The American government’s pursuit of efficiency is a long and winding road, paved with good intentions and often obstructed by bureaucracy, funding battles, and a simple lack of visibility. As documented in our Government Efficiency Timeline, the quest to streamline processes and reduce waste has been a constant throughout our history. The Tax Project Institute, while remaining policy-neutral, strongly supports efforts at transparency and accountability in government, recognizing that sunlight is the best disinfectant.
One of the most significant challenges in evaluating government efficiency initiatives is their inherent lack of visibility. Take, for instance, the recent accusations of transparency against the Department of Government Efficiency (DOGE). This opacity is not unique to DOGE. While many applaud the transactional level detail DOGE is providing (albeit on X , although we are excited to see their Website evolve), which is often much more detail than prior administrations. However, others will point to these being done outside of the blanket approvals of Congress, and while more transactionally transparent, their overall macro aims, goals, directions, and intentions are not.
Many well-intentioned efficiency drives have been bogged down in commissions, buried within lengthy reports, tangled in congressional gridlock, agency bureaucracy, and, ultimately, fall victim to funding cuts, or the slow intentional death by red tape. A disheartening number of these efforts never see the light of day, resulting in wasted resources and missed opportunities. The absence of a national Score Card available to the public, tracking these endeavors further exacerbates the problem. Without a clear record of initiatives launched, progress made (or not made), and obstacles encountered, it is nearly impossible to learn from past experiences or hold individuals accountable.
A Transparent Path Forward: Shining a Light
Given the tools now available to industry, this is where modern technology can offer a powerful solution. While not proposing solutions, the Tax Project Institute believes that leveraging technologies such as blockchain, Hyperledger or Dogecoin’s decentralized Proof-of-Work (PoW) mechanism, could revolutionize the way we track and manage government efficiency initiatives. Imagine a system where each efficiency effort is logged as a transactional entry on an immutable mechanism like Hyperledger or PoW. This would create a transparent and verifiable record of the initiative’s progress that can’t be changed once entered, including:
Task Assignment: Clearly identifying the individuals or teams responsible for specific tasks.
Timestamps: Recording key milestones and deadlines.
Dependencies: Highlighting any prerequisites or related efforts.
Status Tracking: Documenting the current state of the initiative (e.g., “In Progress,” “Completed,” “Stalled,” “Cancelled”).
Workflow: Project level visibility into where in a workstream an initiative stands.
Decisions: A list of decisions that impacted the delivery of the transaction, and who made them.
Justification: For any project that is cancelled, providing documented justification and reasoning for why it was cancelled.
Accountable Persons: For any initiative, who is the person accountable for delivering the result.
Accounting: Accurate accounting of bottom line results of efforts in clear metrics (e.g. Cost savings, Cost Avoidance, Productivity Gains, etc.)
Modernizing Transparency
Such a system would provide a transparent public national record of all intended efforts, allowing anyone to see who was tasked with what, when, how, and whether the effort succeeded or failed. This fosters accountability by making it easy for anyone to independently verify, track progress, and identify bottlenecks. Furthermore, a blockchain-based system would enable a streamlined workflow, ensuring that all stakeholders have access to the same, accurate information. Could America be on the precipice of a major Modernization in efficiency tracking and visibility, will the Technologist Elon Musk usher in a new Era of transparency?
The Tax Project Institute envisions a future where government efficiency initiatives are not shrouded in secrecy but rather are visible, trackable, and accountable. By shining a light on these efforts, we can empower citizens to hold their government accountable and drive meaningful progress towards a more efficient and effective public sector. This is not about pushing specific policies; it is about promoting transparency and providing the tools necessary for informed decision-making.
As the Trump administration continues to make headlines with its approach to governance, one of the most contentious issues has been the Department of Government Efficiency (DOGE), led by tech billionaire Elon Musk. At the Tax Project Institute, we remain committed to our core mission of promoting government spending transparency, ensuring that American citizens have access to the data they need to make informed decisions about how their tax dollars are spent.
