Bessent says Minnesota fraud recovery could help fund Trump’s $1.5T defense plan

Minnesota is ‘ground zero’ for one of the nation’s worst welfare scams, Bessent says

Treasury Secretary Scott Bessent told the Minnesota Economic Club that the Trump administration will claw back federal dollars used in fraudulent schemes. (Credit: Economic Club of Minnesota)

Treasury Secretary Scott Bessent said Thursday that President Donald Trump’s proposed $1.5 trillion boost in defense spending would be achievable if the federal government can successfully claw back money lost to fraud, waste and abuse, pointing to welfare fraud investigations as a potential funding source.

Speaking at the Minnesota Economic Club, Bessent said the Treasury Department is intensifying efforts to recover taxpayer dollars lost to welfare fraud, describing Minnesota as a focal point of ongoing investigations tied to federally funded programs.

"Minnesota, unfortunately, is ground zero for what may be one of the most egregious welfare scams in our nation’s history to date," Bessent said.

MINNESOTA’S ANTI-FRAUD SPENDING HAS QUIETLY BALLOONED, LEAVING TAXPAYERS TO PAY FOR FAILURE TWICE

Scott Bessent, U.S. Treasury Secretary, during an Economic Club of Minnesota event in Golden Valley, Minnesota, on Thursday, Jan. 8, 2026. (Ben Brewer/Bloomberg/Getty Images)

Bessent said recovering those funds could help finance Trump’s proposal to raise U.S. military spending to a cool $1.5 trillion.

"Yesterday, President Trump announced he was considering a $500 billion increase in defense spending," Bessent said. Asked whether the government could afford it, he replied: "Yes, if we can get the money back from fraud."

Pressed on whether the recovered funds would be substantial enough to meaningfully increase defense spending, Bessent said they would.

The revelation comes amid a sweeping fraud scandal in Minnesota that has drawn national attention and is estimated to involve at least $9 billion in misused funds. Minnesota Gov. Tim Walz, a Democrat, announced Monday that he will not seek re-election amid growing scrutiny over the state’s handling of the case.

ONE CHART LAYS BARE THE SPRAWLING FRAUD NETWORK MINNESOTA OFFICIALS MISSED

Minnesota Governor Tim Walz said that he "came to the conclusion that I can’t give a political campaign my all."  (Jerry Holt/The Minnesota Star Tribune/Getty Images)

"Under Governor Tim Walz, billions of dollars intended for families in need, housing for disabled seniors and services for children were diverted to benefit fraudsters," Bessent said. "I am here this week to signal the U.S. Treasury's unwavering commitment to recovering stolen funds, prosecuting fraudulent criminals, preventing scandals like this from ever happening again, and investigating similar schemes state by state," he added.

Bessent said the administration views aggressive fraud enforcement as a key component of its broader effort to rein in government waste while funding national security priorities without raising taxes.

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U.S. Secretary of Treasury Scott Bessent outlined a plan to help finance President Donald Trump's $1.5 trillion defense budget plan. (Anna Moneymaker/Getty Images)

Turning to Minnesota’s future, Bessent said the state had lost its way in recent years but could regain its standing under a different policy approach.

"For decades, Minnesota led the Midwest as a hub for culture, business and innovation," he said. "But it doesn’t have to be this way. President Trump’s hope, and ultimately his invitation, is that Minnesota becomes a North Star state again."

Amanda covers the intersection of business and politics for Fox News Digital.