I used to go on an annual golf trip with a colorful collection of friends from neighboring Rhode Island. We started with trips to Myrtle Beach, but eventually gravitated to Orlando, FL, for convenience. There was always a big run to the grocery store and liquor store at the start.
Typically, we’d rent a couple of adjacent four-bedroom condos, save receipts, and split joint expenses at the end of the trip.
One year, however, our resort just issued us all a single “resort card” to use for all incidental expenses on the property. Everyone’s individual expenses went to the same account. I suspect they knew what would happen. With individual cost-control incentives removed, it didn’t take long before this turned into a free-for-all. People were expensing massages, clothing from the pro shop. At dinner, the common refrain was “What’s the most expensive Bourbon you have?” We had a blast!
Two guys made the mistake of missing a dinner - they wanted to go see a spring training game instead. The dinner we had without them was top shelf! We all had great steaks, a great assortment of appetizers, and plenty of tremendously expensive red wine. For that trip, I bet we spent at least double what we normally did. It is a trip I look back on with great fondness.
The way we went about expenses on that trip is how our representatives in Congress go about the budget process for the United States. When you are spending other people’s money, you have very little incentive to ever spend less. If anything, you try and grab as much of the pile of cash as you can. It is a common feature of many incumbent campaigns to identify the dollars associated with various federal outlays that a representative has managed to “bring home” to his or her constituents. I don’t think I’ve ever seen a political advertisement that featured how much money has been saved. Maybe it has happened, but I just don't recall ever seeing one.
I got thinking about that the other day when I saw an article in the Wall Street Journal discussing the cost-cutting efforts of the “Department of Government Efficiency.” According to the article, despite their best efforts to cut 150 billion dollars in spending, we are on track to spend MORE money this year than we spent last year. The article is titled “See How Government Spending Is Up Even as Musk Touts Savings.” Their summary: “Musk team’s $150 billion in savings barely dents $6.8 trillion in spending largely on autopilot, WSJ analysis finds.
Ever since I started writing about logical fallacies, I’m noticing them everywhere, even in places like the Wall Street Journal. This article commits a Non Sequitur. The article implies a contradiction - DOGE savings should lead to reduced spending. But in reality, the increase in spending is due to factors unrelated to DOGE’s budget cuts. This misleads readers into thinking that the savings were ineffective, which isn't a logical conclusion from the information provided. Without the DOGE cuts, we would just be spending even more money.
The author’s approach to the DOGE savings is also indicative of a serious budgetary problem we face. When we’ve gotten to the point where billions of dollars of savings is trivial, we are in serious trouble. Over the decades, the Federal government has become gargantuan. I think its ever-growing size threatens the long-term viability of this country. There doesn’t appear to be any relief in sight, other than the crazy people hacking away over at DOGE.
To solve the permanent spending spree in Washington, we need to somehow introduce disincentives for individual representatives to spend our collective money like a bunch of out-of-control golf buddies on their annual trip. I wish I had an answer for that one.
The hard truth is that close to three-fourths of government spending is mandatory - this is a screenshot from that same WSJ article:
The “discretionary” money is not discretionary to the people who are receiving it.
This is why, when Elon got up on stage at a late campaign rally and said he could save 2 trillion dollars annually, many people, including me, just shook their heads in disbelief. Without a dramatic restructuring of the entitlement programs, it doesn’t seem remotely possible.
Some economists are sanguine about the amount of debt the US has taken on (36 trillion and counting), and some economists are worried. The optimists argue that as long as the economy is growing, the U.S. can sustain high debt without facing major consequences, especially if inflation remains under control. The worrywarts argue that it poses risks to fiscal stability, limits future policy flexibility, and could result in higher interest payments that crowd out other spending. Their concerns are grounded in the belief that uncontrolled debt could eventually lead to higher taxes or inflation. Count me among the worrywarts.
I just don’t see how this is sustainable over time, especially with the amount of money that is tied up in mandatory programs. And what is especially troubling is that as we have spent more and more money, our society has gotten more and more stratified, as I have pointed out already in “What Is Your Fair Share.”
We need to have an honest conversation about these programs to see if we can restructure our taxing and spending in such a way that it not only becomes sustainable over time, but it moves people out of the chronic poverty in which they are trapped.
What we are doing now, saddling people in the lower income bands with regressive taxes like the payroll tax, and then doling money back to them in the form of government aid, is inefficient. We have yield loss in the process as the money is recycled through the feds. How about we just let them keep more of the money they earn in the first place?
Why not completely eliminate all federal taxes for people making less than a certain threshold, let’s say the bottom half of the country in terms of income. These are the people that own at most one or two percent of all of the wealth in the country.
Let’s call it a “trickle-up” approach. The people in the bottom half do not make enough money to save and build wealth. If we restructured our taxing and spending to eliminate the regressive taxes on them, we could increase wealth mobility in this country and strengthen the American dream. Maybe, we could reverse the current worrying trend of wealth disparity in this country, as well as figure out how to ditch the “resort card” spending mentality. Then we could truly make America great …. again?