As debates about the federal government's size, scope, and spending grow louder, it's worth asking: Who actually depends on Washington? The answer is far broader than many realize, encompassing direct federal system employees and also a vast network of individuals, businesses, and institutions that rely on its programs, payments, and protections.
As we wrote in yesterday's editorial, the federal government has grown so large, and special interests are so entrenched that even minor cuts are nearly impossible to implement. Eliminating fraud seems like a pipe dream. Efficiency gains remain out of reach due to a lack of incentive and because federal courts often intervene to block even the most minor reforms. Everyone who depends on the federal government for its vast influence as a policymaker, payer, regulator, employer, insurer, and guarantor across virtually every sector of society works overtime to keep the funds flowing.
At the most visible level, millions of people work directly for the federal government. These include civil servants in executive branch agencies such as the IRS, EPA, and FAA; legislative staffers and officials in the halls of Congress; and judicial employees across the federal court system. In addition, the men and women in uniform—the Armed Forces, National Guard, and federal law enforcement agents like those in the FBI, DEA, and ATF—as well as intelligence personnel from agencies like the CIA and NSA, are also federal employees.
But the federal government's reach extends far beyond its payroll. An entire ecosystem of private contractors and subcontractors thrives on federal work. Defense giants like Lockheed Martin and Raytheon build advanced weapons systems; IT and cybersecurity firms manage critical infrastructure; and construction, maintenance, and service companies handle everything from federal buildings to cleaning services. These firms, in turn, provide thousands of additional jobs across the private sector.
Then, there are the countless recipients of federal grants and funding. State and local governments depend heavily on Washington for transportation, education, healthcare, and housing support. Nonprofits use federal grants to run social programs, shelters, and public health initiatives. Research institutions and universities receive billions annually from agencies like the National Institutes of Health, the National Science Foundation, and the Department of Defense to drive innovation and scholarship.
Students and educational institutions are also closely tied to Washington. Millions of students depend on federal student loans, Pell Grants, and campus-based aid. Public schools receive Title I and special education funding. Universities rely not just on student aid but also on federal grants for teaching and research.
Healthcare providers—hospitals, doctors, clinics, and nursing homes—rely heavily on federal reimbursements. Medicare, Medicaid, TRICARE (for military families), and the VA system drive a large portion of the U.S. healthcare system. In some states, federal programs account for the majority of hospital revenue.
Farmers and the broader agricultural sector have long benefited from federal support through direct subsidies, crop insurance, disaster relief, or conservation funding. These programs, often managed through the Department of Agriculture, are particularly vital in rural communities where private market protections are insufficient.
The business world is not left out either. Beyond the defense sector, industries ranging from energy to transportation receive federal subsidies or tax breaks. Banks and large corporations benefited from government bailouts during the 2008 financial crisis and again during the COVID-19 pandemic. Even companies that criticize federal regulation often quietly benefit from government-backed contracts, loans, or guarantees.
Legal and consulting firms specializing in federal compliance, as well as lobbying organizations embedded in Washington, are the most direct beneficiaries of the bureaucratic system. Their business model is built around navigating and influencing the federal government.
Native American tribes depend on federal funding for healthcare, housing, education, and economic development, as well as support rooted in historic treaties and trust responsibilities. Similarly, scientific and cultural institutions, from the Smithsonian to NASA contractors to National Endowment grantees, receive ongoing federal support to preserve and advance American heritage and scientific inquiry.
Even foreign governments and international organizations depend on U.S. contributions. Billions in foreign aid and military assistance are distributed annually, and institutions like NATO and the United Nations rely partly on funding from the U.S. government.
As if to chime in with our editorial yesterday, CBS News reported that an appeals court on Friday refused to freeze a California judge's order halting the Trump administration from downsizing the federal workforce. Elon Musk's Department of Government Efficiency had orchestrated job cuts across the vast federal bureaucracy, but labor unions and cities such as San Francisco and Chicago that benefit from federal spending had brought a lawsuit against the cuts.
