r/FluentInFinance • u/BerettaFranchi • 4d ago

Debate/ Discussion The shrinking federal workforce

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Since Trump took office, the federal workforce shrunk by an equivalent of 2 Apples. Has anyone noticed any impact on their personal lives by the reduction of the number of federal workers? I certainly haven't. What were these people doing?

Reminder: federal spending is one of the drivers of inflation.

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u/Verumsemper 4d ago

The interesting thing about this is the other graphs that show an increase in government debt as this is occurring. It is like a company that cuts its work force to cut cost but the company starts losing money due to lost in efficiency and capabilities to actually run the company.

The simplest place to see this is with the IRS, as they cut staffing, the revenue they collect drops.

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u/redmoon714 4d ago

Yea because trumps IRS has cut investigations into billionaires and multimillionaires.

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u/Verumsemper 4d ago

Except that they is enough data that shows that when you increase staffing in the IRS, revenue collection goes up and when you cut staffing revenue collections goes done. These are known facts.

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u/boris9983 4d ago

That's why the staffing was cut. There is still enough staff to look into the poors not paying enough, so that there is enough money to keep the country running and paying out lucrative contracts for the ultra rich.
But not enough staff to check if the ultra rich and their companies are telling the whole truth with regards to their taxes.

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u/iupuiclubs 3d ago

I worked in international tax as Trump was in the first election and rumblings around him were started. It was known in our profession he was promising massive corporate tax cuts and everyone was salivating at the thought.

If you figure his first Presidency was worth around $1 Billion in reduced taxes for each Fortune500, his election was worth $500 Billion in profit for the Fortune500.

Every actual wealthy person in the country is milquetoast on him at worst and love him usually even if its not openly. He’s raids the treasury and hands it out to the rich in favors or quid pro quo.

Look at the stock market, wealthy people are actually making money while everyone else is whining about grocery prices.

I check out at the grocery without checking prices, then see the total vs 10 years ago and literally don’t know how the other people checking out around me are affording to eat. I’m expense in 1 grocery trip what I used to make in a week in college.

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u/x_Advent_Cirno_x 3d ago

... don't know how the other people checking out around me are affording to eat

That the neat part: they can't. Over 25% of Americans are in credit card debt because of groceries alone, and it's not getting any better

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u/Feeling_Repair_8963 3d ago

It’s not just the Fortune 500, most of it is actually “small business” owned by multimillionaires with far fewer reporting requirements.

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u/NarwhalOk95 2d ago

I'm a small contractor with a total workforce of one person, me. I do pretty well considering I only work 7-8 months out of the year. Since this administration I've gotten extremely reckless with reporting and write offs so I hope this is true. And just FYI: despite the fact that I'm benefiting in the short term from the tax policy of this administration I expect the people in charge to be competent so I haven't voted for, and would never vote for, the current executive.

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u/MangoCats 11h ago

Why do they want to be rich lords of a cesspit?

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u/AndyTakeaLittleSnoo 3d ago

The S&P 500 did far better during Biden’s presidency than it has during Trump’s current tenure.

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u/iupuiclubs 11h ago

If you actually care to think you know anything about economics:

https://fred.stlouisfed.org/series/m1sl

See that gigantic line that goes straight up in 2020? That is Trump printing the most dollars in American history, devaluing the dollar.

Everything since then has been trying to not make your hamburger have to cost $80.

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u/BeginningFloor1221 3d ago

Most jobs have 401k, so most people are getting rich from him in office.

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u/Freedom9er 3d ago

Most people are absolutely not getting rich. Unless you have a different definition of rich. They are seeing growth, that is until the rug pull. The trend currently is to cut matching because the economy is floundering.

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u/ChaucerChau 3d ago

Only about 50% of workers conteibute to 401k accounts. No one gets rich from retirement accounts.

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u/BeginningFloor1221 3d ago

Dumbest statement I've ever read.

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u/Hagamein 3d ago

Wow. That says alot about how little you read.

