How Much Money Does the Government Waste?

It depends on how you define waste, of course. I would define whole branches of government as wasteful or worse. And one can say that all money spent by governments on DEI programs is wasted, regardless of how efficiently the programs are carried out.

If you ask taxpayers, they think the government wastes a lot of their money. Our Thinking Minnesota Poll most recently found that, on average, Minnesotans–not known for being rabid right-wingers–think that Minnesota’s state government wastes 34% of their tax dollars. (One might ask: why, then, do they continue to pay taxes?)

The narrowest category of wasteful spending is fraud: not just inefficient or ill-advised spending, but money literally stolen from taxpayers. How much of our government spending is ripped off by criminals?

The General Accounting Office has been looking into this at the federal level:

GAO estimated total direct annual financial losses to the government from fraud to be between $233 billion and $521 billion, based on data from fiscal years 2018 through 2022.

The GAO’s methodology is explained at the link. For now, let’s just go with the numbers. Is it possible that something like $400 billion is outright stolen from our federal government each year? Here in Minnesota, the Feeding Our Future scandal, a single fraud among money, accounted for around $500 million in theft from federal taxpayers, in a program administered by the state. That is a little more than one tenth of one percent of the annual theft estimated by GAO. The numbers are staggering.

If we accept the GAO’s estimate, the amount that is not just wasted, but outright stolen by fraudsters from the federal government is around one quarter of what we spend on national defense. If we go back in time, $400 billion, a little over the midpoint of the GAO’s estimate of what is being stolen, equaled the entire federal budget as recently as 1977.

All of which raises the question: why do taxpayers put up with funding an endless succession of inefficient bureaucracies and outright criminals? Why don’t they rebel?

Well, some of us do. But look at it this way: governments at all levels spend around $10 trillion annually. Think about it–governments spend money only by writing checks, to some person or entity, for some service allegedly rendered or goods provided. Out of a total economy of $25 trillion, those checks amount to a large percentage, perhaps 40%.

So this is what I think is happening: a clear majority of voters who are not cashing government checks, at least not in significant amounts, are indeed angry about the vast waste and theft that eats up their tax dollars. (You could refer to these people as “Republicans.”)

At the same time, there are many millions who make their livings largely or entirely by cashing government checks. Some of those people, to their credit, want to live in a well-ordered society and don’t want their governments to waste money. But many others perceive a strong self-interest in keeping the government checks coming, and have no desire to see government spending scrutinized and cut back, even if they are not themselves fraudsters. (You could refer to these people as “Democrats.”)

I think that is the dynamic that is rapidly driving our country toward insolvency.

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