The history of Tariffs is a history of the United States from early trade done by local British and Colonial import/exporters to the uniform standards of the Tariff Act of 1789 introduced by James Madison and advocated and implemented by Alexander Hamilton that became the primary revenue source for the young nation. From Congressional lists and schedules updated every 5-6 years by Congress to the dynamically negotiated agreements done by the Executive branch we have today. From an instrument of revenue to a tool for international trade, geopolitical power, and protection of National interests, Tariffs have been used throughout US History. From the disastrous effects of the Smoot-Hawley act to the triumphs of Post World War II Bretton Woods frameworks leading to our current Global Trade.
The First Congress establishes tariff duties as the primary federal revenue source. Congress sets detailed product-specific rates, leading to centralized customs collection at major ports.Significance
Major source of Revenue for United States
Establishes Congressional Authority over Tariffs
First attempt to standardize and provide uniformity to Tariffs across Colonies
Tariff Act of 1828 – a.k.a. Tariff of Abominations – Protective tariffs aimed at Northern industries cause tensions increasing cost of living in the South, leading to the Nullification Crisis when Vice President John Calhoun anonymously penned the Nullification Doctrine which emphasized a state’s right to reject federal laws within its borders and questioned the constitutionality of taxing imports without the explicit goal of raising revenue. Congress still sets rates but political conflicts highlight tariff complexity.
Significance
Establishes use of Tariffs as a Protectionism mechanism to protect domestic industry.
Establishes Congressional Authority over Tariffs
Created Political tension between the winners and losers of any Tariff policy.
The McKinley Tariff Act of 1890 was a high protective tariff raising rates on many imports. Congress remains central in setting rates, with protectionism as a goal. Introduces role of Executive Branch.
Significance
Introduced the concept of reciprocity, lowering tariffs if other country lowered theirs
Introduced role of Executive Branch to manage reciprocity agreements
Wilson-Gorman Tariff Act of 1894 attempts reduction of rates on imported goods and introduces a federal income tax. The income tax is struck down by the Supreme Court until it was re introduced after the passage of the 16th Amendment in 1913, reinforcing tariffs role as major revenue in early America.
Significance
Reduced tariffs on imported goods, reflecting a shift towards lower tariffs
Introduced the concept of Income taxes to offset lower tariff revenue
Contributed to the debate on protectionism vs. free trade, impacting economic policy and government revenue sources.
Creation of the U.S. Tariff Commission: A bipartisan body established to advise Congress with expertise, marking increasing professionalization in tariff policy.
Significance
Predecessor to the US International Trade Commission (USITC)
Led by Frank Taussig, Harvard Professor
Created as part of the Revenue Act of 1916 which introduced Income Taxes
Replaced ad hoc lobby driven policies with analytic and scientific studies and recommendations
Smoot-Hawley Tariff Act – further high tariff rates designed to help farmers exacerbate international trade tensions and the Great Depression. Congressional tariff-setting continues but criticism grows.
Significance
Started Global Trade War – caused retaliatory tariffs and significantly reduced International trade
Considered to contribute to worsening the Great Depression
Global trade levels dropped roughly 2/3rds from 1929 to 1934
Reciprocal Trade Agreements Act (RTAA): Congress delegates authority to the president to negotiate bilateral trade agreements and adjust tariffs within limits dynamically. Beginning of executive role in tariff management.
Significance
Congressional delegation of bilateral trade agreements to the Executive Branch
Allowed President to negotiate +/- 50% of existing Smoot-Hawley Tariff rates
Set Reciprocity as fundamental to negotiating Tariffs that US tariff cuts only if US got a cut in return
Moved Tariffs from Congressional lists to Executive bargaining
Unconditional Multi Lateral Most Favored Nation (MFN) clauses – if you cut Tariff X every country gets the best rate – default multi lateral
GATT (General Agreement on Tariffs and Trade) created a post World War II pact that set the rules for non-discriminatory, tariff-based trade among market economies.
Significance
Locked in Most Favored Nation non-discrimination (Article I): any tariff cut for one member extends to all.
Created bound tariff schedules (Article II), making cuts durable and harder to reverse.
Ran multilateral “rounds” that progressively lowered global tariffs.
