The Hill first published this opinion piece.

Recent welfare scams in Mississippi and federally subsidized day care and child nutrition frauds in Minnesota have cost U.S. taxpayers billions of dollars. Although their audacity and scope may shock the nation’s collective conscience, these scandals are yet another example of an age-old economic maxim: No one spends other people’s money as carefully as they spend their own.  

Bad actors aside, fraudulent welfare spending arises and persists in large part because the U.S. welfare system allows state governments to spend federal money rather than their own, with little political risk or actual administrative oversight required. In fact, Washington encouraged states to spend federal money as quickly as possible during and after the pandemic, just in case the welfare spigot should soon run dry.

When state and local politicians can spend federal dollars without raising state and local taxes, they have a perverse incentive to spend first and ask questions later. And when the Biden administration notoriously discouraged states from conducting basic eligibility reviews in some heavily subsidized state-run programs, including Medicaid, that is exactly what happened.

Improper and fraudulent Medicaid and SNAP welfare payments skyrocketed, costing American taxpayers billions.

Whether due to incompetence or political cowardice, both red and blue states have proven inadequate stewards of federal funds, allowing fraud to go unchecked and obvious administrative problems to remain unfixed. The waste and ineptitude only further erode the public’s trust in government and weaken our civic bonds.

But the Trump administration and its One Big Beautiful Bill Act could hold states accountable.

To help rein in waste and fraud, the Trump administration has prudently restricted how states draw down Medicaid funds from federal coffers. It now penalizes states for making improper SNAP payments — the greater the impropriety, the stiffer the penalty. To help enforce these safeguards, the U.S. Department of Justice has created a new position to coordinate anti-fraud efforts across federal programs, including those administered by states. 

This is all to the good. So is Sen. Jon Husted’s (R-Ohio) recently introduced bill combining several federal assistance programs to make them more efficient and encourage program recipients to work more. Husted’s pilot program would reduce the impact of “benefit cliffs” — which can eliminate public assistance if a recipient earns too much — and instead allow for a gradual reduction in benefits across many programs as Americans transition to self-sufficiency.

These changes mean that more work, or an earned raise, will result in more take-home pay, not an abrupt end to vital benefits. If enacted, Husted’s approach would streamline an overly complex, confusing welfare system and thus help states reduce improper payments.

A more streamlined welfare apparatus with more robust oversight that helps reduce fraudulent or otherwise improper payments is going to be necessary for another reason: money. Federal debt continues to grow, and the interest payments alone now exceed national defense spending. With Medicare, Medicaid, and Social Security payments all projected to rise substantially in the near term, Congress will be hard-pressed to continue generously funding state-run welfare programs without risking rampant inflation. Simply put, federal fiscal flexibility will be limited.

As state legislatures reconvene in the new year, they should be wary of proceeding casually with business as usual. The public is tired of reading headlines daily declaring that they have been robbed and defrauded via welfare systems they have supported to help the less fortunate. And states now face a Trump administration concerned about curbing such waste, fraud, and abuse of federal funds. 

Legislators and policymakers, who for too long have turned a blind eye to fraudulent welfare spending, must decide whether to repair their broken programs by investing in effective oversight and payment systems or pay hefty penalties for their persistent negligence.

One of those choices takes responsibility for spending taxpayer money seriously, the other one doesn’t. It is time for states to choose — and the Trump administration seems ready to make them.

Rea S. Hederman Jr. is vice president of policy at The Buckeye Institute.