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

Most people think the federal budget is just what Congress spends each year. But there's a parallel budget nobody votes on: tax expenditures. In this episode, Lucas and Luna break down how the US government loses over $1.6 trillion annually through tax breaks, deductions, and credits — more than the entire discretionary budget. They explore the mortgage interest deduction, the carried interest loo...

Episode 29 of Government Spending with Fexingo dives into the hidden crisis of state and local pension underfunding. Lucas breaks down the $1.5 trillion shortfall in US public pensions, using the specific example of Illinois—where pension debt is $150 billion and rising. Luna asks why taxpayers in other states should care, and Lucas explains how pension guarantees, investment return assumptions, a...

In this episode, Lucas and Luna unpack the $6 trillion gap in U.S. state and local government pension funding. They walk through how the CalPERS scandal of the early 2000s led to rosier return assumptions, why Illinois’s pension debt now exceeds its general obligation bonds, and how a 7% assumed return on a portfolio that actually returned 6.5% over 20 years creates a compounding mismatch. They ex...

In this episode of Government Spending with Fexingo, Lucas and Luna explore the hidden pitfalls of government grants. Using the specific case of the U.S. E-Rate program—a $4.5 billion annual grant to connect schools to the internet—they show how well-intentioned funding can lead to waste, fraud, and perverse incentives. They break down the concept of 'grant capture' by entrenched providers, the ch...

Lucas and Luna unpack the moral hazard baked into federal disaster aid. Using FEMA and the National Flood Insurance Program as a case study, they explore how subsidized insurance and automatic relief payouts actually encourage building in flood zones and fire corridors — putting more people and property in harm's way. Lucas cites the NFIP's $20 billion debt to the Treasury and the fact that repeti...

Episode 25 of Government Spending with Fexingo digs into the persistent failure of government budget forecasts. Lucas and Luna examine why official projections miss the mark by trillions, using the U.S. Congressional Budget Office's 2026 budget outlook as a case study. They explore three structural biases: optimistic economic growth assumptions, unrealistic inflation projections, and the political...

In this episode of Government Spending with Fexingo, Lucas and Luna dive into the mechanics of government bond auctions. Using a recent Treasury auction of a new ten-year note as a concrete example, they explain how the government actually borrows money from investors — from the competitive and non-competitive bidding process to the role of primary dealers and the auction's impact on yields. They...

Episode 23 digs into a quietly devastating problem in public finance: official government budget forecasts are almost always wrong, and not by accident. Lucas and Luna walk through how the US Office of Management and Budget and the Congressional Budget Office produce their baseline projections, why they systematically overestimate revenue growth and underestimate spending increases, and what that...

Norway's Government Pension Fund Global is often called a 'rainy day fund' for oil wealth. But Lucas and Luna dig into why that label undersells what sovereign wealth funds actually do. They trace the fund's origins from a 1990s political compromise to its current role as a global portfolio that owns 1.5 percent of every listed company on earth. They discuss the fund's ethical exclusion screen (fi...

Government IT projects fail at a staggering rate — 40 to 60 percent over budget, often years late, and many get cancelled entirely. Lucas and Luna dig into the rollout of the UK's Universal Credit system, a ten-year, £12 billion digital transformation that still isn't fully working. They explore why governments can't seem to build software the way private companies do: rigid procurement rules, pol...

Most Americans assume the federal government could learn from state-level budget discipline. But the truth is weirder: 49 states have balanced-budget requirements, yet many still run deficits, defer payments, or use accounting gimmicks. Lucas and Luna drill into the specific case of California's 2026 budget gap, explain how the 'balanced budget' rule actually works (and doesn't), and explore wheth...

In this episode, Lucas and Luna unpack the US debt ceiling—what it is, why it exists, and the recurring brinkmanship that rattles markets. They trace the ceiling's origins to 1917, explain the 2023 Fiscal Responsibility Act's suspension until January 2025, and examine the economic costs of political standoffs. With the Treasury's 'extraordinary measures' likely exhausted by mid-2026, they discuss...

Episode 18 of Government Spending with Fexingo dives into the world of government audits — what they actually check, why they take years, and why the Department of Defense hasn't passed a clean audit in decades. Lucas and Luna walk through the 2026 GAO audit of the federal government, the difference between financial and performance audits, and what the $2 trillion in 'unreconciled transactions' r...