Established early dispute settlement norms and a rules-based trading system.
Laid the institutional foundation for the World Trade Organization (WTO)
IEEPA (International Emergency Economic Powers Act) a 1977 U.S. law that lets the President, after declaring a national emergency tied to a foreign threat, block property and restrict transactions to protect national security, foreign policy, or the economy.
Significance
Requires the President to declare a national emergency about a foreign threat.
Allows assets to be frozen and block or allow specific transactions (through OFAC).
Common used for sanctions to limit trade and finance with certain countries, people, or sectors.
Executive branch must report to Congress, and courts can review.
Modern Trump tariffs: The Executive branch imposes broad tariffs using delegated authority and emergency powers to negotiate reciprocal deals. The deals create leverage for US interests, and represent a shift from multilateral deals to US first agreements.
Significance
Broad Tariffs as a negotiating tool in the strong Executive model of negotiation
Goal to reset trade expectations with partners where free trade is reciprocal
Used in geopolitical great power check to limit economic and military threat of potentially hostile peers
Leveraging Emergency Powers (IEEPA) to act on non trade and economic interests like Border Security, and Fentanyl enforcement.
Whether you love or loathe the Trump administration or Elon Musk, one thing’s for sure: the DOGE platform is changing the game on government transparency.
The DOGE website was a big step forward in transparency, but we’ve dialed it up to 11. The Tax Project’s DOGE Savings App gives you unprecedented access to:
Transactional-level detail on DOGE savings items
Real-time savings data straight from DOGE systems
Interactive visualizations like you’ve never seen before
No spreadsheets. Not just summaries. Just raw, searchable, visually intuitive, actionable insight.
Controversial?
DOGE for better or worse, has been the subject of a ton of controversy for sure, but this isn’t about politics — it’s about progress. Love them or hate them, DOGE has blown open the black box of government finance. The fact that this data is being exposed at all is a huge leap forward for Transparency and Open Government.
And with the DOGE API, anyone can build, analyze, or audit. That’s radical transparency — no matter what side you’re on. At the Tax Project, we’re about showing the data, and let informed citizens come up with their own opinions. You’re the boss, we just serve the data.
Why it Matters?
Track DOGE identified savings
Dig into who’s spending what — and where
See where the cuts are coming from
See which Agencies took the biggest cuts
See how much was spent on Vendors and how much was cut
Look at Contracts, Grants, and Lease details
Drill down into interactive Visual Charts
Support Transparency. Be Informed.
The DOGE Savings App is coming, and this is our Pre Release. Transparency is trending. Are you in?
The future of the United States economy, and perhaps the equity between generations, presents an immense challenge and choice with how to manage fiscal responsibility for unfunded liabilities. The National Debt is a frequently discussed topic and people have a general awareness that it should be managed intuitively. By its very nature it is a common topic in the financial zeitgeist, much like the choppy white water on the ocean’s surface. Unfunded Liabilities though are like a hidden current beneath a calm surface, these commitments represent promises made today that lack a clear, fully funded pathway to fulfillment and are a less frequently discussed topic that may not gather attention. A segment that appeared on “60 Minutes” with Federal Reserve Chairman Jerome Powell discussed the economy and if the National Debt is a danger to the economy. Powell denoted that in the long run “the US is on an unsustainable fiscal path” and that we are “borrowing from future generations.” To be fair this question was related to the National Debt and does not even address Unfunded Liabilities which only compounds the challenge. This begs to question whether the current generation is making a “Faustian Bargain,” are we trading long-term societal health and prosperity for short-term comfort by deferring policy decisions.
To answer this question, we must first understand what unfunded liabilities are, their colossal scale, how they fit into the overall fiscal health of our country, and their implications for the future.
What are Unfunded Liabilities?
In simple terms, an unfunded liability is a future financial obligation for which there is no sufficient pre-existing asset or dedicated revenue stream. Unlike the national debt, which represents accumulated past borrowing, unfunded liabilities are projections of future shortfalls in programs the government is legally or morally committed to. These often involve long-term entitlement programs where the present value of future promised benefits far exceeds the present value of projected future revenues.
