Jackson was FDR’s favorite lawyer, and he later ended up on the Supreme Court, after a stint leading prosecutions of Nazi officials at Nuremberg. And his fear, like that of most populists for hundreds of years, was the conjoined power of the state and corporations, the centralization of control in the hands of distant masters. Whether done for well-meaning reasons or for lusty greed was less important than the concentration itself.
In many ways, the anger that Donald Trump is bringing to bear, with the President-elect asking Elon Musk to cut $2 trillion of government spending through the “Department of Government Efficiency,” is taking advantage of this fear. Now, the reason I’m writing about DOGE is because a few days ago, Congress was on the verge of passing legislation to fund the government, and as part of that legislation, to restrict pharmacy benefit managers and block junk fees. Musk and Trump, however, alleged government waste, and thwarted these disruptive new laws.
This move, though it will be framed as shaking things up, is just a rehash of what we’ve seen for decades. One of the games we’ve seen from conservatives since the “New Right” elections of 1978, and through the Tea Party, and now under Trump this week, is masquerading as a disruptor, while enacting standard pro-Wall Street policy. But I think a reasonable question is as follows. What would it actually look like to take on this fusion of corporate and governing power that Americans despise?
After all, while the failure to pass populist laws was disappointing, it is worth considering why Americans think there’s massive waste and tyranny in the institutions that govern them, and why they elected someone to cut through it.
So here’s the simple way to slice through the bloat we see all around us. It’s not easy, because it would require a genuine commitment to taking on the enormously powerful people who benefit from the status quo. But it is simple to understand, and in explaining it, I hope it will also explain what Americans really want done by their new leaders.
The Collusion Tax
There are plenty of studies showing massive government waste, but it’s not in the Federal workforce. It’s in procurement, the place where the government buys from the private sector, everything from pencils to software to nuclear submarines. The government spends about $750 billion a year on contracts. How much of this money is wasted?
It turns out, the answer is a lot.
The Organization for Economic Co-operation and Development (OECD) points out that about a fifth of it is stolen by contractors through bid rigging, the so-called “Collusion tax.” Collusion is when contractors get together in groups and conspire on their bids so that the government overpays for goods and services. According to the OECD, “The elimination of bid rigging could help reduce procurement prices by 20% or more.”
If you take $750 billion, just in Federal procurement spending, that’s $150 billion a year of pure overpayment, due to this one form of crime. There are other boring reports saying something similar. Earlier this year, for instance the Government Accountability Office published a report on fraud, showing the government loses between $233 billion to $521 billion on fraud.
That’s a lot of money. There are plenty of ways to get at it, two of them being to increase penalties against fraud and collusion, and shift law enforcement resources from silly things like disinformation monitoring to investigating contractor fraud. I don’t think that’ll happen, the Republicans and Donald Trump are dead set on defunding the tax cops, aka the IRS, and that’s a key agency in taking on this kind of fraud. But they could.
Still, there’s an even easier approach to taking on the problem. Go after McKinsey and management consultants throughout the Federal government.
5% of Government Spending Goes to Consultants
Why take on management consultants? Well, for starters, the government spends far too much on people giving it advice. In it's 2024 budget, the Biden administration requested $70 billion for management consulting, aka “professional services,” which is 5% of all discretionary spending. The Defense Department alone asked for $32.9 billion. So just cutting all management consulting would be a big chunk of savings.
After all, while the failure to pass populist laws was disappointing, it is worth considering why Americans think there’s massive waste and tyranny in the institutions that govern them, and why they elected someone to cut through it.
So here’s the simple way to slice through the bloat we see all around us. It’s not easy, because it would require a genuine commitment to taking on the enormously powerful people who benefit from the status quo. But it is simple to understand, and in explaining it, I hope it will also explain what Americans really want done by their new leaders.
The Collusion Tax
There are plenty of studies showing massive government waste, but it’s not in the Federal workforce. It’s in procurement, the place where the government buys from the private sector, everything from pencils to software to nuclear submarines. The government spends about $750 billion a year on contracts. How much of this money is wasted?
It turns out, the answer is a lot.
The Organization for Economic Co-operation and Development (OECD) points out that about a fifth of it is stolen by contractors through bid rigging, the so-called “Collusion tax.” Collusion is when contractors get together in groups and conspire on their bids so that the government overpays for goods and services. According to the OECD, “The elimination of bid rigging could help reduce procurement prices by 20% or more.”