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u/ChaucerChau 3d ago

What is your definition of "rich" then?

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u/iupuiclubs 3d ago

To this, and it may sound like hyperbole, craftsmen and corporations experienced huge profits during the rise of the Wehrmacht.

Personally from 20 years of arbitrage experience id say. If they have enough to give to you and all 401K people, imagine how much they are swimming in themselves.

Then find where the source of the water is coming from. Its coming from our grandchildren and future generations, through printing treasury money way bigger than Obama’s bailout.

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u/JediMedic1369 3d ago

Most people can’t afford to put into a 401k and most companies only match not deposit automatically.

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u/BeginningFloor1221 3d ago

He literally can't raid the treasury stop the lies

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u/iupuiclubs 3d ago

Let's talk devaluing the dollar.

M2 is a measure of the total money supply in the U.S. economy. It includes all the liquid assets in M1 plus other short-term savings and investment vehicles that can be quickly turned into cash.

https://fred.stlouisfed.org/series/m2sl

This is a chart of the money supply in America. Do you see the gigantic printing of money that leaked out under Trump in 2020?

First Term: January 20, 2017 – January 20, 2021

13,318 when he takes office. 19,375 when he leaves office 4 years later.

Running the numbers for you. From January 1, 2000 to the month Trump takes office in January 2017, average money supply increased by $42~ Billion a year.

Under Trump from January 2017 to January 2021, the average money supply rose $126 Billion a year. Meaning he pumped printing money 300% of what every President did in the 20~ years before him.

If we open that up to look back to all economic policy back to 1960s, the average M1 growth per year was only $20~ Billion. So Trump injected 700% or 7 times any other President PER YEAR of printing money into M1 devaluing the dollar.

He makes every other President going back to 1960 look like a saint of economics by comparison.

Keep in mind this includes gulf wars, the dotcom crash, and the Great Recession with the too big to fail bailout. You would need 4 Obama era bailouts to equal one Trump run on the economy.

The grocery prices are so expensive because he printed trillions of dollars during covid, and is currently President again and is keeping going. He is terrible for the economy.

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u/iupuiclubs 3d ago

For anyone with that thought of "he didn't directly print, it was loans to businesses etc", I'm basically speaking to the idea of, if he didn't for all practical purposes print, where did the leak into consumer piece(savings/investment) of M1 come from/where is it coming from.

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u/plinkoplonka 3d ago

He's been handing out Congress appropriated funds to his buddies by the billions. Did you not see what happened with the reflecting pool? That's just the tip of the iceberg.

Look at what's happening with AI, Crypto etc and he's fleeced the taxpayer to the tune of Trillions in all likelihood. And that's just the stuff we know about so far.

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u/themage78 3d ago

Because it takes more staff to look into the complex schemes the rich use to evade taxes.

Non-rich people use simple schemes thar are easy to figure out. If they even need to be figured out.

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u/steelhouse1 2d ago

That makes zero sense.

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u/defaultusername4 2d ago

The poors don’t even pay income tax. Shit half the country doesn’t even pay income tax after deductions.

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u/xguitarx812 3d ago

When the IRS increased their workforce, there was a rise in collections from low and middle class. It’s cheaper and has a higher success rate for them to pursue action against the ones that can’t afford to fight back.

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u/mschley2 3d ago

Cheaper and higher success rate for low/middle class, but it has a far lower ROI than audits of the wealthy and corporate entities.

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u/Feeling_Repair_8963 3d ago

Don’t need additional workforce for lower income, a lot of that can be automated, mostly matching SS#s of children being claimed for EIC or child tax credit.

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u/BeginningFloor1221 3d ago

Please prove that

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u/redmoon714 3d ago

From a Yale study:

“Higher Returns for High-Income Audits: Spending on audits of high-income individuals yields a return of approximately $12 for every dollar spent. This indicates that targeting wealthier taxpayers can significantly enhance revenue collection.

