Why is Government Spending Uncontrollable?
Government spending is politically uncontrollable. That means that the politicians who are in charge of spending have every incentive to bribe voters for their votes by spending more. And because governments are run by politicians and bureaucrats, government spending is therefore uncontrollable. Let us consider a few items which could be cut if it weren’t up to vote-seeking politicians:
- The United States Postal Service has been around since July 26, 1775. Now that’s an entrenched bureaucracy! The net loss for the postal system in 2024 was $9.5 billion dollars. This was $3 billion dollars more than the previous year. According to the postal service, over 80% of their current year net loss was attributed to factors that are “outside of management's control.” In other words, it’s uncontrollable by the people in charge of it. Billions could be saved by privatizing the job of delivering mail.
- If we consider all the federal government agencies, institutes, boards, centers, commissions, services, administrations, bureaus, authorities, corporations, councils, committees, offices, endowments, funds, networks, academies, missions, programs, organizations, representatives, groups, forums, staffs, coordinators, advisors, units, divisions, guards, initiatives, commands, corps, courts, colleges, schools, and forces, of which there are hundreds, and multiply their number by $9.5 billion dollars of losses each year, it becomes easy to understand why the federal government is roughly $37 trillion in debt and adding roughly $1.7 trillion per year. If you’re wondering why I multiplied each entity by a loss, it’s because governments do not earn profits; they have no incentive to keep their costs down. Quite the contrary, they have every incentive to spend more. Thus, they generate losses, not profits.
- As the government debt grows, so does the interest on that debt. At this time, the interest costs on the national debt are roughly $933 billion dollars (FY 2025). This is more than the government spends on national defense. In the short run, if the federal government can’t control its spending, the interest debt will also become uncontrollable. If the Federal Reserve Bank were to lower short term interest rates, the rate of interest growth would decrease, but it would still grow. Furthermore, the Fed can’t control long-term rates. They are determined by the markets, which will raise interest rates to compensate for the higher price inflation that government money printing causes. More money printing equals more price inflation.
- Social Security and Medicare/Medicaid add roughly another $3 trillion to the annual deficits. Which politician will be able to cut that expense? It will continue to grow for the foreseeable future.
- And let’s not forget about national defense, which really means world-wide peace enforcement. The U.S. government currently has 877 military bases around the world with more than 100,000 troops and their families. That’s got to cost a pile. These bases are undoubtedly intended to protect the locals who would scream bloody murder if we tried to shut them down…not to mention call us dirty names…and give our enemies an opportunity to install military bases there. How politically feasible would it be to shut most or all of those bases down? Not likely. It’s more likely that that number will grow with wars in the Middle East and Ukraine.
- I almost forgot…during President Trump’s first term as President, he spent more money than all his predecessors combined. He’s a spendthrift. Do you think he will cut spending now? Not likely.
Bottom line: The reasons for spending more in the past are still there and until the government’s money (the U.S. dollar) becomes worthless, there will be no reason to cut spending in the future. In the meantime, just remember: during times of inflation, debtors gain and creditors lose and hard assets are better at preserving purchasing power than fiat currencies are.
Robert F. Sennholz