Students Don’t Know How the Government Spends Money

Apart from a brief overview of the Congressional appropriations and authorization process, there is minimal emphasis on the complexities of government spending and its consequential effects during civics education. This knowledge gap is exploited by activists and special interest groups, who face little opposition from taxpayers when advocating for or against government expenditures.

But what do students and the average citizen need to know about government spending?

First and foremost, government spending is a multifaceted process that commences with generating ideas and culminates in evaluating outcomes and results. Acquiring familiarity with this process marks the initial step toward effectively overseeing and managing government expenditures. Key steps within this process encompass generating ideas, understanding legislators’ philosophies, leveraging external expertise and information sources, formulating statements, reviewing with legislators, drafting policy statements and legislation, submitting them to legislative counsel, preparing introductory remarks and press releases, introducing bills, developing and executing legislative strategies and tactics, publicizing issues, garnering support for approval and passage, and, upon implementation, facilitating review, evaluation, and improvements.

Second, once spending is in place, it becomes a sequence of events. Knowing the key dates for spending decisions provides the citizen with an opportunity to influence spending decisions. Early discussions with mayors, city and county commissioners, members of Congress, and state legislators are crucial.

Third, the government has taken a top-down “let me help you” approach to spending over time rather than a bottom-up “how can I help you” strategy.^[1]

By doing this, governments accentuate the passionate “angelic act” rather than a data-driven, test-and-learn business model.^[2] Government representatives habitually assume their “angelic” acts are good. Blaise Pascal (1623-1662) finds otherwise. “Man is neither angel nor brute, and the unfortunate thing is that he who would act the angel acts the brute.”^[3] President Ronald Reagan added to this message, “The most terrifying words in the English language are ‘I’m from the government and I’m here to help.’”^[4] A bottom-up approach, responding to citizen evaluation, is a must-do for government spending decision-makers.

Fourth, the private sector’s use of the bottom-up business approach directs what can be done to improve outcomes. Today’s two of America’s most successful corporations, Adobe Corporation and Dunkin’ Donuts, find that bottom-up actions outperform top-down decisions.^[5]  Proctor & Gamble (P&G),^[6] a worldwide consumer products company that markets Tide, Crest, and Pampers, uses a bottom-up model based on a clear sense of consumers’ needs and expectations. Once a year, P&G asks, “What are our customer’s greatest needs?” Promising product ideas are identified as “reducing wrinkles, improving skin texture and tone,” and “preventing or minimizing the severity and duration of cold symptoms.” P&G then applies its R&D, manufacturing, marketing, and purchasing capabilities to create better and cheaper products faster. What a concept!—ask the customer what they want and then deliver!

Fifth, timely response is important for all government services. Government services response time is regularly measured in days, weeks, months, and sometimes never. Sam’s Club is “taking prudent steps to prepare for the next generation of retail warfare, one in which speed will be king and delivery will be judged by hours and not days,” according to Oliver Chen, an analyst with Cowen. ^[7] Governments must meet expectations for cheaper, better, and faster services and products!

Six, often government spending is wasted or judged ineffective by recipients. Less than 10 percent of Americans and the poor “believe government efforts to fight poverty have had a big impact. A surprising 34 percent of the public thinks government efforts have actually made things worse for the poor, and 13 percent say they have not had any impact at all.”[8] Let government spending recipients help determine how programs work!

Finally, What is the ideal amount of government spending? In 1870, developed nations’ government spending averaged just over eight percent; today, it is nearly 40 percent. Government spending became desirable with the rise of Keynesians, Marxists, and Socialists. Studies show that as spending increases, there is a negative correlation between spending and GDP. Today, one-third of America’s GDP is spent by the government. Is this the right amount?  Research shows that an optimal level of central government spending is between 10 and 15 percent.[9]

With current U.S. federal spending at 24 percent, there seems to be room for reduction.

[1] This approach can also be called noblesse oblige. “Noblesse oblige is a French expression used in English. It translates as ‘nobility obliges’ and denotes the concept that nobility extends beyond mere entitlements and requires the person who holds such a status to fulfill social responsibilities.” https://en.wikipedia.org/wiki/Noblesse_oblige

[2] https://www.adobe.com/experience-cloud/use-cases/customer-experience.html

https://www.cmo.com/opinion/articles/2017/10/18/a-blueprint-for-cx-success.html#gs.SXU=n2Y

[3] Blaise Pascal, Pensees, Penguin Books, 1966 and revised 1995, page 215.

[4] https://www.brainyquote.com/quotes/ronald_reagan_128358. For a government “passion” case study see Scott W. Stern’s The Trials of Nina McCall, Beacon Press Books, 2018, for how governments came to treat sexually transmitted diseases.

[5] See Adobe blog, “To achieve more, focus on principles,” the blog.adobe.co/achievefocus-principles/

Nigel Travis, The Challenge Culture: Why the most successful organizations run on pushback, Public Affairs. 2018.

[6] Larry Huston and Nabil Sakkab, “Connect and Develop: Inside Procter & Gamble’s New Model for Innovation,” Harvard Business Review, March 2006 and Thomas H. Davenport, Marco Iansitie and Alain Serels, “Managing with Analytics at Procter & Gamble,” Harvard Business School Case Collection, April 2013.

[7] Tiffany Hsu and Michael Corkery, “Loyal Sam’s Club Members Lament Store Shutdowns,” The New York Times Business, January 13, 2018, page B2.

[8] https://www.aei.org/research-products/report/polling-the-poor-and-the-non-poor-on-poverty-1985-2016/

[9] Richard W. Rahn and Harrison W. Fox, Jr, “What is the Optimum size of Government,” Innovative Applications of the Laffer Curve, Copyright January 1998. The Probasco Chair of Free Enterprise. Published by The Scott L. Probasco, Jr Chair of Free Enterprise, University of Tennessee at Chattanooga, The Smith Center for Free Enterprise Studies, California State University, and The Association of Private Enterprise Education Trinity College, pages  72- 85.

Photo by Asier — Adobe Stock — Asset ID#: 279774708 & demerzel21 — Adobe Stock — Asset ID#: 204721485 & Edited by Jared Gould