The recent flurry of developments surrounding DOGE has raised questions about its scope and transparency. While government watchdog groups have expressed concerns about the agency’s operations and potential conflicts of interest, we at the Tax Project Institute do not condone any actions that may violate laws or harm individuals and organizations. However, we are interested in seeing more data become available to the public.
DOGE Mission
DOGE was established by President Trump through an executive order, with the stated goal of modernizing federal technology and software to maximize governmental efficiency and productivity. Despite this narrow focus, critics argue that the agency’s broader mission to cut government waste and slash federal regulations could have far-reaching implications. While we may not agree with DOGE’s approach, we welcome the potential for increased transparency and data availability that could arise from its activities.
At the Tax Project Institute, we believe that transparency is essential for a functioning democracy. It allows citizens to hold their government accountable and make informed decisions about public policies. Unfortunately, instead of receiving comprehensive and systematic information about government expenditures, we often rely on sensational news stories to glean insights into how American tax dollars are being spent. The lack of transparency forces us to piece together fragments of information from various sources, including the pieces emerging from DOGE.
Transparency for All
We hope that as DOGE continues its work, more data will be made officially available to the public. This would align with our mission to empower American citizens by providing them with the information they need to make informed choices. Whether one supports or opposes specific government spending initiatives, it is their right to know how their tax dollars are being used. This principle is fundamental to democratic governance and ensures that citizens can hold their elected officials accountable for fiscal stewardship.
The creation of DOGE, with its stated goal of making cuts to the federal budget and workforce, has sparked intense debate. While some may view this initiative as a necessary step towards fiscal responsibility, others see it as a threat to essential public services and jobs. Regardless of one’s stance on these policies, it is crucial that citizens have access to accurate and detailed information about government spending.
Transparency in government spending is not merely a matter of principle; it has tangible benefits for democracy. When citizens are well-informed about how their tax dollars are allocated, they can engage more effectively in public discourse and participate in decision-making processes. This engagement fosters a more accountable government, as policymakers are more likely to align their actions with public priorities when citizens are actively monitoring their activities.
Moreover, transparency can help reduce corruption and mismanagement of funds. By making budget information easily accessible, governments can deter corrupt practices and ensure that resources are allocated efficiently. This is particularly important in the context of tax expenditures, where a lack of transparency can obscure the impact of tax policies on economic outcomes.
Tools like USAspending.gov and other fiscal data platforms have made significant strides in providing insights into federal spending. However, there is still room for improvement. At the Tax Project Institute, we advocate for policies that ensure American citizens have access to comprehensive and reliable data on government expenditures. By promoting transparency, we can build a more accountable and responsive government that truly serves the interests of all Americans.
Summary
In conclusion, while the Trump administration’s approach to reform may be contentious, our focus at the Tax Project Institute remains on the core principle that citizens have a right to know how their government operates and allocates resources. We hope that initiatives like DOGE will lead to more official data releases, reducing reliance on sensational news leaks and fostering a more informed and participatory citizenry. By advocating for greater transparency, we aim to empower Americans to engage more actively in their democracy, fostering a more accountable and responsive government.
As we approach the United States’ 250th Semiquincentennial next year, a monumental shift in our nation’s economic strategy is underway. President Trump’s recent executive order to create a U.S. Sovereign Wealth Fund (SWF) marks a pivotal moment in American financial history[2][4]. At the Tax Project Institute, we have long discussed the potential benefits of a national investment account in the form of a SWF, recognizing its transformative potential for our economy (See our Article on Sovereign Wealth Funds here).
A Sovereign Wealth Fund is a state-owned investment fund that manages a country’s excess reserves, typically derived from natural resource revenues, trade surpluses, or other sources of national wealth. These funds are designed to invest in a diverse range of assets, both domestic and international, to generate returns and support long-term economic objectives. Much like a national investment account, it grows and compounds over time, and as it grows it becomes of source of revenue offsetting the need for things like additional taxes.
The creation of a U.S. SWF is a watershed moment that may be viewed by future generations as one of the most impactful acts in American history, comparable to the Louisiana Purchase, the Emancipation Proclamation, or the New Deal. Just like a savings and investment account, it doesn’t sound or look like much now, but in 50 or 100 years it could be game changing, and looked at in the same way as other major acts. While it won’t immediately solve our national debt issues or eliminate budget deficits, it could be the first step towards putting our country on a more substantial economic footing.
