Eliezer implies it's pretty much all administrative costs. But it's not clear that this is a fair measure "giving people money." European welfare systems are less resentful of their recipients and more focused on direct transfers. I'm sure that they are more efficient than the US system, though I don't have any numbers. A stipend that was not means-tested could be more efficient still. A negative income tax might not need to be more complicated than the income tax system itself. The US version is not terribly complicated by income tax standards, but I think a lot of people fail to exploit it out of ignorance. That's a type of inefficiency that doesn't show up in this kind of number.