The Chicago Bears have scored at least one touchdown in almost every game. Therefore, the Chicago Cubs should be able to score at least one touchdown in every game.
If you think that comment is ignorant, why? Because baseball and football are different activities operating under different rules.
So what about this comment: “Government has to start living within its means, just like families do.” It too is ignorant, and for the same reason. The federal government and families operate under different financial rules.
The statement was made repeatedly by President Barack Obama in 2011 and 2012. He also vowed to cut the debt by trillions of dollars, which makes him one of the more economically ignorant Presidents in American history.
The differences between football and baseball are well known. The differences between the finances of our Monetarily Sovereign federal government and a monetarily non-sovereign family still cause confusion, partly because the same words are used: “Debt,” “deficit,” “bond,” “note,” “bill,” “owe,” “pay.”
It’s just that the words have different meanings for the federal government vs. households. And although football and baseball share words—ball, win, score, game, position, league. player, helmet, team, catch, run — we are educated in the difference, and would laugh at anyone who confuses the two.
Federal “waste” is completely unlike family “waste,” and for the same reasons.
The Festivus Report is Senator Rand Paul’s way of complaining about what he considers to be wasteful federal spending. Here are a few items from the 2024 report. As you read, decide for yourself whether you consider any (all?) of them to be “wasteful.”
1. F-35 Sustainment Cost Overruns — Tens of Billions. The F-35 program is the most expensive weapons system in history. GAO and the DoD IG report that maintenance costs are projected to exceed expectations by $1.3 trillion over the jets’ lifetimes.
Why it’s considered waste: Underperformance; aircraft not meeting readiness targets; cost inflation far above projections.
2. Failed DoD Program: Future Combat Systems (FCS) — $18 Billion Lost. Canceled in 2009 after years of development.
Cost taxpayers over $18 billion with almost nothing field-ready. Why it’s a waste: The Largest failed weapons modernization attempt since the Cold War.
3. Hurricane Katrina & Sandy Aid Duplication — Several Billion. GAO found: Multiple billions in duplicated housing payments (FEMA + SBA + HUD). Fraud, improper payments, and administrative failures across federal disaster relief programs.
4. Nuclear Waste Repository Project: Yucca Mountain — ~$15 Billion. Congress spent roughly $15 billion designing and preparing Yucca Mountain as the nation’s nuclear waste site. The project has been effectively abandoned for political reasons.
Why it’s a waste: The facility was never opened despite the massive investment.
5. ACA Federal Co-op Failures — $2.4 Billion. The Affordable Care Act created 23 non-profit insurance co-ops. 21 of the 23 collapsed, losing ~$2.4 billion in federal loans.
Why it’s a waste: Most co-ops failed within a few years, leaving almost no lasting benefit.
6. Border Wall Cancellations — $2 Billion in Stranded Materials & Contracts. When the administration changed in 2021, DHS paid over $2 billion in continued contract costs, demobilization, storage of unused materials, and cancellation penalties.
Why it’s a waste: Taxpayers paid for materials and contracts that never produced the intended infrastructure.
7. Federal Improper Payments — Over $200 Billion Annually. Not fraud—just errors. Medicaid improper payments in recent years: $50–80 billion. Medicare: $30–40+ billion. Earned Income Tax Credit: $15–20 billion. UI benefits during COVID spikes: tens of billions. Annual total often exceeds $200 billion, easily clearing the $1 billion threshold.
Why it’s a waste: Payments made to the wrong person, in the wrong amount, or with no documentation.
8. USPS Pre-Funding Mandate Losses — Tens of Billions. For years, USPS had to pre-fund 75 years of employee health benefits: This created massive financial losses of tens of billions.
While not “waste” caused by USPS mismanagement, it’s widely cited as economically irrational spending.
9. IRS Business Systems Modernization (early 2000s failures) — ~$2–3 Billion Lost: An attempt to completely modernize IRS IT systems. Vast portions had to be scrapped or rebuilt because contractors and the IRS couldn’t deliver working systems.
Why it’s a waste: Billions spent, but many components never functioned.
10. Afghanistan Reconstruction Waste — Over $19 Billion Identified From the Special Inspector General for Afghanistan Reconstruction: More than $19 billion in documented waste, fraud, and abuse. Examples: empty schools, unused power plants, abandoned buildings, failed police programs, and aircraft that were scrapped for pennies.
Why it’s a waste: Projects that were never usable or never used.
Have you already decided which, if any, of these expenditures are federal “waste”?
Let’s first clarify what we mean by the term “waste.”
Rand Paul claims “waste” includes: “Underperformance, not meeting readiness targets, cost inflation far above projections, failed modernization, duplicated payments, never opened, failed quickly, never produced, and payments made to the wrong person, in the wrong amount.”
Do you agree that those things constitute waste?
Here is the Merriam-Webster definition: to spend money or consume property extravagantly or improvidently.
