In terms of overall outlays, the amount spent on government grants and contracts is larger than the 800 billion dollars spent on Medicare. Specifically, according to the GAO, the Federal government in 2023 spent 759 billion dollars on contracts in 2023. In addition to these contracts, we find that non-profits receive approximately 300 billion in governments grants. Much of that comes directly from federal grants, but much comes indirectly through the more than 750 billion dollars in federal grants-in-aid that goes first to state and local governments. Much of that is then passed on to NGOs.
This hasn’t stopped the Washington Post from portraying these de facto government workers as bona fide private sector workers. The Post insists on referring to government-funded “green energy” companies as “small businesses” as if they were entrepreneurial firms.
Three weeks ago, the Trump administration sent out an order to the executive branch calling for federal agencies to “temporarily pause all activities related to obligation or disbursement of all Federal financial assistance” that could conflict with President Donald Trump’s agenda.
The order primarily targeted federal dollars doled out to so-called non-governmental organizations, often called “NGOs.”
The effect on many NGOs was immediate. Many started complaining that they would not be able to meet payroll or survive without a constant inflow of government largesse. Thus, in recent weeks, one hears repeatedly of layoffs of taxpayer-funded employees as thousands of ostensibly non-governmental organizations find themselves cut off from their main source of income: the taxpayer gravy train.
In this, these NGOs are no different from any other recipient of government money which claims to be private, but is decidedly not private in the economic sense. These organizations, whether “charitable” non-profits or for-profit weapons makers, only exist as they do because they feed off the taxpayer-funded government trough.
Fortunately, this is becoming better known. The controversy over the layoffs at these NGOs—and the related media coverage—has helped to highlight just how immense is this taxpayer funded network of private-in-name-only organizations that do the federal government’s bidding.
Indeed, in America today there are now more federal contract and grant-funded workers than there are employees on the official federal payroll. If the Trump administration wants to be serious about truly reducing the rolls of the millions of federal employees, he’s going to also have to target the even larger number of “private” employees whose salaries are nonetheless paid by the taxpayers.
How Much Taxpayer Money Goes to “Private” Government Contractors and Grantees?
There are approximately three million non-military federal employees, counting the postal service. (There are over a million active-duty federal employees in the military.) On the other hand, there are more than five million contract workers, and another 1.8 to two million grant workers. (That was back in 2020.) A separate, more recent report shows that more than 7.5 million workers were federally funded by contracts and grants in 2023. In other words, these contract and grant workers far outnumber the “regular” federal workers. As shown by the Project on Government Oversight in 2017, “contractors have long been the single largest segment of Uncle Sam’s ‘blended workforce,’ accounting for between 30 and 42 percent of that workforce since the 1980s.”
(In millions of employees.) Source.
In terms of overall outlays, the amount spent on government grants and contracts is larger than the 800 billion dollars spent on Medicare.
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