From: allin
Concerns about US fiscal policy and debt challenges and excessive government spending have come to the forefront of public debate, driven by a recent attempt to pass a large omnibus spending bill and increased public scrutiny enabled by new digital tools. The current level of federal spending, its historical context, and the mechanisms by which it has grown are key points of discussion, alongside calls for greater transparency and efficiency.
The Omnibus Spending Bill Controversy
A bipartisan stop-gap bill, unveiled just three days before a government funding deadline, was designed to keep the government funded through March 14 [00:19:12]. This bill was characterized as a “rush job” [00:19:34] at 1,500 pages long and included 130 billion to renew the farm bill [00:20:01], 1.3 billion to replace the Francis Scott Key bridge in Baltimore [00:20:11].
The urgency surrounding the bill was deemed “100% manufactured” to avoid serious public debate [00:20:19]. Social media platforms like Twitter (now X) and AI tools like ChatGPT and Claude were used by the public to scrutinize the document, leading to widespread pushback that ultimately contributed to the bill being killed [00:20:27]. This event was described as an “incredible change in how politics will be done going forward” [00:34:09], stopping a “multi-billion grift” on a dime through public awareness generated via tweets [00:34:23].
Historical Context and Fiscal Responsibility
Federal government spending currently stands at approximately $6.2 trillion annually, representing roughly 23% of GDP [00:20:43]. This is a significant increase from 1860, when federal spending was less than 1% of GDP [00:21:04]. While federal spending surged during the Civil War, current levels are considered “unprecedented” year after year, reflecting the expanded role of the federal government [00:21:14].
Historically, the Republic’s objective was for states to make local decisions on infrastructure, with the federal government’s role intended to be limited [00:21:32]. Concerns were raised about the federal government’s current involvement in areas like employing people, providing insurance, managing energy markets, and owning football stadiums [00:21:49].
Distorted Markets and Incentives
Specific examples were given of how federal spending can distort markets:
- Natural disaster relief: While seemingly reasonable, providing federal aid to rebuild homes and businesses in areas prone to natural disasters can remove incentives for individuals and businesses to consider the true cost of insurance and real estate [00:22:12].
- Agricultural products: The federal government’s support for agricultural product prices through the farm bill and biofuels mandates also distorts markets [00:22:47].
The incentive structure in Congress often leads to increased spending. Representatives are motivated to secure benefits for their constituents, resulting in a continuous expansion of government programs and spending [00:23:35]. This dynamic has contributed to the federal government’s spending swelling to 24% of GDP [00:23:56].
Founding Fathers’ Intentions and Structural Limits
The Founding Fathers, particularly James Madison, emphasized in Federalist Papers 10 and 51 that the government structure was meant to ensure federal and state governments would limit each other’s excesses, including financial ones [00:24:23]. Federalist Paper 58 highlights the House of Representatives’ control over the “power of the purse,” giving the people’s representatives authority over taxation and spending [00:24:38]. Alexander Hamilton also warned against the dangers of unchecked government power through burdensome taxation and excess spending, which could erode individual freedoms [00:24:49].
However, a key “mistake” by the Founding Fathers was not creating constitutional limits on spending and enrichment [00:24:59]. They assumed that the House of Representatives, being directly accountable to the people, would naturally provide a check on spending [00:25:02]. This assumption failed to foresee an electorate that would increasingly demand more services and an “increment in lifestyle” from the government [00:26:19], leading to the current high levels of US national debt and fiscal policy.
The absence of structural limits such as a balanced budget, spending as a percentage of GDP caps, or federal debt limits [00:25:20] allowed spending to grow unchecked.
The “Doge” Effect and a Call for Efficiency
The recent public outcry against the omnibus bill, fueled by figures like Elon Musk and Vivek Ramaswamy (“Vee”), represents a significant shift. This “Doge” effort (a term used to describe this movement) highlights how increased transparency and public engagement can put pressure on Congress to scrutinize spending [00:26:40]. The hope is that people will “connect the dots that this isn’t a free lunch” and that federal government spending is not limitless or unaccountable [00:26:56].
There is a growing sentiment that it is now “in vogue” to discuss austerity and inefficiency in government [00:27:18]. This shift is partly attributed to the ongoing conversations about US economic challenges and fiscal responsibility on podcasts like this one [00:27:26]. The ability to quickly analyze lengthy bills using AI tools and disseminate information via social media has made it possible for the public to engage in “serious public debate” [00:28:28].
This new form of “active government” means the public can more easily express approval or disapproval of specific legislation [00:35:46]. It fosters transparency, which is seen as a crucial check and balance against government overreach and hidden agendas [00:40:07].
Government Inefficiencies and the Private Sector
A core argument for fiscal reform is that the government spends more to do less, with lower quality outcomes [00:29:30]. This inefficiency is contrasted with the private sector, particularly startups, which often achieve more with fewer resources [00:42:21]. The idea that “constraint leads to great art” is emphasized [00:42:34].
Inefficiencies are rampant, such as:
- Congressional offices being forced to hire contractors at 2.5 times the cost of direct employees, leading to higher spending and less accountability [00:29:02].
- The “perverse incentives to build bigger teams” and spend more, where project importance is often tied to the amount of dollars it receives [00:42:57].
- Waste in government operations, such as paying for SAS software that nobody logs into or desk routing software when no one is in the office [00:47:41].
Regulations and Spending
Excessive regulations are identified as a major contributor to inefficiency and increased spending. These regulations create “layers and layers of overhead” that are expensive to maintain [00:44:53]. California was cited as an example where increased regulation, even in areas like climate tech, prevents projects from getting done [00:45:07]. The argument is that fewer regulations could lead to less government spending, faster economic growth, and more jobs [00:45:37].
Proposals for reform include:
- Implementing zero-based budgeting, where every expense must be justified from scratch [00:46:16].
- Setting expiry dates (e.g., 10-year or 20-year clocks) on regulations to force re-evaluation [00:46:24].
- Breaking large bills into smaller, more digestible components (e.g., 200-300 pages instead of 1,500) and allowing adequate review periods [00:41:14].
The goal is to move towards a culture where individuals, regardless of political affiliation, can unite to address the “most acute existential problem we have,” which is national debt [00:44:06]. The call is to “let them cook” and judge these efforts based on their results [00:44:29].