Since shortly after Donald Trump’s recent reelection to the presidency, a great deal of attention has been focused on Elon Musk and Vivek Ramaswamy’s Department of Government Efficiency (DOGE), which has inspired hope in some and fear from of those “targeted” that those hopes would come true.

Many of those who feel their self-interest is threatened by a search to eliminate excess costs of government have treated DOGE as if it was a historically unique effort (which helps them characterize it as “untried” and “outside the mainstream”). But there have actually been many such efforts, as Bob Maistros has recently laid out, but they have not been notably successful in achieved their lofty goals. A major reason is the standard political reaction.  

Defenders of every spending program insist that theirs is exceptionally deserving and must be spared. Some will even claim that far more of their favorite spending is necessary, not far less. The extent of their claims makes me think DOGE actually stands for “dozens of gross exaggerations” made in response. Their common theme is that every possible funding reduction they face is unfair and unjustified, and it is not long before those claims are backed by threats that the most valuable services (rather than the least valuable ones) would be decimated under the control of the bureaucrats in charge, often referred to as the Washington Monument strategy.

In large part, that concentrated opposition to reining in insufficiently effective government programs is because every government spending initiative creates an interest group of beneficiaries and program functionaries, regardless of whether the services provided to citizens justify the costs. That is why Milton Freedman once suggested that the most reliable way to stop such programs was in their cribs, before those interest groups were formed.

DOGE-type efforts must combat such a bias toward growing government. But there is a powerful logical tool to reinforce such efforts, but which is all too commonly overlooked. It is the recognition that not only is it necessary for citizens to get at least a dollar of value from every dollar the government spends to advance the general welfare referred to in the Preamble to the Constitution (sometimes referred to as an ideal but seldom demonstrated as a reality), it is necessary that each dollar spent must create far more than a dollar of value to citizens, for the simple reason that every dollar of government spending costs Americans far more than a dollar.

In part, that is because an appreciable part of expenditure programs and the taxes that finance them go to administrative costs, raising the cost of providing services to beneficiaries. Large compliance costs are also imposed on both taxpayers and recipients, but not reflected in program budgets. Further, ever-changing tax rates and rules also impose substantial risks on every investment decision because they can undermine results after the fact by reducing, often massively, the returns investors are allowed to keep.

However, the most important additional burden imposed by government spending is the added social cost of raising the tax revenue to fund it, which economists call the welfare cost or excess burden of taxation.

Taxes introduce a wedge between the value to buyers of the goods and services provided and what sellers receive net of taxes. And the size of that wedge is determined by the sum of all the federal, state and local taxes imposed in a market, plus the burdens of all the regulations which act like taxes. In addition to raising revenue for the government, this eliminates many jointly productive transactions that would otherwise take place, and the wealth they would have created.

Suppose someone faced a 40% combined tax and regulatory burden rate on added income, far below the rate for many. That would mean that every arrangement that provided $100 of value to buyers but cost the seller more than the $60 left after the various government “cuts” would no longer be made, and the mutual gains they would have generated disappear with them. Raising taxes further would destroy even more wealth creation.

Including those additional costs of taxation (because there is no way to raise tax revenue without adversely distorting incentives for citizens to serve one another with their resources) implies that the true social cost of even a “well-spent” government budget dollar far exceeds $1. Therefore, even where it could be demonstrated that a particular spending program generated more in benefits than its budget, which has certainly not been done for all the “indispensable” programs defended, it still would not demonstrate that it was efficient to do so.

So how large is this added distortion? In 2006, Martin Feldstein estimated the excess burden at 76 cents per dollar of added tax revenue, when the U.S. government was far smaller than today. If true, that estimate (not the highest estimate researchers have made) means one more dollar of government spending actually costs society $1.76. As a result, every dollar of additional government spending would have to generate more than $1.76 in benefits to conceivably improve Americans’ general welfare.

Current critics of prospective budget cuts appear most interested in protecting their favorite areas of spending and their own jobs rather than citizens’ well-being. However, to be justified as good policy, the benefits of any spending project or program have to exceed not just the dollars spent, but all the costs entailed, particularly the very substantial costs from gains wiped out by the greater tax wedges necessary to fund that spending. This means that even some spending that may generate more than a dollar of benefits per dollar spent still fails to advance the general welfare. And the list of spending that can meet those higher standards is far smaller than the current budget. That remains true even when program beneficiaries and administrators loudly proclaim their opposition to losing some of what they get but other people pay for.

Gary M. Galles is a professor of economics at Pepperdine University.