U.S. Judge Susan Illston of San Francisco, a Bill Clinton appointee, had ordered the Trump administration to halt the cuts, ruling that presidents can make large-scale overhauls of federal agencies, but only with the cooperation of Congress. Illston was acting like the legendary lawyer in Shakespeare's The Merchant of Venice, who upholds the legality of Shylock's bond to extract a pound of flesh if the debtor defaults, but only on the condition that no blood is spilled, a practical impossibility. Requiring Congress to go along with Trump's DOGE cuts, Illston knew, was a practical impossibility, but she ruled that way anyway. In the 2-1 ruling, the Ninth Circuit Court of Appeals agreed with the judge: "The Executive Order at issue here far exceeds the President's supervisory powers under the Constitution." Do explain how a president exercising Article II powers to hire and fire members of his executive branch "far exceeds" his authority.
At the Oval Office press conference on Friday that President Trump held with Elon Musk, a reporter asked: "Mr. Musk, what do you think would be easier—colonizing Mars or making the government efficient?"
Musk replied with a laugh, "It's a tough call," before assuring her that the Department of Government Efficiency would be able to achieve cuts over time and with Trump's support. It was classic Musk, displaying infectious confidence in a mission that he has himself abandoned to return to his businesses. Without Musk at the helm, the courts, Congress, and the special interests mentioned above will continue to guard the gates of the status quo.
🗞️ Most Read Stories Of The Week
1. Adios, Green New Deal. Welcome, Free-Market Energy Independence—Editorial Board, TIPP Insights
2. Bitcoin’s Record Run Opens A New Chapter In U.S. Financial Leadership—Editorial Board, TIPP Insights
3. Don’t Fund Chinese Companies In The Tax Bill—Steve Cortes, Cortes Investigates
4. Kash Patel Shuts Down The Deep State’s Nerve Center—Victor Davis Hanson, The Daily Signal
5. Oh, Washington! Musk Proves The Folly Of Correcting A Self-Preserving Government—Editorial Board, TIPP Insights
6. What Trump Gets Right About China—Yi Fuxian, Project Syndicate
7. No Leader. No Vision. Only Trauma.—Editorial Board, TIPP Insights
8. What Is The Rationale Behind Current US Tariff Policy?—Frank Shostak, Mises Wire
9. Where Is US Economic Policy Taking Us?—Mohamed A. El-Erian, Project Syndicate
10. Harvard’s History Of Hypocrisy And Hubris—Editorial Board, TIPP Insights
🧠 TIPP Investing Weekly
Week Ending: May 30, 2025
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United States Steel Corp. is a major U.S. steel producer in North America and Europe. It manufactures flat-rolled, tubular, and specialty steel products across five segments, including Flat-Rolled, Mini Mill (via Big River Steel), U.S. Steel Europe, Tubular Products, and Other Businesses.
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The Vanguard Global ex-U.S. Real Estate Index Fund seeks to track the performance of the SP Global ex-US Property Index.
📅 Key Events This Week
Monday, June 2
● 09:45 AM ET – S&P Global Manufacturing PMI (May)
A snapshot of U.S. factory activity and growth trends.
● 10:00 AM ET – ISM Manufacturing PMI (May)
Widely followed gauge of industrial health and output.
● 1:00 PM ET – Fed Chair Powell Speaks
Markets will parse comments for any policy shifts or rate cues.
Tuesday, June 3
● 10:00 AM ET – JOLTS Job Openings (Apr)
Key data on labor demand and workforce tightness.
Wednesday, June 4
● 08:15 AM ET – ADP Nonfarm Employment Change (May)
Private-sector hiring report that often sets the tone before NFP.
● 09:45 AM ET – S&P Global Services PMI (May)
Early read on the performance of the U.S. services sector.
● 10:00 AM ET – ISM Non-Manufacturing PMI (May)
Another broad gauge of services activity and business outlook.
● 10:30 AM ET – Crude Oil Inventories
Weekly update on U.S. oil stockpiles and energy demand trends.
Thursday, June 5
● 08:30 AM ET – Initial Jobless Claims
Weekly read on unemployment claims and labor market stress.
Friday, June 6
● 08:30 AM ET – Average Hourly Earnings (MoM, May)
The Fed closely watches the wage growth indicator.
● 08:30 AM ET – Nonfarm Payrolls (May)
The most influential jobs number for gauging U.S. economic momentum.
● 08:30 AM ET – Unemployment Rate (May)
Measures the overall jobless rate and labor force participation.