Main components of the U.S. Unfunded Liabilities:
• Social Security: The Old-Age and Survivors Insurance and Disability Insurance (OASDI) programs, which provide retirement, disability, and survivor benefits. • Medicare: The federal health insurance program for people 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD). This includes Hospital Insurance (Part A), Supplementary Medical Insurance (Part B), and Prescription Drug Coverage (Part D). • Federal Employee and Military Retirement Benefits: Pensions and other post-retirement benefits for civilian federal employees and military personnel. • Veterans’ Benefits: Compensation, pensions, healthcare, and other support for veterans and their families. These are not merely accounting entries; they represent promises made to millions of Americans—promises that, under current law and demographic projections, cannot be met without significant adjustments.
The Colossal Bill: Quantifying the Unfunded Commitments
The scale of these unfunded liabilities is staggering, dwarfing the already formidable national debt. The most comprehensive and authoritative source for these figures is the Financial Report of the United States Government, prepared annually by the U.S. Department of the Treasury in coordination with the Office of Management and Budget (OMB), and audited by the Government Accountability Office (GAO) [1]. It is crucial to note that these figures are typically presented as “present values” over a 75-year projection period, meaning future shortfalls are discounted to their equivalent value in today’s dollars.
As of the 2024 Financial Report of the United States Government (released February 2025) [1]:
• Total Social Insurance Net Expenditures (primarily Social Security and Medicare): This combined shortfall represents the largest portion of the nation’s unfunded liabilities. For Fiscal Year 2024, this amounted to approximately $78.3 trillion over a 75-year projection period [1]. This figure alone is more than twice the total annual Gross Domestic Product (GDP) of the entire U.S. economy.
Let’s break down the two giants within this category:
• Social Security (OASDI): The 2024 Social Security Trustees’ Report indicates an unfunded obligation of approximately $25.4 trillion over the 75-year projection period [2, 3]. Without legislative action, the Old-Age and Survivors Insurance (OASI) Trust Fund is projected to be able to pay 100 percent of scheduled benefits until 2033. After that, it will only be able to pay about 79 percent of scheduled benefits from continuing income [3].
• Medicare (Parts A, B, & D): Medicare’s unfunded liability is even larger. The 2024 Medicare Trustees’ Report projects an unfunded obligation of approximately $52.8 trillion over the 75-year period [1, 3]. The Hospital Insurance (HI) Trust Fund (Medicare Part A) is projected to be able to pay 100 percent of scheduled benefits until 2036, after which it will be able to pay about 89 percent [3]. Medicare’s financial challenges are exacerbated by rising healthcare costs and an aging population. Beyond these primary social insurance programs, other significant unfunded commitments contribute to the overall fiscal picture:
• Federal Employee and Veteran Benefits Payable: These represent accrued liabilities for pension and other post-retirement benefits for civilian federal employees and military personnel, as well as veterans’ compensation and burial benefits. The 2024 Financial Report of the United States Government reports $15.0 trillion for “Total Federal Employee and Veteran Benefits Payable” on the government’s balance sheet [4]. It is important to distinguish that this is a balance sheet liability, reflecting accrued benefits to date, rather than a 75-year actuarial projection of all future shortfalls like Social Security and Medicare. However, it still represents a significant long-term commitment that needs to be funded.
• Other Unfunded Plans and Liabilities: While less dramatic in scale compared to Social Security and Medicare, other programs carry unfunded aspects. Examples include certain aspects of Medicaid (a jointly funded federal-state program where federal mandates can create unfunded burdens on states), and some federal loan programs or insurance commitments where future payouts could exceed reserves. The concept of “unfunded mandates” on states, for instance, like those related to environmental regulations or disability access, effectively shifts federal obligations to local governments, creating their own set of fiscal challenges [5]. Due to the diverse nature of these obligations and the varied methods of accounting for them (ranging from spending projections to contingent liabilities or balance sheet entries), there isn’t a single, universally accepted, aggregated dollar amount for “Other Unfunded Plans and Liabilities” that directly compares to the 75-year present value projections for Social Security and Medicare. While they contribute to the nation’s broader fiscal challenges, the most authoritative reports primarily focus their explicit “unfunded liability” calculations (in terms of present value of future shortfalls over 75 years) on the major entitlement programs of Social Security and Medicare. When considering the total picture of long-term fiscal imbalance, beyond just Social Security and Medicare, some broader analyses, such as those from the Penn Wharton Budget Model, project an “infinite horizon fiscal imbalance” (covering all current and future generations) that could reach $162.7 trillion as of 2024 [6]. This figure underscores the true magnitude of the nation’s fiscal challenge.