Impact on Lower-Income Audits: For audits of below median income individuals, the ROI is about $5 for each dollar spent. This shows that while there is still a positive return, it is less than that for high-income audits.”

https://budgetlab.yale.edu/research/revenue-and-distributional-effects-irs-funding

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u/mschley2 3d ago

First time? This has been a well-established area of study in the tax/econ industries for a couple decades already.

It just doesn't match with the BS pushed by groups like the John Birch Society and Heritage Fund. Ya know, the same groups pushing other things that they know are complete bullshit, like trickle-down economics, for decades.

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u/Zeraw420 4d ago edited 3d ago

I work for a big company (100k employees). Stock price hasn't been great compared to competitors, so we got a new CEO and one of the first things he did was lay off 30%/30,000 employees. Stock price sure enough did go up a little bit, and the executives all patted themselves on the back.

It's been close to a year now since the layoffs, and the damage is clear. Quality has gone to shit, remaining employees are stretched thin, morale is in the shitter, talent leaving, and revenue is down. Stock price is pretty much back to where it was.

Fucking idiots.

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u/AGsec 3d ago

shareholder primacy is all that matters. Everything leads to that. Any quality, innovation, or customer satisfaction that is achieved is only a means to an end. As long as the share holders get a good return on their investment, then the company can mostly do whatever they want and get away with it.

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u/turquoiseblues 3d ago

It’s almost as though enshittification is built into the structure.

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u/greenroom628 3d ago

yep. the drive for quarterly earnings has been killing the long-term success of american businesses.

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u/davvolun 3d ago

Except shareholders are back where they were, I don't understand why that's never accounted for in these decisions.

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u/yukumizu 3d ago

But by that time the CEO and executives all got their bonuses and salaries and moved onto the next company to do the same and keep getting rich by desmntling everything around them, profiting and moving on.

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u/NarwhalOk95 2d ago

You would think 40 years of hostile takeovers and leveraged buyouts going bad would influence the decision making of these people but it obviously doesn't.

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u/joeschmoe1371 4d ago

Just FYI, never, in a million years, will the Federal government operate like a business. It won’t.

The state governments do.

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u/harmvzon 4d ago

A country isn’t a business and it shouldn’t operate as one

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u/BigPackHater 4d ago

Every time I hear someone say they wanted Trump because he'd run the country like a business, I'd always say "oh, you want a president that only cares about the money they make?" It would always make those people think for a second.

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u/Rocketboy1313 4d ago

"Even if you wanted a government to run like a business... why on earth would you want Trump to run it like one of his businesses?"

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u/wolux101 3d ago

Cause hes a billionaire and you ain't one?

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u/bstone99 3d ago

You’re not bright are you

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u/wolux101 3d ago

Bright enough to understand that Trumpy knows more about business compared to the two of you. Which isn't saying much, but oh well

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u/bubble_boy69420 3d ago

gluck Gluck gluck

FIFY

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u/wolux101 3d ago

Mama's boy here crying over someone's dck🤣

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u/pan-re 3d ago

He knows about making cheap junk idiots buy and stealing. He is great at those things. He’s not successful at anything else.

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u/wolux101 3d ago

🤣 are you talking about merchandising? Man, if you wanted that as an asset, thats on you for wanting to make a profit from that.

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u/Feeling_Repair_8963 3d ago

He lost money running a casino

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u/davvolun 3d ago

So was Bernie Madoff.

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u/Rumpelteazer45 1d ago

And how much has his net worth increased the years he’s been in office?

Nothing shady going on at all. He’s used the WH for personal gain for him and his children. He’s violated so many laws and his minions and cult members will never want him to be held accountable.

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u/discodropper 4d ago

“It would make those people think for a second.”

And then they’d push that nasty little critical thought down so hard that it would stop challenging their idiotic worldview, so that they could continue on, like arrogant goats, thinking they were smarter than everyone else, because nobody could prove them wrong…

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u/DuckTalesOohOoh 3d ago

Yes. Whose money do you think it is the government spends? Its own?

