California’s Fraud Problem Is Real — But Politics Is Obscuring the Truth

By Michael Phillips | CABayNews

When Donald Trump declared on Truth Social this week that a “Fraud Investigation of California has begun,” the response from Sacramento was immediate — and dismissive. Gavin Newsom’s office countered that California has blocked more than $125 billion in fraud attempts and aggressively prosecutes scams.

Both claims can be true. And that’s precisely the problem.

California does have a serious fraud problem — particularly in massive, fast-moving government programs where oversight lags behind spending. But by framing the issue as a partisan showdown, state and federal leaders risk turning a legitimate accountability question into just another red-versus-blue food fight.

The backdrop to Trump’s claim matters. The U.S. Department of Health and Human Services has frozen roughly $10 billion in federal funds to California and four other Democratic-led states, citing concerns about fraud and misuse in child care and social services programs. Those funds support programs like TANF and the Child Care and Development Fund — lifelines for working families.

Here’s the catch: while Minnesota has already seen documented child care fraud cases involving hundreds of millions of dollars, no comparable public evidence has yet been produced for California. That hasn’t stopped the freeze, nor has it stopped Sacramento from responding with broad assurances rather than specifics.

California’s history suggests skepticism is warranted on both sides.

During the pandemic, California lost tens of billions of dollars to unemployment insurance fraud. Prison inmates, international crime rings, and identity thieves drained a system overwhelmed by speed-over-controls policymaking. Similar vulnerabilities exist today across social services, housing assistance, disaster relief, and child care subsidies — programs that are vast, decentralized, and often administered through third parties.

Newsom is right that California has improved fraud detection. He’s wrong to pretend the state’s systems are beyond reproach.

Trump is right that federal oversight has been lax for years. He’s wrong to announce investigations by social media post without naming agencies, programs, or evidence.

The real losers in this political theater are California families and providers caught in the middle. A funding freeze based on vague allegations creates uncertainty, raises costs, and undermines trust. But so does a state government that treats every fraud inquiry as a partisan attack rather than an opportunity to prove competence.

A serious fraud investigation — transparent, documented, and program-specific — would benefit everyone. If California’s safeguards are as strong as claimed, they should withstand scrutiny. If they’re not, taxpayers deserve to know.

Fraud isn’t a Republican talking point or a Democratic embarrassment. It’s a governance failure. California has enough of those already without turning accountability into performance art.

What the state — and the country — needs now is less rhetoric and more receipts.