Diagram 1 Source: US Treasury
Unfunded Liabilities in the Context of the National Debt
It’s crucial to understand the relationship between unfunded liabilities and the national debt. The national debt is the total accumulated outstanding borrowing by the U.S. Federal Government over the nation’s history. As of May 8, 2025, the U.S. national debt stands at approximately $36.21 trillion [7]. While the national debt is the sum of past deficits, unfunded liabilities represent promises for future spending that are not yet financed or due. However, they are deeply intertwined. As entitlement programs like Social Security and Medicare mature, their unfunded portions translate into increasing demands on the federal budget. When current revenues are insufficient to cover these mandated benefits, the government must either increase revenue by raising taxes, or borrow to make up the difference, thereby adding to the national debt. The national debt is the manifestation of yesterday’s unfunded promises and ongoing spending decisions. Unfunded liabilities are the future promises that, unless addressed, will become tomorrow’s addition to the national debt. This perpetual cycle creates a growing burden.
The Impact on Future Generations: A Faustian Bargain?
The profound question at the heart of this fiscal dilemma is whether current generations are making a “Faustian Bargain” with future generations.
Faustian Bargain: The term “Faustian Bargain” originates from the classic German legend of Faust, a scholar who, disillusioned with the limits of human knowledge, makes a pact with the demon Mephistopheles (i.e., Deal with the Devil). In exchange for limitless knowledge, worldly pleasures, and power for a set period, Faust agrees to surrender his soul to the devil. The essence of a Faustian bargain is a trade-off: an immediate, often enticing benefit or power, at the cost of something valuable, often an intangible, moral, or spiritual value eventually. The bargainer often recognizes the malevolent nature of the deal and its ultimately tragic or self-defeating outcome [8].
Answering the Question?
Are current generations, by failing to address the growing unfunded liabilities, effectively making a Faustian bargain? The “immediate benefit” is the continued receipt of promised Social Security, Medicare, Pensions, and other benefits to current generations without politically painful reforms and in essence transferring that burden to future generations. So unlike Faust who received the benefit and had to deal with the consequence, the current generation will receive the benefit without the consequence. Meaning the current generation can pass the consequences on by doing nothing.
Americans should expect promises made to be kept, and short falls in funding are a recurring no fault event. However, if the goal is to promote long term health and prosperity than something should be done. Politicians aren’t motivated to push to address this political third rail that would involve either raising taxes, cutting spending, reducing benefits, raising eligibility ages or likely a combination of these. So much like the song Freewill by the band Rush, “If you choose not to decide, you still have made a choice.” By doing nothing, the current generation is passing this burden on.
What happens if we don’t address?
This may be more of a moral dilemma than fiscal question as the fiscal health and economic opportunity of future generations is at stake with the most severe impact on future generations. If unchecked, the escalating unfunded liabilities will lead to:
• Higher Taxes: Future generations will likely face higher taxes to cover these mounting obligations. This could stifle economic growth, reduce disposable income, and limit their ability to save and invest. • Reduced Government Services: As a greater portion of the budget is consumed by mandatory entitlement spending (making up large portions of the unfunded liabilities) and interest on the debt, less funding will be available for other crucial public services like education, infrastructure, research and development, and national defense—investments that are vital for future prosperity and competitiveness. • Slower Economic Growth: High levels of public debt and unsustainable entitlement programs can crowd out private investment, and lead to slower overall economic growth. This means future generations will inherit a less dynamic economy with fewer opportunities. • Intergenerational Inequity: The burden is disproportionately shifted to younger and future generations, who will pay into systems that may offer them fewer benefits than the US is currently providing. This raises fundamental questions about fairness and the social contract between generations. • Reduced Fiscal Flexibility: The government’s ability to respond to unforeseen crises (economic downturns, pandemics, wars) will be severely constrained if a large portion of its budget is already locked into mandatory spending and debt service. How can this be addressed? In short, not very easily. The pathway to addressing would likely require a combination of policy choices that include: • Reforming Entitlement Programs: This could involve adjusting eligibility ages, modifying benefit formulas, introducing means-testing, or reducing benefits for programs like Social Security and Medicare. • Controlling Healthcare Costs: Addressing the underlying drivers of healthcare inflation is critical for the long-term solvency of Medicare. Finding efficiencies will mitigate the risk. • Increased Revenue: This might involve tax increases and must be balanced carefully to consider the impact on economic growth. • Economic Growth: A stronger economy generates more tax revenue and helps to manage debt more effectively. Economic growth will ease fiscal challenges across the board.