Virtually everything the federal government does would be considered “extravagant.” Let’s face it, for the federal government, “million” barely rates a footnote on any budget. Even “billion” may not be noticeable. “Trillion” is the standard.
I suspect Rand Paul is talking about something like “useless,” as in flushing money down the toilet or throwing it in a bonfire.
That is why I take issue with Paul, because I don’t feel money is being used uselessly in the ten examples. I don’t feel they “flush money down the toilet” or “burn money in a bonfire.” In fact, I suggest that those projects were valuable to the American economy.
Let’s begin with these facts:
- None of the ten projects cost you, the American taxpayer, one cent. The federal government does not pay its bills with tax dollars. It pays with newly created dollars, ad hoc, simply by pressing computer keys, which it can do, endlessly.
- Gross Domestic Product = Federal Spending + Nonfederal Spending + Net Exports. All federal spending grows the U.S. economy and enriches the American people as the dollars circulate.
- Some things were accomplished. New products were invented; new systems were learned, and old systems were discarded. Learning what doesn’t work can be as valuable as learning what does.
- None of the spending reduced the federal government’s ability to spend in the future. The government has the infinite ability to create dollars and use them for any purpose it chooses.
In short, for a Monetary Sovereign nation, “waste” is never about dollars. It is about real resources. Domestic failed programs circulate money into the economy. Only programs that destroy or export real resources can cause true economic loss.
Even then, the loss is mitigated by the political and financial positive effects of spending U.S. dollars in another nation. That nation, having dollars, is more likely to become a customer for U.S. businesses. Enriching other nations benefits our economy; we sell more to nations that have dollars than to nations that don’t
Consider number 10. “Afghanistan reconstruction.” To the extent that American businesses were involved, we benefited from the dollars these businesses received and from the experience they gained.A substantial portion of Afghanistan’s reconstruction spending went to U.S. contractors, paid American engineers, logisticians, security firms, and auditors, flowed through U.S. banks, payrolls, suppliers, and insurers, and supported domestic production of equipment and services.
The only real loss would have been any U.S. raw materials used to make things left in Afghanistan.
Number 8, “USPS Pre-Funding Mandate Losses” isn’t even a cost. It’s just bookkeeping. Nothing was spent.
Public discussion of “wasteful federal spending” almost always misses the central point of Monetary Sovereignty: dollars are not a scarce federal resource.
Again, the U.S. government, being Monetarily Sovereign, cannot run out of dollars, does not need to obtain dollars from taxpayers, and creates new dollars every time it spends. Therefore, evaluating “waste” in terms of dollars alone is analytically meaningless.
A dollar spent by the federal government is not lost; it is added to Gross Domestic Product (GDP), the commonly used measure of our economy. Every federal dollar spent—whether you approve of the program or not—enters the private sector as income.
Reminder: GDP = Federal Spending+Nonfederal Spending+Net Exports
In that sense, so-called “wasteful spending” is still “helicopter money,” and helicopter money is by definition stimulative, not lost. It enlarges GDP and strengthens private balance sheets.
A failed defense program, a scrapped IT project, a canceled contract, or even an improper payment all have the same macroeconomic effect: they increase domestic income. They are engineering or managerial failures, not monetary failures, for a Monetarily Sovereign government.
A resource constraint matters only when it prevents something else from happening. During the years of Afghanistan reconstruction, the United States did not experience full employment, nor did it cancel or delay major domestic projects because labor or industrial capacity had been “used up.”
Construction workers, engineers, manufacturers, and logistics firms were not exhausted; many sectors had idle capacity. In fact, much industrial and organizational capacity expanded during this period rather than contracted.
Most of the materials used—steel, concrete, fuel, vehicles, electronics—were manufactured goods that can be reproduced. Their destruction represents transformation, not permanent loss.
The real, irrecoverable losses were human lives, injuries, and trauma, and possibly some rare raw materials. Those losses are real and cannot be dismissed.
Claims of broader “economic waste” rely on treating money as a scarce resource and assuming a “crowding out” that did not occur. Absent full employment or canceled domestic production, those claims are hypothetical at best.Meanwhile, the spending itself generated income, employment, industrial experience, and hard-won institutional learning. Removing dollars from the analysis leaves a narrower and more honest accounting of what was truly lost and what was gained.
SUMMARY
The strongest objection to this framing is that real resources are finite, even if money is not. Critics argue that Afghanistan reconstruction consumed labor, materials, and attention that could have been used at home.
This objection sounds persuasive, but it only holds if those resources were actually scarce.
The only “waste” is the federal collection of taxes, in the sense that the federal government creates dollars by spending and destroys dollars by collecting taxes.
Federal taxes do not fund federal spending. Their only purposes are to control the economy and to assure demand for the dollar. Federal spending never is a sign of waste.
Rodger Malcolm Mitchell
Twitter: @rodgermitchell
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A Government’s Sole Purpose is to Improve and Protect The People’s Lives.
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 