What are they for?
Sovereign Wealth Funds serve various purposes across the globe. Some of the key areas where SWFs are utilized include:
Economic Diversification: SWFs help countries reduce their dependence on a single sector or resource by investing in a wide range of industries and assets.
Intergenerational Savings: They can preserve wealth for future generations, especially in countries with finite natural resources.
Stabilization: SWFs can act as fiscal stabilizers during economic downturns or when commodity prices fluctuate.
Strategic Investments: They allow countries to invest in key industries or technologies that align with national interests.
Infrastructure Development: Many SWFs focus on funding critical infrastructure projects both domestically and internationally.
In short, they are investment accounts run by the country, and the hold the potential to fund significant portions of future expenses, and offset revenue short falls.
What it means for the U.S?
The U.S. SWF has the potential to become the largest in the world, given the size and strength of the American economy. As of 2025, the largest SWF is Norway’s Government Pension Fund Global, with assets under management of $1.78 trillion[6]. The U.S. fund could potentially surpass this figure, leveraging the country’s vast economic resources and global influence.
The implications of a U.S. Sovereign Wealth Fund are far-reaching:
Enhanced Global Economic Influence: A large U.S. SWF would significantly increase America’s economic clout on the world stage, potentially rivaling or surpassing the influence of other major SWFs from countries like China, Norway, and the UAE[6].
Domestic Investment: The fund could be used to finance critical infrastructure projects, support emerging industries, and drive innovation within the United States.
Long-term Fiscal Planning: A well-managed SWF could provide a cushion against economic downturns and help address long-term fiscal challenges.
Wealth Distribution: If structured appropriately, the fund could potentially provide direct benefits to American citizens, similar to Alaska’s Permanent Fund[4].
Strategic Acquisitions: The fund could be used to acquire stakes in strategically important companies or technologies, as hinted at by the potential involvement in TikTok[2][4].
Market Impact: The sheer size of a U.S. SWF could have significant effects on global financial markets, potentially influencing asset prices and investment trends
While not a panacea, a SWF offers significant Economic flexibility at scale to offset and provide services in a number of ways to minimize economic shocks, like the 2008 Great Recession or the COVID pandemic, or offset expenses on long term items like infrastructure, or potential pending large scale changes in the market, like AI offsetting white collar jobs.
Global Context
As we consider the potential of a U.S. Sovereign Wealth Fund, it’s important to look at some of the largest existing SWFs for context:
Country
Fund
Value
Norway
Norway Government Pension Fund Global
$1.78 Trillion
China
China Investment Corporation (CIC)
$1.3 Trillion
Abu Dhabi
Abu Dhabi Investment Authority
$1.05 Trillion
Kuwait
Kuwait Investment Authority
$1 Trillion
Saudi Arabia
Public Investment Fund
$925 Billion [6]
These funds have played crucial roles in their respective countries’ economic strategies, from Norway’s focus on preserving oil wealth for future generations to China’s efforts to diversify its foreign exchange reserves. Given that the US GDP is almost 13 times larger than Norway, you can see the potential size of the fund and the proceeds that it maybe able to throw off. Just doing simple math lets say the US SWF reaches $20 trillion, taking 4% annually from the fund to reinvest on Americans (offset taxes, new infrastructure, services, direct payments, etc.) could lead to $800 billion in annual offsets. Given the unending demands on government budget, this won’t solve our problems, but it can certainly help.
Summary
The creation of a U.S. Sovereign Wealth Fund represents a paradigm shift in how America approaches its economic future. As Treasury Secretary Scott Bessent explained, “It will include a mix of liquid assets and resources that we possess domestically as we aim to make them available for the American populace.”[4] This approach could unlock significant value from government assets and activities that have previously been underutilized.