What is the Cost?
The 2024 Financial Report of the U.S. Government highlights a “75-Year Fiscal Gap” of 4.3% of GDP [1]. This means there is a short fall in revenue to fund programs that will require some combination of reduced spending, reduction in services, higher taxes, and hopefully some higher revenue due to growth. To truly grasp the magnitude of this challenge, let’s contextualize and estimate per citizen in Table 1. Using a rough estimation if we apply that 4.3% gap to a 40 hour working week you get about 1.72 hours a week of extra contributions needed to pay for the gap.
Program
Cost
Cost per Citizen
Social Security (OASDI)
$25.4 Trillion
$76 Thousand
“Medicare (Parts A, B, & D)”
$52.8 Trillion
$157 Thousand
Federal Employee & Veteran Benefits
$15 Trillion
$44 Thousand
Other Unfunded Liabilities
?
?
Total
$93.2 Trillion
$277 Thousand
Table 1
Conclusion
It is right to be skeptical of 75 year government estimates, and a lot can happen and change in that period. However, the challenges are very real and will ultimately manifest themselves in unpleasant ways unless acted upon. Like the seemingly harmless slow drip of water that over time can be tremendously powerful carving canyons and moving mountains. The moral dilemma of addressing the issue head on or pushing it to another generation will present difficult choices for citizens and leaders. The solutions will likely require making tough trade offs and sacrifices. The Faustian Bargain of immediate gratification and deferring tough choices shifts the primary cost, long-term well-being and opportunities on to future generations. Ignoring this challenge today has ethical and economic ramifications that will resonate for decades.
The challenge is immense, but not insurmountable. The question is whether today’s leaders and citizens possess the foresight, will, and courage to confront these head-on, or if we continue to make a Faustian bargain, leaving future generations to pay the price. The choices we make today will define the economic destiny and intergenerational equity of tomorrow.
References
[1] Treasury: 2024 Financial Report of the United States Government. https://fiscal.treasury.gov/files/reports-statements/financial-report/2024/full-financial-report.pdf [2] Social Security Administration (SSA): 2024 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds. https://www.ssa.gov/oact/tr/2024 [3] U.S. Department of the Treasury: Fact Sheet: 2024 Social Security and Medicare Trustees Reports. https://home.treasury.gov/system/files/136/TR-2024-Fact-Sheet.pdf [4] Treasury: Note 13. Federal Employee and Veteran Benefits Payable from the 2024 Financial Report of the United States Government notes section. https://fiscal.treasury.gov/files/reports-statements/financial-report/2024/notes-to-the-financial-statements13.pdf [5] Wikipedia: Unfunded Mandate https://en.wikipedia.org/wiki/Unfunded_mandate [6] Penn Wharton Budget Model: Complete Measures of U.S. National Debt. https://budgetmodel.wharton.upenn.edu/issues/2025/1/27/complete-measures-of-us-national-debt [7] Treasury: Understanding the National Debt. https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/ [8] Britannica: Faustian bargain. https://www.britannica.com/topic/Faustian-bargain [9] United States Census Bureau: U.S. and World Population Clock. https://www.census.gov/popclock/
In the complex landscape of federal spending, transparency and accountability are paramount. Recent revelations regarding trillions of dollars in untraceable funds have ignited a renewed call for rigorous oversight. Enter the Locating Every Disbursement in Government Expenditure Records (LEDGER) Act, a bill sponsored by Senator Rick Scott (R-FL) and Roger Marshall (R-KS), aiming to overhaul the U.S. Department of the Treasury’s payment tracking system. This legislation promises to shed light on the often opaque world of government disbursements and bring increased visibility to taxpayer dollars.
