Government Spending with Fexingo: Budget, Deficits, and Public Finance Explained
Governments around the world spend trillions annually, yet the logic behind budget allocations, deficit targets, and public-debt ceilings remains opaque to most citizens. In this podcast, Lucas and Luna dissect the numbers behind national accounts, walking through real budget documents from the U.S., Germany, Japan, and emerging economies. Each episode focuses on a single government-spending concept, such as structural versus cyclical deficits, entitlement program burdens, military budget justifications, or surplus versus debt accumulation. They avoid partisan talking points and trace actual flows from tax receipts to procurement contracts to transfer payments.
Episodes
Why Government Infrastructure Projects Always Go Over Budget
Episode 81 of Government Spending with Fexingo: Budget, Deficits, and Public Finance Explained. Lucas and Luna dig into a pernicious but little-understood reason why government infrastructure projects routinely blow their budgets: they consistently underestimate the cost of environmental mitigation and community compensation. Using the $4.5 billion overrun on California's high-speed rail as a conc
How Government Grants Create Dependency Loops
Episode 80 of Government Spending with Fexingo: Budget, Deficits, and Public Finance Explained. Lucas and Luna examine how government grants—especially in R&D and social services—create dependency loops that persist long after the original problem is solved. Using the Small Business Innovation Research (SBIR) program and community development block grants as case studies, they discuss why grant-fu
How Government Pension Assumptions Cost Taxpayers Billions
Episode 79 of Government Spending with Fexingo digs into a quiet time bomb: the investment return assumptions that public pension funds use to calculate their liabilities. Lucas and Luna walk through the history of how these assumptions drifted from reasonable to optimistic, focusing on CalPERS — the California Public Employees' Retirement System, which assumed 7.5 percent annual returns for years
Why Government Pension Funds Invest in Private Equity
Episode 78 of Government Spending with Fexingo explores why public pension funds are pouring billions into private equity, even as returns get harder to predict. Lucas and Luna break down the California Public Employees' Retirement System (CalPERS) target of 13 percent from private equity, the liquidity mismatch, and the hidden fees eating into returns. They discuss the J-curve effect, the challen
Why Government Bond Yields Are Actually a Tax on Future Growth
Episode 77 of Government Spending with Fexingo unpacks a paradox: as government bond yields rise, future economic growth gets squeezed. Lucas and Luna walk through the mechanics of how higher interest payments crowd out productive investment, using Japan's 1990s debt spiral and the US Congressional Budget Office's latest long-term projections as anchors. They explain the 'interest-to-GDP ratio' —
Why Government Pay Lags Behind Private Sector
Episode 76 of Government Spending with Fexingo digs into the persistent pay gap between public and private sector workers. Lucas and Luna anchor on a specific number: the roughly 20 percent pay penalty for federal employees in professional roles, using data from the Congressional Budget Office’s 2024 report. They explore why this gap exists — from wage compression to political constraints — and wh
Why Government Auctions Leave Money on the Table
Every year, governments sell everything from broadcast spectrum to drilling rights at auction — and systematically leave billions of dollars on the table. In this episode, Lucas and Luna examine why public auction design so often misfires, drawing on the disastrous 2021 UK 5G spectrum auction, where a poorly chosen format cost the Treasury an estimated £1 billion. They break down the mechanics of
Why Government Departments Pay Different Prices for the Same Drug
In this episode of Government Spending with Fexingo, Lucas and Luna explore a striking inefficiency in public procurement: why different US government agencies pay wildly different prices for the same prescription drugs. Lucas walks through a 2024 GAO report showing that the Department of Veterans Affairs pays an average of $1.50 per unit for a common anti-inflammatory, while the Defense Departmen
Why Government Payroll Systems Pay Wrong People
Every year, U.S. federal agencies overpay employees by an estimated $4.5 billion — and a lot of those payments go to people who no longer work there. Lucas and Luna break down how outdated payroll systems, fragmented data, and weak reconciliation processes create a perfect storm for improper payments. They trace one real case: a retired Navy officer who kept receiving paychecks for 18 months after
Why Government Makes It Hard to Start a Business
Starting a business in the US takes 94 days and costs 0.5% of income per capita on average. In New Zealand, it takes half a day and costs 0.1%. Why the gap? We look at how government licensing, zoning, and tax registration create friction that disproportionately hurts small entrepreneurs. Lucas and Luna dig into the World Bank's Doing Business data (before it was suspended), the specific steps tha
Why Government Land Banking Fails
Episode 71 of Government Spending with Fexingo explores why governments consistently lose money on land banking—buying and holding land for future development. Lucas and Luna examine the case of the UK's Homes and Communities Agency, which sold a massive land portfolio at a loss, and contrast it with Singapore's successful use of land value capture through its Urban Redevelopment Authority. They b
Why Government Price Indexes Overshoot Reality
Episode 70 of Government Spending with Fexingo: Budget, Deficits, and Public Finance Explained dives into the little-known problem of substitution bias in government price indexes. Lucas and Luna unpack how the Consumer Price Index overstates inflation by ignoring how consumers switch to cheaper alternatives when prices rise. Using the Boskin Commission's 1996 finding that the CPI overstates infla
Why Government Agencies Pay More for Everything
In this episode of Government Spending with Fexingo, Lucas and Luna explore why government agencies consistently pay higher prices than private companies for the same goods and services. Using the example of office chairs purchased by the U.S. General Services Administration — often costing 2 to 3 times more than comparable models on the open market — they unpack the structural reasons behind gove