However, the establishment of such a fund is not without challenges. Proper governance structures, transparency measures, and regulatory frameworks will be crucial to ensure the fund operates in the best interests of the American people. As a 2024 study by the Carnegie Endowment for International Peace warned, without appropriate safeguards, sovereign wealth funds could potentially become “vehicles for corruption, money laundering, and other illegal activities.”[4]
The development of the U.S. SWF over the next year will be a process closely watched by economists, policymakers, and global investors alike. Its potential to reshape America’s economic landscape and global financial influence cannot be overstated. As we celebrate our nation’s 250th anniversary, the creation of this fund may well be remembered as a defining moment in our economic history.
In conclusion, the establishment of a U.S. Sovereign Wealth Fund represents a bold step towards securing America’s economic future. By leveraging our nation’s vast resources and economic power, this fund has the potential to drive innovation, support critical investments, and ensure long-term fiscal stability. As we move forward, it will be essential to strike a balance between ambitious growth and responsible management, ensuring that this new economic tool truly serves the interests of all Americans for generations to come.
As the US Federal Fiscal year draws to a close each September, a peculiar phenomenon grips government agencies across the United States. Known colloquially as “The Big Flush,” this annual event sees a dramatic surge in government spending as departments rush to exhaust their remaining budgets. This practice, driven by the “use it or lose it” mentality, raises important questions about fiscal responsibility, government efficiency, and the delicate balance of power between the legislative and executive branches.
The Appropriations Process and Legal Framework
To understand the year-end spending surge, we must first examine the federal budget process. The U.S. Constitution grants Congress the “power of the purse,” giving it ultimate authority over government spending. This power is exercised through the annual appropriations process, where Congress determines funding levels for various federal agencies and programs.
The Congressional Budget and Impoundment Control Act of 1974 (ICA) further refined this process, establishing procedures for congressional budgeting and placing limits on the executive branch’s ability to withhold appropriated funds. This legislation was a direct response to President Nixon’s attempts to impound funds allocated by Congress, a practice the Supreme Court later deemed unconstitutional in Train v. City of New York (1975)[2].
Under the ICA, the President is required to spend all appropriated funds unless specific procedures are followed to request rescissions (i.e Cancel spending) or deferrals (i.e. Delay spending). For rescissions, the President must propose them to Congress, which then has 45 days to pass a rescission bill. If Congress fails to act within this timeframe, the President must release the funds as originally appropriated[5]. Deferrals, which temporarily delay spending, can be overturned by either house of Congress passing a resolution of disapproval[1].
The “Use It or Lose It” Phenomenon
The legal requirement to spend appropriated funds, combined with the annual budget cycle, has given rise to the “use it or lose it” mentality among government agencies. This phenomenon refers to the tendency of departments to rapidly spend their remaining budget allocations in the final weeks of the fiscal year, fearing that unspent funds will be returned to the Treasury and potentially lead to budget cuts in subsequent years[1].
Research has empirically demonstrated the existence of this year-end spending surge. A study by economists Jeffrey Liebman and Neale Mahoney, cited in the National Bureau of Economic Research (NBER) working paper, found that federal agencies spend an average of 4.9 times more in the last week of the fiscal year than in a typical week[1]. This dramatic increase in spending raises concerns about the quality and necessity of last-minute spending.
Implications for Taxpayer Money and Government Efficiency
The year-end spending surge has significant implications for the efficient use of taxpayer money. Critics argue that this practice encourages wasteful spending on low-priority or unnecessary items simply to meet (exhaust) budgets. The rushed nature of these purchases may lead to poor decision-making, inadequate vetting of contracts, and reduced value for money.
Liebman and Mahoney’s research supports these concerns, suggesting that the quality of spending decreases during the year-end surge. They found that many of these last-minute expenditures fall below the social cost of funds, effectively meeting the definition of wasteful spending[1].
The social cost of funds is an important concept in evaluating government spending. It refers to the total cost to society of using public resources for a particular purpose, including both direct costs and indirect costs such as economic distortions caused by taxation[13]. When year-end expenditures fall below this threshold, it means that the societal benefits derived from the spending are less than the overall cost to society of providing those funds[1].
Moreover, this pattern of spending can distort the overall allocation of resources within the government. Agencies may prioritize easily executable, short-term expenditures over more strategic, long-term investments that could yield greater public benefit but require more time to plan and implement.
