This Ain't No Content

Government Efficency

There is a lot of talk about cutting costs in government and it seems to be focussing on two things:

  1. government employees
  2. foreign aid

I'm a software engineer, so I tend to look at efficiency in terms of performance optimization -- if you have a system that doesn't have the performance (typically latency or throughput) you need, you look for where you optimize it. It's a big topic for which people write entire books, but the fundamentals are not necessarily difficult to understand.

Typically, you will want to first measure so you understand the problem. Then you will want to look for performance "hotspots", where a lot of the cost is incurred. These are the places to optimize.

I think the analogy to government spending is fairly obvious: instead of optimizing latency, you are looking at optimizing monetary cost, but the overall principles are similar: you want to look at where the most money is being spent.

Looking at the numbers, it's important to keep the overall context in mind. The federal budget for fiscal year 2024 was around 9.7 trillion dollars).

Average federal government pay is not bad, a little over $106,000 per year. 1 According to the same source, there are around 2.4 million such employees, so the total salary cost is a little over 250 billion a year). So salary cost is around 2.6% of government spending.

In FY 2024, the budget for the US Agency for International Development was a little under 24 billion dollars or, alternatively, a little over 0.25% of the total.

If you want to make meaningful saving on government spending, these are not places to invest much effort -- you're only going to make a tiny dent even if you zero them out 2. On the other hand, the big ticket items are Medicare and Social Security (each around 16%) and National Defense (around 13% according to the same source).

a visual breakdown of the 2024 budget by function

I understand, these are politically awkward places to cut money. You can go down the list, but then you have to scale back your expected savings.

The numbers here are deliberately rough, but even if they are not quite right, they're in the right ballpark. The overall point still stands.

(1) These are mostly white collar jobs. Lots of government employees could be making more money in the private sector.

(2) And nobody seems to be seriously arguing that there should be zero foreign aid and zero government employees.