If you take $750 billion, just in Federal procurement spending, that’s $150 billion a year of pure overpayment, due to this one form of crime. There are other boring reports saying something similar. Earlier this year, for instance the Government Accountability Office published a report on fraud, showing the government loses between $233 billion to $521 billion on fraud.
That’s a lot of money. There are plenty of ways to get at it, two of them being to increase penalties against fraud and collusion, and shift law enforcement resources from silly things like disinformation monitoring to investigating contractor fraud. I don’t think that’ll happen, the Republicans and Donald Trump are dead set on defunding the tax cops, aka the IRS, and that’s a key agency in taking on this kind of fraud. But they could.
Still, there’s an even easier approach to taking on the problem. Go after McKinsey and management consultants throughout the Federal government.
5% of Government Spending Goes to Consultants
Why take on management consultants? Well, for starters, the government spends far too much on people giving it advice. In it's 2024 budget, the Biden administration requested $70 billion for management consulting, aka “professional services,” which is 5% of all discretionary spending. The Defense Department alone asked for $32.9 billion. So just cutting all management consulting would be a big chunk of savings.
by Matt Stollar, BIG | Read more:
Image: uncredited
[ed. "The total payroll of the federal government is about $110 billion a year [ed. Personnel]. Federal government spending was $6.1 trillion. You cannot meaningfully shrink the federal government by firing “unelected bureaucrats.”
What is money spent on? Medicare, Medicaid and Social Security are 45%. Defense and debt payments are 28%. The VA, education and transportation are 15%. SNAP, UI, child nutrition, and the earned income tax credit are 7.5%. The remainder is stuff like military pensions. (...)
What this means is that if you want to save money, you need to be talking about *how to provide important benefits more efficiently.* How can we provide similar quality healthcare at lower cost? NOT, “we are going to get rid of a bunch of stuff no one wants in the first place.”
What is money spent on? Medicare, Medicaid and Social Security are 45%. Defense and debt payments are 28%. The VA, education and transportation are 15%. SNAP, UI, child nutrition, and the earned income tax credit are 7.5%. The remainder is stuff like military pensions. (...)
What this means is that if you want to save money, you need to be talking about *how to provide important benefits more efficiently.* How can we provide similar quality healthcare at lower cost? NOT, “we are going to get rid of a bunch of stuff no one wants in the first place.”
[UPDATE]: [ed. From the silver lining dept, here's a DOGE benefit I hadn't thought about but that might actually be useful. Employing AI to analyze regulatory intent vs. regulatory implementation vs. regulatory evolution/application, vs. regulatory law definitions/challenges/impediments. From Jennifer Pahlkah's Eating Policy substack -
Um, Congress, you might want to take a look at this:
Um, Congress, you might want to take a look at this:
***
"Last Friday’s post got a lot of very insightful comments. In response to one comment about the potential of using AI to break through the wall of complex law and policy, darulharb writes:That is, I suspect, exactly what they're doing right now [meaning DOGE]: spinning up the A.I. systems that will be tasked with taking a comprehensive and detailed look at both the legal and regulatory structure, and the expenditures. This is something that previous reform commissions never had the technical capability to attempt before, because the technology didn't exist. The most shocking thing I believe we'll see greater public awareness of because of DOGE is the degree to which even Congress doesn't know what is going on.This is likely spot on. The reality is that in many domains, the regulatory and spending complexity is such that it’s very hard for anyone to know what’s going on. You might think it’s Congress’s job to understand how the laws they’ve written have been operationalized, but that’s one of their chief complaints — that they don’t really understand what happens within the agency and they don’t always think it's consistent with their intentions. And the agencies themselves are dealing with the accretive nature of what comes down from Congress — new laws naturally reference and amend old laws, creating one confusing web of language. Then there’s the web of the regulations previous staff have written, not to mention the policies, forms, and processes that have been born from those regulations that seem to carry the weight of the law but are really somewhat arbitrary expressions of one way they could be operationalized. (...)
It may also significantly curtail their ability to understand their own work, both legislative and oversight, and act quickly, right as a potentially adversarial actor is emerging. Most commentary on DOGE has pitted it against the agencies it has vowed to drastically cut, but Congress is going to want to have a say in what they propose to do (...). In other words, if the budget passed by Congress says we’re spending this, we’re spending this, DOGE or Trump be damned. I have no idea how that is going to play out legally, but I do suspect that if DOGE has the tools my commenter thinks they probably already have at their disposal, one party in this brewing fight is going to have some significant advantages. Marci’s pacing problem frames the fast pace of change in society at large against a slow pace in government, but we may be about to see a massive pacing problem — a dramatic speed asymmetry — within government itself.]
