Big Picture:

The United States national debt hit $31.4 trillion at the close of 2022. There is more risk of the federal government shutting down as they approach the debt ceiling. This debt consists of money that is owed to private companies and to various government institutions, which includes the Federal Reserve, state and local governments, Social Security and Medicare programs, insurance companies, etc. Although it isn’t possible to halt government spending, there are measures that can be taken to be more fiscally responsible. 

Although not all expenditures are wasteful, it is important that the government scrutinizes existing programs that have hit a dead end. When we’re talking about taxpayer dollars, then the government must provide a valid and justified reason to use funds. Citizens must be assured that their hard-earned money is effectively applied toward the long-term growth of the nation. The government has managed to save about $27 billion since 2017, but a long path ahead of them still remains. Americans deserve leadership that is accountable, sensible and committed to how it spends the people’s money. 

Operative Definitions:

1. Congressional Budget Office: A sector that provides Congress with timely, nonpartisan information and analysis of decisions and policies related to the federal budget and economic decisions.
2. Privatization: Transferring ownership from public authorities to private authorities, which also means moving management-related responsibilities over to the private sector.
3. Federal Reserve: The central economic banking system of the United States. Major responsibilities include managing money supply and regulating the supply markets. 

Important Facts and Statistics:

1. Projections from the Congressional Budget Office (CFO) say that if wasteful spending increases by more than 26 percent of the GDP by 2038, then the national debt will increase by 100%. However, these values only represent the baseline because it is possible that the government could break this amount of spending. 
2. In the case that the United States faces unforeseen wars or military-related challenges, the government would have to invest more spending in defense-related matters. Although this isn’t necessarily “wasteful spending,” it adds to the national debt. 
3. There is also a possibility that the economy faces another recession just like the one that occurred after the COVID-19 pandemic. In cases like this, the government stimulates money in the pockets of small businesses and communities that have been struck hardest by the aftermath. Similar to New Deal programs, this requires a large chunk of money to be removed from the federal budget which will take years upon years to pay off. 
4. Studies have been performed and show significant evidence that privatizing programs can cut waste, encourage better quality of service and spur growth. Although the United States has adopted some privatizing measures starting from 1980, there is a lot of space to adopt similar tactics. 
5. Privatizing usually leads to better flexibility for top managers of agencies to run certain projects and it offers efficient costing, which leads to better investment decisions as well. 

Four-Point Plan:

(1) To create useful programs, the government needs to have a clear vision of its goal, the people it wants to gear its goals toward and where its spending will go. Once the policies are drafted by a team of diverse experts, it is important that appropriate and effective public administration of the program is delivered. Public administrators need to be held accountable for their job duties because there are thousands upon thousands of people relying upon and potentially benefiting from the program. This also means that citizens should not be sending tax dollars to support unclear and inconsistent programs. 

(2) Another factor to consider is the amount of community support when proposing new projects. When the public demands new reforms, it is also possible to amend current programs through analytical review instead of creating new programs altogether. This will eliminate the possibility of duplication which further contributes to wasteful spending. This essentially reaps the same kind of services under the same mission while also targeting the same group of people. To eliminate wasteful spending, a strong federal role must be involved in regulating and supervising the execution of projects. When this is accomplished, federal public administrators also gain more knowledge and awareness of certain agencies involved in the programs. 

(3) One alternative consists of privatizing a lot of proposed projects. It is also possible that the current load of programs takes a toll on government operations. By transferring the load on private operations, the government can shift its focus to other functions to protect the well-being of citizens. Other countries like Germany and the Netherlands have already privatized their post offices, which may be a sign that the United States should do the same. Air traffic control systems have also been privatized in Canada and Great Britain. 

(4) Maintaining a strong federal involvement is essential, but in cases where certain activities can be handed over to the states, the responsibility should be transferred over. Government waste begins to accumulate when the government tries to take on too large of a portion of programs. If our leaders continue to follow the same route of previous years, then it will take a toll on the economy and the thousands of American citizens will have to pay the price. These measures should be adopted before the issue reaches its most severe state. 

Economic Impact (From Our Student Economist Team):

Overall, many studies conducted by the International Monetary Fund have shown that privatization can have positive effects on industry growth, investment and employment over time. However, it’s how the government uses private proceeds that truly matters. Ultimately, only time can tell us how effective a policy is.

Acknowledgements:

The following student worked on this proposal: Amulya Redkar, University of Georgia.

Sources:

“Budget of the United States Government.” GovInfo, 18 February 2022, https://www.govinfo.gov/help/budget.

“CBO: Consequences of a Growing National Debt.” Committee for a Responsible Federal Budget, 21 July 2014, https://www.crfb.org/blogs/cbo-consequences-growing-national-debt. 

“Congressional Budget Office | house.gov.” House.gov, https://www.house.gov/the-house-explained/legislative-branch-partners/congressional-budget-office. 

Edwards, Chris. “Reducing Wasteful Federal Spending.” Cato Institute, 9 January 2014, https://www.cato.org/testimony/reducing-wasteful-federal-spending. 

“Fiscal and Macroeconomic Impact of Privatization--IMF Occasional Paper No. 194.” International Monetary Fund, https://www.imf.org/external/pubs/nft/op/194/. 

“Government Privatization: History, Examples, and Issues.” Commission on Government Forecasting and Accountability, https://cgfa.ilga.gov/Upload/2006Gov_Privatization_Rprt.pdf. 

Kelly, Robert C. “What the National Debt Means to You.” Investopedia, https://www.investopedia.com/articles/economics/10/national-debt.asp#toc-repaying-the-natio. 

“STOPPING WASTEFUL AND UNNECESSARY SPENDING.” GovInfo, https://www.govinfo.gov/content/pkg/BUDGET-2021-BUD/pdf/BUDGET-2021-BUD-4.pdf.