individuals who care about antipoverty applications right here at house. When applications like meals stamps or Medicaid are on the chopping block, chances are high Republicans are going to show to the identical argument: These applications are wasteful, so why ought to we fund them?
USAID as we speak. Medicaid tomorrow?
All through the presidential marketing campaign, Trump promised to not reduce applications like Medicare and Medicaid, however the pink flags had been onerous to overlook. “There’s a lot you are able to do when it comes to entitlements, when it comes to slicing and when it comes to additionally the theft and the unhealthy administration of entitlements,” he informed CNBC in March of final yr.
And that’s precisely how Trump and his allies are framing their potential assaults on Medicaid now. (Not like USAID, Medicaid is almost 10 % of the federal finances, making it a extra interesting goal for the Trump administration in the event that they’re seeking to drastically reduce spending.) He just lately informed reporters that he’ll “love and cherish” Medicaid, however added one caveat: “We’re not going to do something with that,” he stated, “except we are able to discover some abuse or waste.”
Certain sufficient, when Trump nominated Dr. Mehmet Oz to function the administrator of the Facilities for Medicare and Medicaid Providers (CMS), he stated that Oz would “reduce waste and fraud inside our nation’s costliest authorities company.” And earlier this month, Musk’s DOGE aides began working at CMS, the place, in keeping with the Wall Avenue Journal, they’ve gained entry to crucial cost and contracting programs. The DOGE aides have been tasked with discovering fraud.
To make certain, Medicaid and Medicare, like all authorities program, are under no circumstances good and do expertise fraud and mismanagement. However the Trump administration is drastically exaggerating how a lot cash they are going to save by tackling fraud in these applications. “At this level, I’m 100% sure that the magnitude of the fraud in federal entitlements (Social Safety, Medicare, Medicaid, Welfare, Incapacity, and so forth) exceeds the mixed sum of each non-public rip-off you’ve ever heard by FAR,” Musk tweeted final week. “It’s not even shut.”
That declare, nonetheless, isn’t rooted in actuality, except Musk is aware of one thing we don’t and isn’t sharing it. One quantity that the federal government usually cites when evaluating these applications’ effectivity is the “improper cost charge,” which represents funds that don’t meet CMS necessities for numerous causes, together with inadequate documentation, overpaying, or underpaying. In 2024, Medicaid’s improper cost charge was roughly 5 %. Whereas a few of that is perhaps a results of fraud, abuse, or mismanagement, the overwhelming majority of it’s a results of inadequate documentation, in keeping with a CMS report.
The issue is that if Republicans are really involved with wasteful spending, they wouldn’t focus their efforts on limiting welfare entry by imposing measures like work necessities, which have been confirmed to be ineffective. When Georgia imposed its work necessities on Medicaid, for instance, its administrative prices ballooned, with nearly all of its Medicaid spending going towards implementing its work reporting necessities.
Republican efforts to reduce Medicaid and different welfare applications have by no means been about stopping fraud or abuse. They’ve at all times been about shrinking the social security web, partly to assist fund tax cuts for individuals who don’t want them. And with Musk’s plan to chop some $2 trillion in authorities spending, it’s clear the highway to getting even remotely near that determine goes by entitlement cuts. Just like the assault on USAID, Republicans will say they’re merely concentrating on fraud and abuse, however their definition of wasteful spending will possible have much less to do with precise waste or corruption and extra to do with cash that goes towards serving to the poor.
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