Government Spending with Fexingo: Budget, Deficits, and Public Finance Explained

Episode 55 of Government Spending with Fexingo uncovers a quiet fiscal paradox: government user fees—meant to be efficient—often act as regressive taxes. Lucas and Luna break down the economic mechanisms using real examples: the 2025 British Columbia vehicle registration fee that costs low-income drivers 0.8% of income versus 0.05% for high-income earners, and the US passport fee structure that ma...

Why do massive government IT projects so often go over budget and miss deadlines? Lucas and Luna dig into one of the biggest examples: the UK's NHS National Programme for IT, launched in 2002 and effectively abandoned by 2011 after spending over £12 billion. They trace the core problems: scope creep, fragmented procurement, misaligned incentives between vendors and agencies, and the lack of agile...

In this episode of Government Spending with Fexingo, Lucas and Luna explore why many governments issue inflation-indexed bonds, like Treasury Inflation-Protected Securities (TIPS) in the US. They start with a concrete case: the UK's index-linked gilts, first issued in 1981 when inflation was running above 10 percent. Lucas explains the mechanics — how the principal adjusts with the Consumer Price...

In this episode, Lucas and Luna unpack the mechanics behind government pension liabilities—the long-term promises to public employees that continue to balloon despite market rallies and tax hikes. They use the case of Illinois, where unfunded pension liabilities exceed $140 billion, to illustrate how discount rate assumptions, benefit formulas, and demographic trends create a fiscal time bomb. Luc...

Why does building a mile of subway track in the US cost five to ten times more than in comparable European countries? In this episode, Lucas and Luna dig into the specific structural factors behind America's infrastructure cost premium. They examine the 2019 Eno Center for Transportation study showing US transit projects cost $600 million per mile versus $100 million in Spain or France, then trace...

In episode 50 of Government Spending with Fexingo, Lucas and Luna explore the crowding out effect—how government borrowing can push private investment aside. Using the 2026 US fiscal environment as a backdrop, they examine a Congressional Budget Office projection showing federal borrowing will absorb roughly 80% of net private savings this year. They walk through the mechanism: when the Treasury i...

Lucas and Luna explore how government insurance programs — from flood insurance to deposit insurance — create large contingent liabilities that don't show up on the official budget. They examine the National Flood Insurance Program's debt of over $20 billion, the Pension Benefit Guaranty Corporation's $50+ billion deficit, and how the FDIC's insurance fund works. The hosts discuss why these progra...

In this episode of Government Spending with Fexingo, Lucas and Luna explore how block grants have become a quiet but powerful tool for federal cost-shifting. Using the social services block grant as a case study—its funding has been cut by 40% in real terms since 2000 while states absorb rising demand—they unpack the fiscal logic behind this shift. Lucas explains the original 1980s rationale, the...

Most people assume a government surplus is always good news. But in this episode, Lucas and Luna examine historical episodes where surpluses led to economic pain: the U.S. in the late 1990s, Canada in the 2000s, and Sweden in the 2010s. They explain how surpluses can drain aggregate demand, lead to fiscal drag, and create political pressure for tax cuts that undermine long-term fiscal stability. T...

Episode 46 of Government Spending with Fexingo digs into the hidden arithmetic behind public budgets: the 'phantom growth' assumptions that make long-term projections look rosier than reality. Lucas and Luna examine the Congressional Budget Office's track record—specifically how it overestimated U.S. economic growth by an average of 0.5 percentage points per year over the past two decades, adding...

Episode 45 of Government Spending with Fexingo: Budget, Deficits, and Public Finance Explained. Lucas and Luna dive into the unintended consequences of government price guarantees—specifically the European Union's Common Agricultural Policy (CAP) and its butter mountains. They trace how a 1960s price floor for butter led to massive overproduction, storage costs, and eventual reform, costing EU tax...

Governments around the world routinely underestimate the cost of major infrastructure projects. In this episode of Government Spending with Fexingo, Lucas and Luna explore a specific case: the California High-Speed Rail project, originally estimated at $33 billion in 2008 and now projected to cost over $100 billion. They break down the psychological and institutional forces behind 'optimism bias'—...