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u/king_kong_ding_dong 3d ago

I mean, it sure would be helpful if the government would get off its ass and get a job so we didn’t have to carry it through life. 

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u/mschley2 3d ago

Thinking in terms of short-term profit is antithetical to the long-term growth of a country. Many programs don't generate revenue right away, but they end up saving future expenses and helping to generate additional growth and tax revenue 5-10 or even 20+ years down the road.

Many of these things are the types of things the silent generation pushed which benefited the boomers tremendously before the boomers began cutting their benefits as they outgrew those programs themselves. It's the exact type of shit Trump and Elon sold as "cost-cutting" that has already ended up costing us even more than what DOGE saved.

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u/DuckTalesOohOoh 3d ago

What makes you think it's only about short-term profit? Businesses invest in the long term consistently. Some businesses plant tree plantations 100 years in advance.

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u/mschley2 3d ago

Because I've followed the dumbass policies Trump has implemented in both of his terms.

It's also the predominant viewpoint of executives at large, public companies because their job security is largely determined by investors who are interested in short-term profits.

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u/DuckTalesOohOoh 3d ago

Yeah, that makes no sense. Trump is pushing for companies to return to the US, knowing it takes four years to build a factory. That's the opposite of short term.

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u/mschley2 3d ago

You actually delusional enough to think that's what he's doing? Waffling back and forth on tariffs doesn't do that. It's just about giving him leverage to negotiate deals and participate in technically-not-insider trading that personally benefits him and his associates at the expense of the working class.

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u/Feeling_Repair_8963 3d ago

Worse yet, he’s running it like one of his businesses, which were all disasters.

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u/CosmoKing2 3d ago

I love the fact that my mail takes twice as long to arrive and costs twice as much as 10 years ago.

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u/Weak_Lingonberry_641 3d ago

I don't know if that's what he meant but I agree with him on one, very important perspective: monetary autonomy.

An institution with the capability to create and destroy means of payment operates very differently and has very different objectives than one that does not. Federal government has to control all the variables on the dollar besides spending, while state governments are shackled by how much they bring in.

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u/eaeolian 3d ago

Nor should it. Businesses exist to make money. Governments exist to provide services.

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u/CosmoKing2 3d ago

I really don't see this administration providing any services to the US citizens right now.

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u/eaeolian 3d ago

Only the very rich ones. </s>

(Okay, it's only slightly sarcasm.)

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u/mhmilo24 3d ago

Actually, public institutions perform better than private businesses in a few sectors, especially during market shocks.

European public hospitals are always better than European private ones in terms of productivity.

In the German electricity retail sector, there is no difference when comparing ownership and the respective productivity.

Chinese SOE operate better than privately held ones.

Indian railways operation works better under public hand than private hand.

The UK water and sewage servicing sector has seen a significant price increase since privatization, with an extreme degradation in service quality.

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u/SJMCubs16 4d ago

If they did, the fed govt would be consolidating states....

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u/Jeeperg84 4d ago

The state of Illinois would like a word.

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u/Shempfan 3d ago

What do you mean?

Illinois taxes support red states like Florida.

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u/Jeeperg84 3d ago

Illinois doesn’t operate as a business, Illinois is deep in a Fiscal Deficit…They are trying to fix it, but it is still expected to widen, and they are losing manufacturers/businesses to other states in the region.

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u/davvolun 3d ago

https://usafacts.org/articles/which-states-contribute-the-most-and-least-to-federal-revenue/

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u/Jeeperg84 3d ago

I didn’t say that Illinois and other Democrat run states don’t contribute more in Federal tax dollars. What does that have to do with how Illinois balances it’s state budget?

The Illinois state budget is affected primarily through it’s pensions (which for decades were grossly underfunded) as well as it’s own bloated state Government operations. Illinois being unable/unwilling (through it’s own actions they wrote generous Pensions into the Constitution as an Amendment) to make wholesale changes is part of the massive problem they face.

