MW Elon Musk says federal fraud is bigger than the entire defense budget. Could that actually be true?

By Brett Arends

This isn't the first time his claims have raised eyebrows

Forget Elon Musk's comments about Social Security. During his interview with podcaster Joe Rogan, Donald Trump's budget-cutting czar called the entire federal government a "pyramid scheme," or fraudulent financial enterprise, and said fraud, waste and abuse in the government were on a scale far beyond anything ever uncovered or even suggested by any inspector general or watchdog.

"It's a $1 trillion scam," Musk told Trump backer Rogan on Friday. "It's the biggest scam of all time - ever - in history." The government, he added, is "much worse than Twitter," where he fired nearly all of the staff after buying the social-media company in 2022.

"Wow," said Rogan.

'The stuff that they lose in the couch cushions is like $20 billion, $30 billion a year.'Elon Musk, on "The Joe Rogan Experience," of the Defense Department

Musk made the claims while his political patron, Trump, tries to sell tax cuts that critics see disproportionately benefiting the rich and big businesses and which are expected to cost the federal budget at least $400 billion a year.

If Musk is correct, that would make the amount being openly stolen from the federal government each year bigger than the entire economies of Ohio or Georgia, Switzerland or Taiwan. It would be 50% bigger than the entire annual revenue of Walmart $(WMT)$ or Amazon $(AMZN)$, more than twice the annual revenue of Apple $(AAPL)$ and nearly three times Exxon Mobil's $(XOM)$.

It would also be bigger than the entire defense budget, and half the size of the total deficit.

The fraud would account for $1 out of every $7 spent by the federal government, or $1 out of every $6 once you exclude interest payments on federal debt.

A recent investigation by the Wall Street Journal found that, so far, the actual savings discovered by Musk's "DOGE" team are far less than claimed.

Musk, on the Rogan "experience," claimed that the Social Security numbers of 20 million dead people are being used to steal about $100 billion a year in Medicaid, disability and other benefits from across the federal government. He claimed nongovernment organizations, or NGOs, were a "gigantic scam" being used to loot the government of billions of dollars.

He said the U.S. Treasury was sending out trillions of dollars in "untraceable blank checks." He said the Defense Department wastes so much money that up to $30 billion a year gets lost like loose change fallen from the Pentagon's pocket. "The stuff that they lose in the couch cushions is like $20 billion, $30 billion a year," Musk told Rogan.

What is most remarkable is that none of this was discovered by anyone before Musk began looking six weeks ago. Each government department has an independent inspector general with a full-time staff tasked with turning up fraud and abuse. A separate Government Accountability Office has also been working full time - since the presidency of Warren Harding - at finding waste. Its most recent fraud estimate ranged from about $230 billion to $530 billion, and that included the fraud bonanza of the coronavirus pandemic years of 2020 and 2021.

It is also remarkable that none of the $1 trillion in fraud that Musk alleges has been exposed by whistleblowers, even though, thanks to the False Claims Act of 1863, they could have banked enormous sums - possibly hundreds of billions of dollars - by dropping that dime. Last year whistleblowers pocketed more than $400 million after helping the federal government collect $2.9 billion in fraud and judgments. It's not clear why whistleblowers would be leaving sums of money hundreds of times bigger than that on the table.

Rogan didn't ask.

Musk wasn't smoking cannabis while he made the claims, as he had done when he went on the program seven years ago.

This isn't the first time that Musk has raised eyebrows with fantastic claims and implausible statements.

Just four months ago he said he could cut "$2 trillion" from the federal budget, accounting for 85% of all spending other than Social Security, Medicare, defense, veterans and debt interest, before backing down.

In 2022 he said he would buy Twitter for $44 billion but then tried to back out, only going ahead with the purchase - whose price tag was widely believed to have included a weed joke - after he was forced to by legal action.

In 2018 he falsely called a British diver a "pedo guy" as the man was helping rescue a group of Thai schoolboys from an underwater cave, before later saying he'd never thought anyone would take his accusation seriously.

In the same year he claimed he had "funding secured" to take Tesla private, only to admit later in court that this was incorrect. (Musk's initial tweet, again, featured an apparent cannabis reference.)

During the Rogan interview, Musk also said the U.S. government was going bankrupt. But he didn't explain why, if that was the case, the president was still pursuing a tax cut expected to reduce revenues by another $400 billion a year. Nor why the administration was cutting staff at the Internal Revenue Service, even though tax cheats cost the U.S. more than $600 billion a year.

From the archives (December 2024): Republicans succeed in clawing back more Biden billions for IRS tax-cheat enforcement

It's just over 20 years since a previous Republican president sold the American people on a war in Iraq based on assurances that Saddam Hussein possessed "weapons of mass destruction." America got the war, but they never found the WMDs. The war ended up costing $815 billion, and as many as half a million lives.

But no doubt this will be different. The proof of Musk's claims, naturally, will be in the eating. Presumably we will see these promised savings in real dollar terms within a year, if not sooner.

-Brett Arends

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March 04, 2025 12:45 ET (17:45 GMT)

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