In this episode of Government Spending with Fexingo, Lucas and Luna break down the inverse relationship between government bond prices and yields—and why it matters for taxpayers. Using the 10-year Treasury as a concrete example, Lucas explains how a bond's coupon, price, and yield interact, how the secondary market drives yields, and what a rising yield means for future borrowing costs. They expl...

Cost-benefit analysis sounds like a rational way to decide on public projects. But in practice, it's a political weapon as often as an analytical tool. In this episode, Lucas and Luna look at a specific case: the California High-Speed Rail project, where early cost-benefit numbers were used to justify a $33 billion bond, then quietly revised as costs ballooned past $100 billion. They explore how a...

Episode 41 of Government Spending with Fexingo dives into the paradox of user fees and cost-recovery models. Lucas and Luna examine how government agencies set fees for services like passport processing, national park entry, and business filings — and why those fees frequently exceed the cost of providing the service, sometimes by a factor of ten. They focus on a 2024 study of state-level DMV fees...

Episode 40 of Government Spending with Fexingo dives into the hidden world of improper payments. Lucas and Luna break down the annual $200-plus billion problem in US federal spending — from Medicaid overpayments to unemployment insurance fraud. They explore the structural reasons audits miss the bulk of errors, the role of outdated systems, and why simply throwing more auditors at the problem won'...

Episode 39 explores the economic multiplier effect of government research funding. Lucas and Luna examine the 2025 federal R&D budget of $200 billion, tracing how basic research at labs like ARPA-E and NIH seeds commercial breakthroughs. They discuss a 2026 Brookings study showing every dollar of public R&D generates $3.50 in private investment over a decade. Luna challenges whether this holds for...

Government procurement is slow, expensive, and often broken. In this episode, Lucas and Luna explore a specific case: the US Coast Guard's Deepwater modernization program. Originally budgeted at $24 billion over 25 years, the program saw cost overruns of over 100 percent and delays exceeding a decade. They unpack why procurement is so costly — from the rules of the Federal Acquisition Regulation (...

Governments around the world use special purpose vehicles — SPVs — to finance public projects off their balance sheets. This episode explains why: a school district in Colorado created an SPV to build a new high school without raising taxes or increasing reported debt. Lucas breaks down how SPVs work, why investors accept them, and the hidden risks taxpayers shoulder when these vehicles fail. Luna...

Episode 36 of Government Spending with Fexingo: Budget, Deficits, and Public Finance Explained. Lucas and Luna dig into the mechanics of discount bonds—why a $1,000 government bond can trade for $950. Using Australia's 2033 bond as a real-world example, they explain the math behind coupon rates, prevailing yields, and present value. They also cover why bond prices fall when interest rates rise, th...

Episode 35 of Government Spending with Fexingo dives into seigniorage – the profit governments make from printing money. Lucas and Luna break down how the U.S. Mint made about $800 million in 2025 from pennies and nickels alone, and why the Federal Reserve remitted roughly $100 billion to the Treasury last year. They explore the mechanics of seigniorage in modern central banking, the difference be...

Public-private partnerships, or PPPs, are government's way of outsourcing big infrastructure projects to private companies. Lucas and Luna walk through how they work, when they fail, and why the US military's privatized housing scandal is a cautionary tale. They examine the economics behind risk transfer, the hidden costs of private finance, and what listeners should look for when their city annou...

Episode 33 of Government Spending with Fexingo explores how governments increasingly rely on user fees—tolls, park entry charges, and utility surcharges—to fund services instead of broad-based taxes. Lucas breaks down the economics of user fees using real-world examples: the Pennsylvania Turnpike toll hike in June 2026, national park entrance fees that now exceed $35 per vehicle, and the hidden su...

Lucas and Luna examine how government subsidies can inadvertently create zombie industries — businesses that survive only on taxpayer support. Using the case of Japan's steel sector and the US ethanol mandate, they explore the unintended consequences of sustained subsidies: market distortion, slowed innovation, and the political difficulty of ending support. They also discuss how subsidy design ma...

Episode 31 of Government Spending with Fexingo explores why governments consistently miss their revenue forecasts — and not by accident. Lucas and Luna dig into the specific mechanics of how the U.S. Congressional Budget Office and state revenue estimators use 'static scoring' that ignores how tax changes actually affect behavior. They walk through the 2017 Tax Cuts and Jobs Act as a case study: t...