Why Government IT Modernization So Often Fails
Episode 68 of Government Spending with Fexingo takes a hard look at why large-scale government IT modernization projects so frequently fail. Lucas and Luna dig into the story of the UK's National Programme for IT in the National Health Service — a £12.4 billion project abandoned in 2011 — and compare it to the US Department of Veterans Affairs' $16 billion electronic health records overhaul curren
Why Government Interest Payments Are Growing Faster Than Revenue
As of mid-2026, the US federal government is spending more on net interest than on either Medicare or national defense. Lucas breaks down the mechanics of how rising debt levels and higher interest rates compound into a faster-growing expense line, using the analogy of a credit card balance that keeps getting bigger while the APR rises. Luna asks why this isn't getting more political attention, an
Why Government Emergency Spending Rarely Gets Reversed
When a crisis hits, governments rush through emergency spending bills with bipartisan urgency. But after the crisis fades, that spending almost never fully disappears. In this episode, Lucas and Luna examine the 'ratchet effect' in US federal budgeting — how temporary programs like the 2008 TARP bailout, the 2020 CARES Act, and the 2021 infrastructure bill created permanent fiscal footprints despi
The Hidden Cost of Government Procurement Red Tape
Lucas and Luna dig into why buying a simple thing like office furniture costs the federal government 40% more than a private company. They walk through the 5,000-page Federal Acquisition Regulation, the burden of requirements like the Buy American Act and Davis-Bacon wage rules, and how risk aversion leads to sole-source contracts that drive up prices. They cite a 2024 Government Accountability Of
Why Government Lease Accounting Hides Billions in Debt
When a government buys a building with debt, the liability shows up on the books. But when it signs a 30-year lease with the same net present value? That obligation often stays invisible. In this episode of Government Spending with Fexingo, Lucas and Luna dig into the arcane world of government lease accounting — specifically the difference between an 'operating lease' and a 'capital lease' — and
The Unfunded Mandate Problem in US Federal Policy
In this episode of Government Spending with Fexingo, Lucas and Luna dive into the world of unfunded mandates — when the federal government requires states or local governments to implement policies but provides little or no funding to do so. Using the 2001 No Child Left Behind Act as a central case study, they explore why these mandates have become a recurring tool in Washington, despite widesprea
Why Governments Are Getting Into the Insurance Business
Episode 62 of Government Spending with Fexingo explores the growing trend of governments acting as direct insurers — not just in flood or crop insurance, but increasingly in areas like cyber risk and pandemic business interruption. Lucas and Luna break down the US National Flood Insurance Program's $20 billion debt, the UK's pandemic business interruption guarantee scheme, and the tricky economics
How Government Guarantees Create Hidden Debt
Episode 61 of Government Spending with Fexingo: Budget, Deficits, and Public Finance Explained. Lucas and Luna dive into the world of explicit and implicit government guarantees—from FDIC insurance to Fannie Mae and beyond. Using the 2023 Silicon Valley Bank failure and the 2008 housing crisis as anchors, they explain how contingent liabilities can balloon into trillion-dollar obligations without
Why Government Bonds Are Becoming Less Liquid
In Episode 60 of Government Spending with Fexingo, Lucas and Luna drill into a quiet crisis in the $28 trillion US Treasury market — declining liquidity. They unpack how post-2008 regulations, the rise of high-frequency trading, and the US government's own massive debt issuance have made it harder to buy and sell bonds without moving prices. Lucas explains the 'bid-ask spread creep' and what the B
Why Government Software Licenses Cost More Than Buying
Lucas and Luna break down why governments pay vastly more for software licensing than buying outright. Using the US Department of Defense's $45 million spend on Microsoft Office licenses in 2025 as a case study, they explore how procurement rules, budget cycles, and vendor lock-in inflate costs. The episode reveals that the DoD's per-seat cost for Office 365 was nearly triple the commercial rate,
Why Governments Keep Paying for Cost Overruns
Governments around the world routinely approve projects that end up costing far more than initial estimates. In this episode, Lucas and Luna explore the psychology and politics behind cost overruns, focusing on a 2024 study of 200 major infrastructure projects across OECD countries. They discuss how optimism bias, strategic misrepresentation, and the 'sunk cost' fallacy combine to create a cycle o
How Government Projections Systematically Underestimate Costs
Episode 57 of Government Spending with Fexingo digs into the systematic bias in government cost projections. Hosts Lucas and Luna examine the 'optimism bias' that causes public projects from highways to IT systems to run billions over budget. They walk through a classic example: the Sydney Opera House, originally estimated at $7 million AUD in 1957 and completed at $102 million — a fourteen-fold o
Why Governments Subsidize Sports Stadiums Despite Losing Money
In this episode of Government Spending with Fexingo, Lucas and Luna dissect the economics behind public subsidies for professional sports stadiums. They explore why cities continue to spend hundreds of millions on venues for private teams despite decades of academic research showing negligible economic returns. Using the 2024 Kansas City Chiefs and Royals stadium deal as a case study, they break d
Why Government Fee Structures Create Hidden Regressive Taxes
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 So Many Government IT Projects Fail
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
Why Governments Issue Inflation-Indexed Bonds
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
Why Government Pension Liabilities Keep Growing
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 Government Infrastructure Costs More in the US Than Europe
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
How Government Borrowing Creates a Crowding Out Effect