A Push for Fiscal Responsibility
The LEDGER Act was introduced as a measure to increase transparency in federal spending. The bill aims to provide greater clarity on how taxpayer dollars are spent, and to reduce the possibility of waste, fraud, and abuse. This legislation is part of an ongoing effort to push for greater fiscal responsibility within the Federal Government. The pending legislation, while still not law, if passed could significantly strengthen transparency, and accountability.
The Impetus: DOGE Report $4.7 Trillion Dollar Revelation
The genesis of the LEDGER Act can be traced to a Government Accountability Office (GAO) report, often referred to as the “DOGE” report (Department of the Treasury’s Government-wide Funds). This report denoted $4.7 trillion in federal payments lacking proper traceability codes, raising serious concerns about the government’s ability to track and account for its spending.
The GAO’s findings delved into the Treasury’s processes for recording and categorizing federal payments. They found that a significant portion of disbursements were not being assigned the necessary codes to identify the purpose, source, and recipient of the funds. The Treasury uses Treasury Account Symbols (TAS) to tie payments to budget-level items, however, many TAS fields, that are optional, were left blank. This created a massive blind spot, making it impossible to trace the money trail in a detailed, transaction-by-transaction manner. The GAO found this by analyzing the raw data coming from the treasury, and finding gaps in the transactions with TAS data recorded, that would allow for proper tracking.
This revelation highlighted a significant gap in the Treasury’s financial management. Without proper traceability codes, it becomes exceedingly difficult to follow the money trail, increasing the risk of waste, fraud, and abuse. The DOGE revelation served as a reminder of the need for enhanced transparency and accountability in Federal spending.
What the LEDGER Act Does: A Transaction-Level Revolution
The LEDGER Act seeks to address the shortcomings identified in the DOGE report by mandating the implementation of a comprehensive traceability code system for all federal payments. While there are no specific implementation details at this time, if passed the bill is passed, based it’s stated intent and the GAO report’s findings, it is likely the bill will require the Treasury to track each individual payment transaction with specific metadata. This metadata would likely include:
Purpose of Payment: A clear description of what the funds were used for.
Funding Source: Identification of the specific agency, program, or appropriation that funded the payment.
Vendor or Recipient: Details about the entity or individual receiving the payment.
Contract or Grant Numbers: Relevant identifiers for contracts or grants associated with the payment.
Date and Time of Transaction: Precise timestamps for each payment.
This level of granularity would create an audit trail, allowing for detailed analysis of federal spending patterns. The LEDGER Act is likely to enhance the Treasury Account Symbol (TAS) system, by making the optional fields required, and adding greater detail to the TAS system. The administration has since mandated the use of this field. See our Article on Modernizing Government Financial Systems and use of Hyperledger technology.
Implementation: A Transformation of Treasury Operations
If passed, the LEDGER Act would require a significant transformation of the Treasury’s payment processing systems. The Treasury would be tasked with:
Developing and Implementing Traceability Codes: Creating a standardized system of codes that can be applied to all federal payments.
Integrating with Existing Systems: Modifying existing payment systems to accommodate the new traceability code requirements.
Establishing Data Standards: Defining clear and consistent data standards for the traceability codes to ensure accuracy and uniformity.
Creating a Centralized Database: Developing a centralized database to store and manage the transaction-level data.
Developing Reporting Tools: Creating tools that allow agencies, auditors, and oversight bodies to generate reports and analyze spending patterns.
Providing Training: Training federal employees on the new traceability code system and data entry procedures.
Oversight and Auditing: Creating a system that allows for regular audits and oversight of the new systems.
This would likely involve investment in technology, software development, and training. The Treasury would need to work closely with other Federal agencies to ensure seamless integration and data sharing.
A New Era of Visibility and Accountability
The LEDGER Act promises to usher in a new era of visibility and accountability in federal spending. By providing transaction-level data, it would enable:
Enhanced Auditing: Accountants and auditors would have access to detailed transaction records, making it easier to identify errors, irregularities, and potential fraud.
Improved Management: Agency managers would have real-time insights into spending patterns, allowing them to make more informed decisions.
