Firing Government Watchdogs and Cutting Their Budgets is Undercuts the ‘War on Fraud’ – The Debt Dispatch

This piece was co-authored with Chris Edwards.
Federal agencies house 72 inspectors general offices to audit government spending and root out waste, fraud, and abuse. These watchdogs cost a combined $3.9 billion annually—just 0.06 percent of federal spending—but likely save taxpayers many billions more than that from their investigative efforts.
For some reason, the Trump administration has fired or forced out at least 21 of the inspectors general (IGs) since January 2025. In its recent budget, the administration proposes cutting real IG funding by 23 percent between fiscal 2025 and fiscal 2031.
In the meantime, the administration has declared a “war on fraud,” particularly in welfare and health care programs. This is a welcome effort because many federal programs suffer from billions of dollars of theft. However, the anti-fraud war would seem to be undermined by the administration’s own weakening of the IG system.
With federal deficits rising, policymakers should be strengthening every budgeting mechanism that can save money, including the IG system. Let’s review some of the recent changes.
Trump’s Firings Create IG Vacancies
In January 2025, President Trump fired 17 IGs, many from major departments including Defense, Interior, Health and Human Services, Housing and Urban Development, and Veterans Affairs. Since then, the administration has fired, forced out, or replaced additional IGs, including those for the Department of Education, Export-Import Bank, and USAID.
Many of these firings violated federal law. The Inspector General Act requires the president to provide Congress with a 30-day notice before removing an IG, along with “substantive rationale.” Neither was provided in the January firings.
Nonetheless, the president possesses broad authority to fire executive branch personnel, and independent oversight within federal agencies—such as the IG offices—is difficult to guarantee. This is why Congress needs to step up to the plate on spending reforms and oversight.
Nearly 40 percent of IG positions—28 out of 72—are currently vacant, with 22 of the vacancies already lasting more than a year. The Social Security Administration spends $1.8 trillion a year, yet it has not had an IG for a year and a half. The Department of the Treasury has not had an IG for more than six years. Many IG offices are headed by acting officials who may feel that they lack authority to forcefully pursue investigations. Whether Trump’s IG firings were merited or not, the administration and Congress should work together to quickly fill vacant IG positions.
Trump Proposes Cuts
The coordinating group for the federal IGs is the Council of the Inspectors General on Integrity and Efficiency (CIGIE). The council says that the combined funding of federal IGs was $3.9 billion in 2025. We estimated total IG spending back to 2010 and projected it to 2031 based on the Trump administration’s proposal.
Figure 1 shows that estimated real outlays for federal IGs had been fairly stable since 2010 but are now falling. Trump’s budget would cut spending 23 percent in real dollars between 2025 and 2031. (See data note below.)
Table 1 shows the number of employees in IG offices in 2025 and in 2027 under Trump’s budget. Among cabinet departments, the largest cuts to IGs are Defense, Interior, Justice, and Veterans Affairs.
The administration’s proposed cuts to IGs seem penny wise and pound foolish. The IGs for several departments have stated that the president’s FY 2027 budget would substantially reduce their ability to detect and prevent waste, fraud, and abuse.
The CIGIE says that the IGs find tens of billions of dollars a year in unwarranted spending. The IGs found $65 billion of “potential savings” in 2025 and $71 billion in 2024. If most of those savings are realized, it would be a good return on investment for just $4 billion in annual IG costs.
Also note that the Departments of Justice, Defense, and Homeland Security received large spending increases in the One Big Beautiful Bill Act of 2025 and may receive further increases in a possible Reconciliation 2.0. More auditors will be needed to investigate all the new improper payments that will likely be generated.
Table 2 shows IG spending as a percentage of total agency spending for major agencies. The Social Security Administration (SSA) IG appears particularly undersized, as it audits not only the retirement program but also two large and fraud-prone disability programs. Recent testimony by a leader of the SSA IG details the major threats faced by the agency, including looting by sophisticated transnational crime gangs.
IGs Should Be Strengthened, Not Cut
It is not clear why an administration wanting to cut waste would undermine the effectiveness of federal auditors. Our own research has benefited from many IG reports that have usefully exposed bloated and illegal spending. With the government wasting hundreds of billions a year on improper payments, Congress should support the efforts of IGs to expose spending that is wasteful and corrupt.
Cutting IG budgets would be justified if government officials were angels, but as James Madison knew, they are not. As Madison said, we must oblige the government to control itself, and IGs are one mechanism for doing that.
Data note: For Figure 1, we estimated total annual IG outlays based on data for four-fifths of IG spending readily available in the federal budget. Estimates for 2026–2031 are based on the administration’s budget projections.
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