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
How Government Insurance Programs Create Hidden Fiscal Risks
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
How Government Block Grants Shift Risk to States
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
Why Government Surpluses Can Be More Dangerous Than Deficits
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
Why Government Budgets Use Phantom Growth Assumptions
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
Why Government Price Guarantees Distort Markets
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
Why Government Budgets Inflate for Big Projects
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'—
Why Government Bond Yields Inverse to Prices
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
Why Governments Love Cost-Benefit Analysis
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
Why Government Fees Often Cost More Than They Raise
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
Why Government Audits Miss Most Fraud
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'
Why Government R&D Funding Creates Job Multipliers
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
Why Government Procurement Costs Twice as Much
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 (
Why Governments Use Special Purpose Vehicles for Public Projects
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
Why Government Bonds Trade Below Face Value
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
Why Governments Print Too Many Banknotes
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
Why Governments Turn to Public-Private Partnerships
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
How Governments Use User Fees to Avoid Taxes
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
Why Government Subsidies Create Zombie Industries
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
Why Governments Are Terrible at Forecasting Revenue
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
How Government Tax Expenditures Are a Hidden Budget
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
Why Government Pension Liabilities Are Everyone's Problem
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
Why Government Pension Liabilities Are Everyone's Problem
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
Why Government Grants Create Unintended Consequences
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
Why Government Disaster Relief Creates More Damage
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
Why Government Budget Forecasts Are Always Wrong
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
Why Governments Sell Bonds in a Bond Auction
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
Why Government Budgets Use Fantasy Economic Forecasts
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
Why Sovereign Wealth Funds Are Not Just Rainy Day Funds
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
Why Government IT Projects Fail So Spectacularly
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
Why US State Budgets Are Required to Balance
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
Why Government Debt Ceilings Are a Self-Inflicted Crisis
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
How Government Audits Actually Work and Why They Fail
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
Why Government Infrastructure Spending Is Always Over Budget
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
Why Governments Use Sin Taxes to Change Behavior
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
Why Government Procurement Is Broken and How to Fix It
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
Why the US Government Borrows at an Auction
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%
Why Government Budget Baselines Are Rigged
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
Why Government Bonds Have a Negative Yield in Japan and Europe
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
Why Government Debt Is Not Like Household Debt
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
Why Governments Use Inflation to Shrink Their Debt
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
The Real Cost of Government Subsidies
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
How Government Credit Ratings Actually Work
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
The Hidden Cost of Government Pension Liabilities
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
Why Governments Should Borrow at Zero Rates Forever
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
Why the US Government Borrows at an Auction
The US federal government is the single largest borrower on Earth, but most people have never heard of a Treasury auction. In this episode, Lucas and Luna break down how the Treasury borrows nearly all its money through a weekly auction system that is both shockingly efficient and surprisingly opaque. They walk through the mechanics of competitive versus non-competitive bids, the role of primary d
Why Government Debt Is Like a Mortgage for the Economy
In this episode, Lucas and Luna explore the controversial idea that government debt is not inherently bad — it's about what you borrow for. They drill into the concept of 'public investment' versus 'consumption spending' using the concrete example of the U.S. Interstate Highway System, built with debt in the 1950s, which generated decades of economic growth. They also discuss how modern economists
How Municipal Bonds Really Work and Why They Matter Now
In this episode, Lucas and Luna break down the mechanics of municipal bonds — the $4 trillion market that funds schools, highways, and hospitals across America. They explain the tax-exempt structure, why muni yields have historically tracked Treasury yields, and how the post-2024 interest rate environment has changed the calculus for individual investors. Lucas walks through a concrete example: a
Why the US Federal Budget Has a Baseline Problem
Episode 2 of Government Spending with Fexingo digs into the mechanics of the federal budget baseline — the CBO's 'current law' vs 'current policy' projections. Lucas and Luna explain why the baseline almost always assumes spending will grow, and how that shapes every debate about deficits, taxes, and entitlement reform. They walk through the 2026 Congressional Budget Office baseline released in Ja
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