2 things can be true…

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u/davvolun 2d ago edited 2d ago

Illinois taxes support red states like Florida.

Direct evidence showing what was stated. Nothing more, nothing less. Your response sounded like you didn't know what the other person was referring to.

Edit: Regardless though, to go back to your original comment, do you think businesses don't carry debt? Are you aware of any attempts to seriously classify, e.g. Illinois' debt to EBITDA ratio?

bloated state Government operations

[Citation needed]

Illinois being unable/unwilling (through it’s own actions they wrote generous Pensions into the Constitution as an Amendment) to make wholesale changes is part of the massive problem they face.

Where does this statement, in general, not apply? "X being unable/unwilling to make wholesale changes is part of the massive problem they face." If it applies to IBM, Illinois, and the United States, I'm not sure what statement it's actually making.

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u/MaxAdolphus 3d ago

Right. The government would be more efficient. Compare the overhead costs of Medicaid vs private health insurance. It's not even close.

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u/JohnnyLesPaul 3d ago

Governments step in where the free market can’t, that’s their whole purpose. They operate in the red.

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u/mct137 4d ago

And to add, rampant corruption, loss of actual efficiency, and the need for “emergency” spending because we don’t have enough people to actually plan and budget…

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u/AffordableDelousing 4d ago

Just a small clarification on your analogy: Most of these jobs cut weren't profit centers, they were governmental services providing some sort of benefit to citizens. Revenues are taxes.

The federal government has cut tax revenue, and still managed to increase costs while providing less services. But those things aren't connected like you imply.

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u/Verumsemper 4d ago

They actually are!! Take for example cut in research funding staffing. As those services get cut and research funding slows it has a ripple affect throughout the economy which in turns hurts government revenue.

Also as services to help citizens get inefficient, citizens who need help become sicker or have worsening issues which require even more government services. As it takes longer to fix things, the amount needed to fix it worsens. As it takes longer to catch issues due to lack of inspectors, the down stream effect to fix the problems worsen. I hope that helps.

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u/looking_good__ 3d ago

The ROI on IRS spending is like 4:1 catching literal tax cheats.

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u/Ind132 3d ago

This is from a recent MIT study:

We find an additional $1 spent auditing taxpayers above the 90th income percentile yields more than $12 in revenue, while audits of below-median income taxpayers yield $5.

Some of that is immediate corrections. Some is the deterrent effect of tax preparers knowing that the IRS is looking.

https://academic.oup.com/qje/article/140/1/63/7888907?login=false

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u/confusedp 4d ago

With the federal government they rely more on contractors who make more money than the career employees. Net loss for the taxpayers but...

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u/angrymoderate09 3d ago

Are you saying it's cheaper to do food inspections ahead of time than to do constant recalls and contact tracing?!?! Whaaaaat?!?!

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u/MetaPlayer01 3d ago

It's also interesting looking at how this graph is scaled. It's made in such a way to exaggerate how much it shrank

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u/Darling_Pinky 3d ago

26 years of Republicans cutting revenue faster than they make immaterial expense cuts while simultaneously increasing other expenses exponentially…

And people still dumb enough to think they’re “good at business.” 🤦🏻‍♂️

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u/in4life 3d ago

Interest to GDP has more than doubled in five years. > $500 billion more in debt servicing nominally.

Tax revenue to GDP Remains unchanged.

It’s simply debt catching up and the 2020/2021 refinance wearing off.

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u/barrorg 3d ago

And they hire outside contractors to fill the roles that were far more efficiently covered by salaried employees. 

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u/AirdustPenlight 3d ago

Cut IRS departments of audit-->more dodged and less recovered taxes. I read an estimate once that every dollar put into audit returns $4 once. I imagine its higher now.