The Executive Branch Conundrum
While the ICA and subsequent court decisions have reinforced Congress’s power of the purse, this strict approach to budget execution creates a conundrum for the executive branch. On one hand, the President and federal agencies are legally obligated to spend appropriated funds as directed by Congress. On the other hand, this requirement may hamper the executive branch’s ability to respond flexibly to changing circumstances or to implement more efficient spending strategies.
The executive branch, with its day-to-day management of government operations, may be better positioned to identify areas where spending could be reduced or reallocated more effectively. However, the current system provides limited flexibility to do so without going through the cumbersome rescission or deferral processes outlined in the ICA. The bottom line is rarely do planning estimates (Congress Appropriations) match the real world actual expenses.
This tension between compliance and efficiency creates a challenging environment for agency leaders. They must balance their legal obligation to spend appropriated funds with their responsibility to use taxpayer money wisely. The fear of budget cuts in future years if funds are left unspent further complicates this balancing act, potentially incentivizing suboptimal spending decisions in order to protect budget.
Congressional and Judicial Support for the Power of the Purse
Despite these challenges, both Congress and the courts have consistently upheld the legislative branch’s primacy in budgetary matters. The Supreme Court’s decision in Train v. City of New York (1975) effectively removed the presidential power of impoundment, reinforcing Congress’s control over spending[2].
This stance is rooted in the constitutional separation of powers and the principle that the power to appropriate funds is a fundamental check on executive authority. If the executive branch could unilaterally decide not to spend appropriated funds, it would effectively nullify Congress’s constitutional power to levy taxes and borrow money[9].
However, this strict interpretation of the power of the purse creates a paradox. While it aims to prevent executive overreach and ensure that the will of Congress (and by extension, the people) is carried out, it may inadvertently promote inefficiency and waste in government spending.
Mechanism for Improvements
While the Tax Project does not make policy recommendations, it is clear that Process improvements and new mechanisms could improve overall results. Potential improvements could include a more flexible system with ongoing budget feedback loops, allowing for more dynamic allocation of resources throughout the fiscal year. Additionally, a mechanism by which the executive and Congress could work together more closely on budget execution could be beneficial. This could involve tying budget flexibility to legislative outcomesachieved by the executive team, rather than focusing solely on the amount spent[9].
Furthermore, consideration could be given to mechanisms that support longer-term projects. The current annual budget cycle can make it challenging to plan and execute multi-year initiatives effectively. A system that allows for better management of funds across fiscal years for approved long-term projects could lead to more strategic investments and reduce the pressure for year-end spending[9].
Conclusion
The “big flush” of year-end government spending highlights the complex interplay between fiscal responsibility, government efficiency, and constitutional principles in the United States. While the current system, rooted in the Congressional Budget and Impoundment Control Act, aims to uphold Congress’s power of the purse and prevent executive overreach, it also creates incentives for potentially wasteful spending practices.
Addressing this issue requires a delicate balance. Any reforms must respect the constitutional separation of powers and Congress’s fundamental role in determining government spending. At the same time, they should aim to promote more efficient and effective use of taxpayer money throughout the fiscal year.
As the debate continues, it is clear that finding this balance is crucial for ensuring good governance and fiscal responsibility in the modern era. The challenge lies in developing a system that maintains strong legislative control over spending while providing the flexibility needed for efficient and responsive government operations. Only through careful consideration and bipartisan cooperation can meaningful reforms be achieved to address the “big flush” phenomenon and improve the overall management of federal resources.
Trump’s Proposed External Revenue Service: A Return to 1913
Former President Donald Trump has recently floated the idea of replacing the Internal Revenue Service (IRS) with an “External Revenue Service” that would eliminate income taxes and instead rely on tariffs and fees imposed on foreign governments. In essence, replace Income Taxes with fees on Foreign trade shifting the burden of taxes on foreign entities instead of inwardly on US citizens. While this proposal is still in its early stages, lacks concrete details, and may never come to fruition it has sparked discussions about potential benefits and drawbacks of such a dramatic shift in U.S. tax policy.
