Federal Government Spends Too Much of Your Money

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Unlike professors who haven’t read the federal budget, scholars who actually have can’t find any cuts.

The Heritage Foundation hosted a panel discussion on how to improve agency performance with fiscal discipline, and two professors commented on its feasibility. Marcus Peacock, a research professor at George Washington University, and Jason Fichtner, who works at the Mercatus Center at George Mason University, shared their thoughts on this subject.

Peacock pointed out that federal government spending has rarely decreased, in fact, “discretionary spending, over any five year period, has increased” in the federal government. Discretionary spending is non-entitlement (Social Security and Medicare) spending, such as defense spending.

Fichtner highlighted the oft-used ‘use it or lose it phenomena’ of the federal government to spend leftover funds for the fiscal year. “It happens all the time,” Fichtner said, because managers think, ‘we gotta spend the money now, or Congress is gonna take it back’. He noted, “The year-end spending phenomenon is real …and potentially wasteful.” Too often, this year-end spending “is of lower quality,” one study noted and the International Monetary Fund said these spending surges are common in other countries, such as Canada and Taiwan.

In his research, Fichtner found, “in the last month of the fiscal year of 2015, the Department of State spent 39%” of its budget and the Department of Housing and Urban Development spent 36% of its total budget. He pointed out that the Department of Energy does not fall into the year-end spending surge with 5.7% spent in the last month. Over half of government agencies spent over 16% of their budgets in the last month. He looked at the State Department and found that 2% of contracts were signed in the last three days of the last month, but those contract dollars represented 8% of the State Department’s total dollars spent for the year.