The DOGE Should Save Billions by Modernizing Government Benefit Access

President Trump has asked Elon Musk and Vivek Ramaswamy to lead a new  Department of Government Efficiency to “slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies.”  A big opportunity to increase government efficiency would be to reduce fraud and misspending in federal social welfare programs, which costs the federal government hundreds of billions of dollars per year. 

A strategy that should be at the top of the agenda would be to create a secure, federal digital identity to access certain federal benefits. Deploying secure technology in this way has the potential to achieve hundreds of billions in annual taxpayer savings, while making it easier for Americans who depend on social welfare benefits to access vital services.

Last year, the federal government made more than $230 billion on so-called “improper payments,” the vast majority of which are overpayments. About half of these improper payments are made through the Medicare and Medicaid programs. But $75 billion is due to individual benefits programs like unemployment insurance, the Earned Income Tax Credit, and Social Security’s Supplemental Security Income Program. 

There’s also the problem of fraud and abuse of government benefits. Altogether, the federal government wastes between “$233 billion to $521 billion annually to fraud” according to the nonpartisan Government Accountability Office.

At the same time, many Americans forgo government benefits that could help their families make ends meet during this period of high inflation due to the so-called “time tax” or administrative burden involved with applying for federal benefits. For example, roughly one in five eligible taxpayers forgo the opportunity to apply for the federal Earned Income Tax Credit. Broadly, Americans forgo as much as $140 billion in social welfare benefits, in part due to the administrative burdens associated with applying for them. Fully enrolling all eligible Americans in all of the main social welfare programs could move 15 million people, including five million children, out of poverty.

One of the main causes of federal misspending and the administrative burden is the challenge of identity verification. According to the federal government’s Joint Financial Management Improvement Program, one of the significant factors causing improper payments is “applicant identity—verifying that the person who is attempting to interact with a federal program office is who they claim to be.”

But a new option exists to potentially address both challenges: using digital technologies for the purpose of identity verification while providing more convenient access to federal benefits. Around the world, policymakers are establishing digital identities to facilitate citizen interactions with governments and to prevent fraud and identity theft. Several countries, most notably Estonia, have successfully addressed the problem of waste, fraud, and abuse by enacting a cryptographically secured digital identity system. Such systems work by pairing a chip-enabled identification card with a personal identification number (PIN) that the user memorizes. Unlike Social Security numbers, which are effectively in the public domain and often subject to misuse, the modern digital approach makes it more difficult to misappropriate someone’s identity. 

The United States has already made substantial progress establishing a secure way for Americans to securely access government federal and state websites and services through Login.gov, which includes more than 80 million users. Looking forward, the White House and Congress should establish a limited digital identity technology platform for certain public benefit programs to strengthen program integrity and to reduce the administrative burden that Americans encounter accessing federal benefits, including by building upon the services offered by Login.gov.

A voluntary federal digital ID, backed by secure technology, could yield significant benefits for both the public and private sector, and help secure the American people’s personal information from hackers working to steal their identities. According to one estimate, Americans lost $20 billion to identity theft in 2022. Replacing the ineffective Social Security number, which is essentially public domain, with a secure technology would protect personal information and help both government and the private sector prevent cyber crime. 

To be sure, the federal government will need to navigate important political questions when designing a federal digital ID. Many Americans rightly distrust the government and may express concerns about privacy. Some will oppose any effort to increase controls around government benefits which may force some undeserving citizens off the rolls. But the federal government has already begun transitioning to electronic benefits and identity management, including through Login.gov, and could structure a new secure digital ID program as a voluntary option or pilot program to help encourage initial participation to build trust. Moreover, any transition to a secure digital ID could be complemented with in-person and traditional benefit enrollment options for Americans who may lack access to technology or may be leery of using a digital ID.

The United States can’t afford to waste $200 to $500 billion on fraud and misspending, and needy Americans shouldn’t have to struggle to sign up for social safety net programs that can help lift them out of poverty.  Establishing a voluntary, secure digital ID to access certain government benefits would be a win-win solution that visionary leaders like Elon Musk could make a reality over the next four years. y over the next four years.