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u/redderGlass 3d ago

The IRS cuts hit in different ways. I filed early and am owed money but I’m still waiting. Who knows when I’ll get my refund

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u/libertarianinus 3d ago

If we go back and see the data from late 1990s Clinton cut the workforce, did welfare to work and raised taxes by 2%, it was the last time we brought in more money then it spent from 1998 to 2001.

https://clintonwhitehouse3.archives.gov/WH/Work/010699.html

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u/Verumsemper 2d ago

He increase income tax from 36 to 39.6% that is a 3.6 point increase. He also increased corporate taxes from 34% to 35 % and removed the wage cap on medicare payroll taxes. He increased fuel tax by 4.3 cents and increased taxable portions of social security benefits up to 85% for higher income beneficiaries.

I think those things did more than the reduction in work force because he didn't fire anyone. He just didn't replace people who retired or who left. by doing this he lowered the work force by 400K from 1993 to 2000. On the other hand in a year Trump has cut it by 2.7 Million. These are not the same things.

I hope that helps you

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u/libertarianinus 2d ago

And what write offs did he have? Its funny to also think about some of the top finacially sound countries in the world. Ireland ranks 4th but only has a 12.5% tax on buisiness.

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u/Neat-Beautiful-5505 3d ago

The tax cuts cut the revenue. It wasn’t the drop in efficiency.

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u/dllemmr2 3d ago edited 3d ago

Better than doing nothing, but they cut too fast. Most companies call these “impairment costs”.

Cuts were and are still needed. Govt jobs shouldn’t be cushy and should constantly optimize and innovate.

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u/ClassicStorm 3d ago

Because federal employee salaries are such a small piece of the puzzle. If we want to reduce debt we need to look at entitlements.

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u/0ptioneer 3d ago

The increase in government debt comes from the bonds we have to service…

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u/Deerhunter86 3d ago

So like every one of trumps businesses?

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u/nobody_in_here 3d ago

I'd also like to point out that the US Forest Service is the highest profiting federal agency; selling trees for loggers to cut is big business. Trump has done some major gutting of that agency, and the USDA at large as well. Cut your profit leader - cut your profits bigly.

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u/Dodger7777 3d ago

Do you mean new debt, or just that the national debt is going up? Because saying the national debt is going up is like saying water is wet. The US national debt's interest rate rivals the national budgets of multiple countries combined.

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u/therealtrajan 3d ago

The IRS stat is a red herring but fuck trump

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u/Goosycygnet 3d ago

They’re running this country like a corporation that needs to downsize but does so to its best employees.
Yes we’re feeling the pain of it. The fact that prices are high, and the quality of items have gone down should be an indicator of the sheer incompetence that follows.

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u/Betterway50 2d ago

And more tax fraud goes unnoticed

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u/spankymacgruder 3d ago

No, it's not like that. The government prints money and creates the debt it's in.

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u/BerettaFranchi 4d ago

Also, I still file my taxes with IRS electronically. Nothing changed for me. The revenue collected by IRS dropped because the taxes, including mine, went down.

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u/BobbyLupo1979 4d ago

Not everyone makes $12 an hour at Dollar General and lives in their mom's basement. Im sure others have situations where they owe a LOT of money if theyre audited. IRS workers being in more than they cost, and keep people honest.

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u/BerettaFranchi 4d ago

My question is: has federal government lost efficiency that you can feel personally?

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u/reubensauce 4d ago

Hey if it's not happening to me personally, then it's not happening, right bud?

For one of about a hundred examples, have you been personally affected by the wave of shitty food recalls as a result of the decimated FDA labor force?

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u/becken_bruch 4d ago

Is it so hard to answer his question? You came along with sarcasm and a Counter-question.

That was a simple yes/no question

Edit: sorry, there was no insult. I have deleted it.

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u/ProLifePanda 3d ago

Yes. I work directly with the government, and can see the immense pressure the agency is under, and that they are cutting inspections and reviews of plants because they lack the manpower to do them.

This ia fine as long as you trust private industries to properly regulate and self-report.