For Republicans focusing on a ripoff by Somali day-care operators in Minnesota, it seemed like a pot of gold. Conservative activist Nick Shirley used a 43-minute video on YouTube to charge that Minnesota was perpetrating “potentially the largest fraud scandal in U.S. history.” The fraud, Shirley claimed, was so large that “it could actually almost replace the entire GDP of Somalia.” That was a preposterous claim — its GDP is $11.97 billion — but his video campaign took out Democratic Gov. Tim Walz’s campaign for a third term.
That was a dramatic fall from Walz’s vice presidential campaign just a year earlier. And it promised to attract sharks who hoped to take out more top Democratic officials, starting with California Gov. Gavin Newsom. Behind the headlines, however, is a far more complex and interesting story, one that tells us something significant about the whole issue of fraud in the modern American welfare state.
Shirley’s story was an exaggeration. He claimed to have found that the Somali day-care centers were collecting money without providing any care, but he didn’t get in to check. Center operators refused to allow him in when he arrived with his camera and masked men. One center was closed when Shirley banged on the door; it didn’t open until later in the day when second-shift workers headed off to their jobs.
There certainly were problems with the federally funded child-care programs in Minnesota, but nowhere near what the Trump administration had charged. A federal audit in 2025, on data collected in 2023, found an error rate of 11 percent in payments that were made to 1,155 child-care centers. Most of the errors came from sloppy recordkeeping by the centers, not fraud. Such errors and genuine fraud invariably get mixed into the same pot, because only a microscopic audit can separate recordkeeping from efforts to cook the books.
Minnesota’s Department of Children, Youth, and Families is the lead agency for the day care program, but the counties are responsible for managing applications, determining eligibility, making payments, and licensing centers. An “error” in this system means that centers did not adequately document the attendance records of the kids, something that happens quite easily with small centers staffed with relatively inexperienced managers who are responsible for compliance with very complex rules. And, of course, there’s no separate line item for “fraud.”
How does the quest for fraud translate across the federal income-support programs, especially for the really large programs: Supplemental Nutrition Assistance Program (SNAP, or food stamps) and Medicaid, where the states have huge responsibility for much more money?
The most important answer is this: No one really knows. But the best place to start is to sort through the “improper payments” — payments the federal government makes that turn out not to have adequate documentation.
The U.S. Centers for Medicare and Medicaid Services estimates (and it’s only an estimate) that the improper payment rate in Medicaid was 6.12 percent in the most recent survey (collected in 2023, 2024 and 2025). In SNAP, the improper payment rate was almost twice as high, 11.7 percent in 2023, the U.S. Government Accountability Office (GAO) estimated. Most of the errors were overpayments, but there were significant underpayments as well.
Are these problems rooted in blue states? In fact, the problems flow across the country. In SNAP, five red states and 10 blue states were above the national average. For Medicaid, the balance is reversed. The improper payment rate overall is much lower, at 6.1 percent, but red states predominate, at 8 percent compared with the lower numbers from five blue states.
Are there jurisdictions with problems in both programs? Consider states above the national average for both. The list is evenly divided: two red states (Alaska and Florida) and two blue states (Delaware and Massachusetts), with bright-blue District of Columbia appearing twice.
So Trump’s quest to repeat his discovery in Minnesota is bound to disappoint him. In traditional fee-for-service Medicaid programs, where providers are reimbursed based on the care they provide, Arizona and South Carolina have error rates of more than 25 percent. Florida and Wisconsin have error rates of 16 percent. All went for Trump in 2024. California’s rate was 5.9 percent; to take aim at arch-nemesis Gavin Newsom, the administration would have to first target 12 red states that have larger error rates than his.
It’s surely the case that we need an attack on fraud in federal payments. The GAO estimates that the amount of fraud in federal programs is quite large — between $233 and $521 billion per year — but not nearly as large as critics often cite.
Fraud is an equal-opportunity scourge, across blue and red states. It’s deceptively hard to root out, because doing so begins with far better management and recordkeeping. If Vance takes his role as Fraud Czar seriously, he will have to take out as many allies as opponents — and that would make it a pretty clumsy political blunderbuss.
