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Yes, money is fungible. So the question is pointless. Someone can “profit” off of his per diem by spending $20 on food where he’s allowed $35. That money is his to keep.

Now that it’s his money, whether he puts it in the bank or spends it on hookers, it’s still his money.

Right, technically, there's no problem from an IRS code point of view, though there probably are some Secret Service rules broken. I'm just thinking that politically, a Congressional committee would add this to the list of expense account frauds they could rake some of these guys over the coals for if they did the old "fast-food/eat cheap and spend my per diem on something else" game. Though it's technically not fraud, at that point it becomes a "hooker per diem". If they had bought a few nice cigars, no one would have really cared.

Eating cheaply, and spending the per diem on something else isn’t just “technically” not a fraud. It is a perfectly reasonable, and completely legal thing to do.

Most organizations (private and public sector) pay travelling employees per diems because it’s actually cheaper than requiring itemized accounting of all expenditures. If you are given (say) up to $50.00 for a meal allowance, and have to submit a receipt — then you’ll tend to spend $50.00 per meal. If you receive a per diem of $40 per meal, and spend only $30 — then both you, and your employer come out ahead.