Increased Government Oversight: Oversight bodies and lawmakers would have the tools to scrutinize federal spending and hold agencies accountable.
Greater Public Transparency: The public would have access to more detailed information about how their tax dollars are being spent.
Government Accounting:
Our Federal Government has a maze of accounting systems, and tools to track Federal Spending. The Federal government discloses portions of this data on various websites based on the type of spending. They are generally broken down in these categories:
Awards: These represent funds given to non-federal entities, such as contractors, grantees, and loan recipients. Significant budget items included in awards are; federal contracts to private companies for military equipment, or infrastructure, and grants to state and local governments for programs.
Accounts: These represent all federal spending, including internal agency operations, such as employee salaries, and operating expenses. Significant budget items included in accounts are; military personnel pay, Social Security payments, and Medicare payments.
Public Disclosure and how the LEDGER Act changes differ from Other Systems
The LEDGER Act’s focus on transaction-level detail sets it apart from existing Federal spending data systems:
Federal Procurement Data System (FPDS): This system focuses specifically on Federal procurement awards, which are contracts for goods and services. While FPDS provides detailed information on these contracts, it does not track other forms of federal spending, such as grants or loans, and it does not provide transaction-level details. (FPDS.gov)
USASpending.gov: This website aggregates data from FPDS and other sources to provide a broader view of federal spending. However, it only includes a subset of total federal spending. It excludes classified information, personally identifiable information (PII), and some proprietary data. Furthermore, according to the GAO USAspending.gov has billions in transactions each year that are listed as unreported by agencies, where no data or visibility is made to the public, highlighting a lack of transparency. While it does show some account level spending, it is designed to show award spending and does not contain transaction level detail. (USAspending.gov)
U.S. Treasury Fiscal Data: This data provides a comprehensive overview of the entire federal budget, including revenue, spending, and debt. However, it does not offer the granular, transaction-level detail that the LEDGER Act would provide. It shows high level financial information. (FiscalData.Treasury.gov)
The LEDGER Act would complement these systems by providing a deeper layer of accountability. It would allow for a more comprehensive understanding of how federal funds are being used, from the initial award to the final payment.
Is this a Big Deal?
At the Tax Project Institute our goal is to educate the public on what citizens contribute to our country and the transparency of how our government spends their contributions. While it may seem somewhat shocking that there is so little oversight that $4.7 Trillion dollars is untraceable, it really should not come as much of a surprise given that the TAS codes had been made optional. Additionally, the Government has a number of checks in place, like the GAO and our Improper Payments (including Fraud) Tracking Systems (Figure 1), that perform audits and account for weaknesses in controls and processes, and call out places for Government improvement. What is most concerning is the lack of accountability and controls to address these findings that these processes find. For example Government agencies are required by law to report spending to USASpending.gov but yet in a GAO audit only 103 of 152 agencies reported (68%) (Figure 2).
As of this date, the USASpending.gov site shows trillions in “Unreported” data from 2017 (as far back as it goes) to date.
Year
Unreported Amount (Billions)
2017
$97.9
2018
$43.8
2019
$31.8
2020
$70
2021
$131.8
2022
$137.1
2023
$147.4
2024
$164.5
2025
$37.9
We should note, that there has been significant progress in these numbers recently, indicating a new emphasis and progress in this area. You can use the USASpending.gov site or the enhanced version available from the Tax Project Institute (Requires Free Registration)
So bottom line, is it a Big Deal? – no, while shocking the revelations really aren’t anything new, but the chance of getting the ONLY source of Federal Government Wide spending at the transaction level, with enforcement of record keeping to trace all payments to budget line items is a very big deal indeed and could go down ultimately as a landmark in Government Transparency.
Conclusion: A Step Towards Ongoing Fiscal Transparency
The LEDGER Act represents a significant step towards greater fiscal responsibility and transparency in federal spending. By mandating transaction-level tracking, it would provide unprecedented visibility into how taxpayer dollars are being used. While implementation may require significant effort and investment, the potential benefits in terms of accountability and oversight are substantial.
