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Jun 3, 2025  |  
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NextImg:Spending ourselves into trouble - Washington Examiner

The United States government spent $6.13 trillion in fiscal 2023. That’s nearly $17 billion a day, or more than $700 million every single hour — and the trendline for our spending is just heading north.

Federal spending has more than tripled since 2000 and nearly doubled if you adjust for inflation. 

Federal spending growth has been good for the Washington, D.C., region, for lobbyists, and for Beltway Bandits in general, but it has been bad for the country as a whole. 

Overspending harms America by stoking inflation, creating unsustainable deficits, distorting the economy, fostering corruption, and exacerbating culture wars.

For the first 20 years of this century, the overspenders got something of a free ride. The economy was growing rapidly enough to absorb Uncle Sam’s spending spree. But in 2021, the free ride ended, and inflation skyrocketed to 9%. In mid-2024, inflation still persists at more than 3%, and it’s rising again. Overspending is the cause.

In 2020 and early 2021, the two parties set aside their rancor to do what they can always agree on: spend hundreds of billions of taxpayer dollars. Congress spent more than $6 trillion in emergency COVID-19 aid, much of it approved long after the economy had recovered from the lockdowns of spring 2020. This added money wasn’t mirrored by added productivity — quite the opposite. Congress was often paying businesses to stay closed.

The result was predictable. Inflation happens when spenders (families, businesses, governments) have more money to spend but the economy isn’t providing more goods and services. More money chasing less stuff means higher prices.

Inflation is the most visible consequence of government overspending but not the only one. Uncle Sam in 2023 had to pay $247 billion in interest expenses on debt held by the public. That amount rose to $678 billion in 2023. China, as of April, owns $770 billion in U.S. debt. This is the long-term fruit from decades of deficit spending.

Government overspending also harms the economy by misallocating wealth.

To liberal politicians and commentators, all government spending is stimulus. If Uncle Sam gives money to a company, a local government, or anyone, that recipient in turn has money to spend elsewhere.

But government spending also creates incentives. If the government pays someone for doing something, revenue-sensitive entities will do more of that thing. It’s also true that if consumers pay companies for doing a thing, more entities will do that thing.

But there are key differences here. Consumers spend money on what they want, so when businesses respond to that, they are literally giving people what they want. Governments spend money on what a handful of politicians or bureaucrats want. This can be determined by politics, by the self-interest of a politician, or simply by the arbitrary judgment of bureaucrats.

When governments subsidize factories or build grand edifices, they are preventing some person or business from using that land, those building materials, and that labor for some alternative purpose. That alternative purpose would have been determined by market demand or individual choice, so the odds are it would have had more value than what politicians or bureaucrats selected.

Politicians direct money for their own political gain and to enrich their friends, which harms the economy. Last decade, for instance, Nevada granted $1.25 billion in subsidies to Tesla for building a battery factory outside Reno. This massive subsidy didn’t merely determine where Tesla would do its manufacturing, but it determined how battery companies would conduct their research. 

One supplier, AES Energy Storage, said it would steer its battery research away from where it had been and focus specifically on the technology Musk and Nevada lawmakers had jumped to.

Likewise, one comprehensive study on congressional earmarks found that they hurt the local economy because they induce corporations to chase federal dollars instead of market signals.

Entangling politics with riches is also corrupting. The more money controlled by politicians and bureaucrats, the more incentive industry has to influence Washington. This is why politicians of both parties love spending so much: It makes them more important.

They get wined and dined more, gain more campaign donors, and line up more lucrative post-government jobs as lobbyists or consultants. 

Government spending also provides fertile ground for outright bribery. Recall Rep. Duke Cunningham (R-CA), who was convicted of accepting bribes from defense contractors to whom he steered federal largesse.

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Finally, overspending exacerbates our culture wars. When the government sphere grows, the private sphere shrinks. When the Left’s culture warriors come after Catholic hospitals for not aborting their patients, it’s on the grounds that Medicaid money funds hospitals. When the Biden administration forces colleges to abandon due process in campus sexual misconduct hearings, Title IX money provides the leverage. 

If Washington could spend less, we would have lower interest rates, less inflation, more efficient allocation of resources, less corruption, and more social peace.