If you think the so-called Department of Government Efficiency (DOGE) is saving some of your hard-earned tax dollars, then you don’t understand money.
The federal government, being the issuer of the U.S. dollar, creates new dollars from thin air every time it spends. It does this by using a computer to mark up the size of one account or another at one bank or another. Note that it does not call the IRS and ask if they have some tax dollars available. No, every dollar of spending is a new dollar created from thin air by computer keystrokes.
So what happens to those hard-earned dollars you pay the tax man every year? What happens to them is exactly the opposite of what happens when the government spends. Instead of crediting a bank account (when spending), tax payments are simply debited from bank accounts, and those dollars simply vanish into thin air.
That might be difficult to fathom at first, but it’s true. When the government spends, the money supply grows. When taxes are collected, the money supply shrinks.
The government does not need your tax dollars, because it will simply create new dollars whenever it spends.
So why do we have to pay taxes? There are several reasons, but funding the federal government is not one of them.
The primary reason for taxes is to create demand for the currency. A government creates money in order to provision itself. It needs people to work for it, whether to build roads, stand up an army, build a courthouse, or whatever. First, the government imposes a tax liability that must be paid with the government’s currency; otherwise, someone might have to forfeit property or serve time in prison. Now, because everyone wants to avoid punishment, they all agree to use the government’s currency, and the government is able to hire the labor it needs. This also leads to the development of markets where people can trade goods and services in order to get the currency required to pay their own taxes.
Without that tax liability, people might decide to use a different form of money, such as Bitcoin, or none at all. (Bitcoin is not really money, but for this discussion we’ll pretend it is.) In that case, the government would be unable to hire anyone willing to work for its currency. Assuming you believe that a functional government is a good thing, that would be a real problem.
Another reason for taxes is to regulate the economy and to avoid inflation. If the government did not extract taxes from the public, the public might eventually accumulate enough money to spend beyond the productive capacity of the economy. That would lead to a bidding up of prices (inflation).
We can debate the correct level of taxation, but taxes are necessary, and tax dollars are simply deleted. They pay for nothing.
So when DOGE claims to be saving your tax dollars, it is lying. All it is doing, besides breaking the government with neither rhyme nor reason, is cutting spending that would otherwise support thousands of workers, their families, and their communities and provide essential services that benefit all of us.
Some people might prefer to have a dysfunctional government and see thousands of their neighbors out of work. As cruel and pointless as that might be, it is their right to think that. However, if anyone thinks that DOGE is protecting their precious tax dollars, then they simply don’t understand money.