The bill’s success, if passed, will depend on the Treasury’s ability to develop and implement a robust process to ensure ongoing enforcement of traceability code system. However, if successful, the Locating Every Disbursement in Government Expenditure Records (LEDGER) Act would be a crucial piece of ongoing government transparency, ensuring that taxpayer dollars are used wisely and efficiently.
There is a common saying in business, “If it isn’t monitored, then it isn’t managed.” In essence, oversight is crucial for effective management. The Tax Project is dedicated to examining transparency and the responsible use of taxpayer dollars. This article analyzes claims made by an independent source (referred to as “DOGE”) regarding data within the Social Security system. This analysis is provided as an example for how it might be Monitored and Managed, and helped in the placing of the public’s Trust, had it been made public to begin with.
We will caution that the following analysis is based on public statements and data released by DOGE, and their analysis of Social Security. The Tax Project cannot independently verify the validity of this data, and therefore the conclusions presented here should be viewed as an example and not as an expert analysis.
“Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.” Louis D. Brandeis
DOGE Claim
The following analysis provides context for a data release by DOGE, who posted their analysis on the number of individuals marked as “alive” in the Social Security system, categorized by age group (Image Attached). Here is the post:
The Tax Project has included the data, and used OCR, as a way to clarify the analysis, and show that it can be reviewed and verified.
According to the data provided by DOGE, the total number of individuals listed as “alive” in the Social Security system is 398 Million (398,416,213). The Tax Project acknowledges that this data has not been independently verified and presents this analysis as an example of the potential benefits of increased transparency in government data.
A comparative analysis with U.S. Census Bureau population estimates (~341.4 million) suggests a discrepancy of approximately 57 million individuals. Further research is needed to understand the factors contributing to this difference. Potential explanations include differences in data collection methodologies, reporting lags, or the inclusion of non-citizens within the Social Security database.
Age Group Discrepancies
The data also highlights notable figures within specific age groups:
Individuals aged 100 and Over: The dataset indicates that over 20 Million (20,789,524) individuals are within this range. This contrasts with estimates from a Pew Research study, which suggests there are roughly 101,000 Americans aged 100 or older. This would represent roughly 5-6% of US Population over 100, overstating the Pew data by over 200 times (20,000%).
Individuals aged 100-109: The dataset indicates 4 Million (4,734,407) individuals within this age range.
Individuals aged 120-129: According to the provided data, there are 3 Million (3,472,849) individuals listed within this age range. This raises questions, as the oldest verified living human lived to be 122 years old, and the oldest living American lived to 119.
Individuals aged 130 and Over: The dataset indicates that roughly 9 Million ( 8,955,261) individuals are within this range. Given the oldest living American if you combine the 120-129 age group and this 130 and over group that would be over 12 Million individuals in the dataset older than the oldest recorded American.
Anomalies: The data reports 1.3 Million people over age 150, including one individual in the 360-369 age range or roughly 3 times maximum expected lifespan of an individual.
Potential Implications
These discrepancies raise questions about the accuracy and reliability of the data within the Social Security system, and if true erode the public trust. While the data does not directly indicate improper payments, the presence of a significant number of individuals listed in age ranges exceeding known human lifespans warrants further scrutiny. Erroneous data may potentially impact resource allocation and be subject to abuse and mismanagement. Data validation and reconciliation are necessary to ensure funds are properly allocated. Based on the 20 million excess population of 100+ year old persons in the database at the average Social Security annual benefit of $23,700 the potential misallocation could be over $470 Billion a year. While it is highly unlikely that the actual figure of improper payments, if any, is any where near this figure the discrepancies create opportunities for poor outcomes.
Transparency and Data Management
The Tax Project advocates for increased transparency in government data management practices. Making Social Security data more accessible to public scrutiny could potentially facilitate independent verification and improve data quality. Robust data validation processes are essential to ensuring the responsible and productive use of taxpayer dollars. Greater transparency could include:
Regular, independent audits of Social Security data management practices.
The creation of a publicly accessible data portal (while protecting individual privacy) to allow for external analysis.
Improved data documentation and metadata to clarify data collection methodologies and potential limitations.
The Tax Project continues to focus on transparency, and helping the public understand the use of their Tax dollars. We hope that this kind of transparency becomes available in the future so that all Americans can inspect and understand where their money is spent.
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.