Lucas and Luna dig into a paradox that defines public finance: major infrastructure projects almost always go over budget, and the overruns follow a predictable pattern. They use the 2024 California high-speed rail update and the Big Dig in Boston as case studies to explain why cost estimates are systematically low. The hosts explore the 'optimism bias' and 'strategic misrepresentation' in governm...

Episode 16 of Government Spending with Fexingo dives into sin taxes—levies on alcohol, tobacco, sugar, and gambling—as tools for both revenue and public health. Lucas and Luna unpack the economics behind the 'sin tax' concept, using the UK's sugar tax on soft drinks as a concrete case. They walk through how Coca-Cola reformulated to avoid the tax, why tobacco taxes generate billions despite fallin...

Governments spend trillions on everything from fighter jets to office chairs, but the procurement process is notoriously slow, inefficient, and prone to waste. In this episode, Lucas and Luna drill into the specific case of the US Department of Defense's F-35 program — a $1.7 trillion boondoggle that illustrates systemic flaws. They explore why competitive bidding can backfire, how sole-source con...

The US Treasury runs a weekly auction to sell bonds, but how it sets the interest rate is more like an art than a science. In this episode, Lucas and Luna examine the mechanics of a Treasury auction — from the role of primary dealers to the difference between competitive and noncompetitive bids. They walk through a specific recent auction of 10-year notes, explaining why the yield came in at 4.32%...

Lucas and Luna dig into the Congressional Budget Office's baseline — the official starting point for every US budget debate. They explain how the baseline is built, why it assumes spending will grow indefinitely, and how this 'kicks the can' on hard choices. Expect a concrete walkthrough of the numbers: the 2025 baseline vs. actual discretionary spending caps, the arcane rules like Section 257 of...

In this episode of Government Spending with Fexingo, Lucas and Luna explore the seemingly bizarre world of negative-yielding government bonds. They explain why investors in Japan, Germany, and Switzerland have been willing to effectively pay governments for the privilege of lending to them. The hosts break down the math of negative yields, the role of central bank policy and quantitative easing, a...

Lucas and Luna break down a persistent myth: that sovereign debt works the same way as your credit card balance. Using the U.S. as a case study, Lucas explains why a monetarily sovereign government faces no risk of involuntary default on its own-currency debt, citing the Treasury's ability to issue bonds and the Fed's role in the financial system. Luna pushes back on moral hazard and the political...

In this episode of Government Spending with Fexingo, Lucas and Luna explore how inflation can silently reduce the real value of government debt. They focus on the aftermath of World War II, when the US national debt hit 106% of GDP, and how a combination of moderate inflation, financial repression, and economic growth brought it down to just 33% by 1970. Lucas explains the mechanics of nominal ver...

Lucas and Luna explore the hidden costs of government subsidies, using the US solar panel tariff suspension as a case study. They discuss how subsidies can distort markets, create unintended consequences, and sometimes cost more than they deliver. Lucas breaks down the concept of deadweight loss from subsidies and explains why even well-intentioned programs can backfire. The episode also touches o...

Credit ratings for sovereign governments—like S&P's AAA or Moody's Baa2—shape how much countries pay to borrow and whether investors buy their bonds. In this episode, Lucas and Luna walk through the mechanics of a sovereign credit rating: what agencies actually evaluate, the difference between a rating and a rating outlook, and how a downgrade can ripple through a country's entire economy. They us...

Episode 7 of Government Spending with Fexingo digs into a $1.5 trillion timebomb that most Americans don't know about: state and local government pension underfunding. Lucas and Luna walk through the specific case of Illinois, where the state's pension system is only 40% funded, and explain why this matters for both public employees and taxpayers. They break down how pension accounting works, why...

In this episode of Government Spending with Fexingo, Lucas and Luna tackle the controversial case for perpetual zero-interest government borrowing. Drawing on Japan's experience with decades of near-zero rates and the U.S. Treasury's 2020 shift to all-coupon debt, they explore how low-rate environments have changed the cost of public debt. Lucas explains the concept of 'debt service as a fiscal he...