Historical Context
While many will hear about this proposal and think this is a major, if not radical change it’s important to note that Income taxes are a relatively recent development in U.S. history. The Federal Income tax as we know it today was only established in 1913 with the ratification of the 16th Amendment. Prior to this, the U.S. government primarily relied on tariffs and excise taxes for revenue.
Potential Benefits
Proponents of this proposed system argue that it could offer several advantages:
Simplification: Eliminating income taxes could greatly simplify the tax code, potentially reducing compliance costs for individuals and businesses.
Increased competitiveness: By shifting the tax burden to foreign entities, U.S. businesses might become more competitive in the global market.
Strategic leverage: Tariffs and fees on foreign governments could be used as tools in international negotiations and to address trade imbalances.
Encouraging domestic production: Higher costs on imported goods could incentivize domestic manufacturing and reduce reliance on foreign supply chains.
Domestic Job growth: Tariffs can create barriers protecting domestic industries and promoting job growth and potential repatriation of foreign jobs, companies, and manufacturing.
Strategic positioning: As the US has entered a new cold war with China as a near peer competitor, strategic tariffs could serve as an effective check limiting their Economic growth and ability to build military and economic power against the US.
Trade-offs and Challenges
However, this proposed system also presents significant challenges and potential drawbacks:
Revenue stability: Relying primarily on tariffs and foreign fees could make government revenue more volatile and dependent on international trade dynamics.
Consumer costs: Tariffs are ultimately paid by consumers through higher prices on imported goods. This could lead to increased living costs for many Americans.
International relations: Imposing significant tariffs and fees on foreign governments could strain diplomatic relationships and potentially lead to retaliatory measures.
Economic distortions: Tariffs can create market inefficiencies and lead to suboptimal resource allocation. It could potentially cause massive shifts in supply chains and have major ripples in economies throughout the world with a wide range of impacts, and potentially negative consequences for all participants.
Constitutionality: The legality of completely eliminating income taxes and replacing them with an external revenue system would likely face legal challenges.
Potentially Regressive: US Federal Income taxes are highly Progressive with 89% of taxes being paid by the Top 25% of tax payers. Shifting to tariffs for revenue maybe inflationary to goods. While it is likely the higher income individuals consume more, it may be that staples required by all consumers may disproportionately impact those most in need.
Feasibility: While this may sound good on paper, the IRS collects roughly $5 trillion in income tax revenue annually – it may not be economically feasible or possible to collect this from external entities
Tariffs as a Form of Taxation
It’s crucial to understand that tariffs are indeed a form of taxation. While they are imposed on foreign goods and not seen as a direct cost to the consumer, the cost is typically passed on to domestic consumers through higher costs. This means that under the proposed system, Americans would still be paying taxes, albeit indirectly through higher prices on imported goods.
Strategic Considerations
Despite the economic drawbacks, some argue that tariffs can serve strategic purposes beyond revenue generation. In particular, tariffs on goods from near-peer competitors like China could be used as leverage in geopolitical negotiations or to protect sensitive industries as well as check a rising global power who we are currently in a cold conflict with and may potentially be in a hot conflict in the future. However, this approach carries risks of escalating trade tensions and potential economic retaliation.
Conclusion
Trump’s proposed External Revenue Service represents a old, but radical departure from the current U.S. tax system. While it offers potential benefits in terms of simplification and strategic leverage, it also presents significant challenges and economic risks. As with any major policy shift, careful consideration of both short-term and long-term consequences is essential.
It’s important to emphasize that this proposal is still in its early stages and lacks specific details. The feasibility, implementation, and potential impacts of such a system would require extensive study and debate. Furthermore, any major overhaul of the U.S. tax system would likely face significant political and legal hurdles.
As discussions around this proposal continue, it will be crucial to consider not only the economic implications but also the broader impacts on international relations, domestic policy, and the overall well-being of American citizens. Ultimately, any changes to the tax system should aim to balance revenue needs, economic growth, fairness, and strategic interests in an increasingly complex global landscape.
Tax Project Institute is a fiscally sponsored project of MarinLink, a California non-profit corporation exempt from federal tax under section 501(c)(3) of the Internal Revenue Service #20-0879422.
