Why US federal agency spending has outpaced inflation — despite headcounts dropping billions fly out the door

Federal agencies and departments are spending more of your money than ever — far above the rate of inflation over the past quarter-century, despite headcount dwindling by as much as 26.7% from max staffing levels, a new study shared with The Post has found.

The study by non-profit Open The Books comes as part of a broader effort to map out the federal bureaucracy amid the Department of Government Efficiency’s crusade to root out waste and bloat.

“At the major agencies, we’re finding a troubling pattern,” Open The Books CEO John Hart told The Post. “While the bureaucratic ranks have remained relatively steady, spending has soared in recent decades.

“This begs the question: Where is all this taxpayer money going?”

One explanation is the rise in federal aid transfers to states and other government subsidies that don’t require significant manpower to carry out, according to Chris Edwards, Kilts Family Chair in Fiscal Studies at the Cato Institute.

“Back in the 1960s, [the government] mainly did stuff in-house,” Edwards said. “These days … you get all this explosive growth in these benefit and subsidy programs, and that seems to be what they’re reflecting in their data.”

“The head count might be smaller, but all that means is you have a slightly slimmer bureaucracy that’s administering much, much, much, much larger programs,” said Hayden Dublois, data and analytics director at the Foundation for Government Accountability.

Since 2001, the US has experienced cumulative inflation of around 80%, according to data from the US Bureau of Labor Statistics. Open the Books found that spending growth at key agencies far surpassed that level.

Here are a few notable findings from the study:

EPA: Headcount down 13%, spending up 469.5% 

Two decades ago, the Environmental Protection Agency had roughly 18,596 employees on staff. By 2024, that number had dropped to 16,450.

During the same timeframe, EPA spending jumped from $7.2 billion in 2000 to more than $41.1 billion in 2024, a 469.5% increase.

Edwards described the EPA as a “good example” of the mission creep phenomenon in the federal government.

“EPA used to be just a regulatory agency,” he said, “but now the EPA spits out a huge amount of subsidies to state and local governments.”

“What is going on, partly,” he added, “is that agencies that didn’t use to hand out subsidies, like the EPA … [now function] a regulatory agency, plus it hands out subsidies.”

The sharpest rise in EPA spending began around the onset of the COVID-19 pandemic in 2020 and spanned through 2024, when its outlay soared from $8.7 billion to $41.1 billion in a four-year stretch.

“Spending grew explosively during COVID,” said Edwards, citing a slew of emergency programs approved by Congress. “And it should be falling out, but it’s not. It’s stayed high. So we’re at a new higher plateau.”

President Trump’s administration has moved to trim down the EPA’s budget, with administrator Lee Zeldin pushing to claw back some $20 billion in funding from the Inflation Reduction Act that was appropriated for carbon reduction projects.

FCC: Headcount down 21.6%, spending up 1,094.6%

Back in 2000, the Federal Communications Commission had 1,956 people on its payroll; by 2024, that number had plunged to 1,534, marking a decrease of about 21.6%.

Spending at the FCC simultaneously soared from $2.4 billion to $28.4 billion during the same period, a whopping 1094.6%.

State Department: Headcount down 26.7%, spending up 457.7%

At the start of the millennium, the State Department employed 19,495 workers before headcount sank to 14,316 last year, a 21.6% decline.

State Department spending, however, grew 457.7%, starting at $6.7 billion in 2000 and ending at $37.2 billion in 2024.

The Trump administration has identified some 4,100 grants worth about $4.4 billion to cut at the State Department, the Daily Wire reported last week.

Department of Energy: Headcount up 6.7% , spending up 288.7%

One exception to the trend of federal workforce reductions since the turn of the millennium is the Department of Energy, which actually saw its headcount increase from 15,787 employees in 2000 to 16,846 in 2024, a 6.7% increase.

During that same stretch of time, the department’s budget rocketed from $15 billion to $58.3 billion, a surge of about 288.7%.

The Open The Books study was partly inspired by discrepancies auditors uncovered in the Federal Register, which records federal regulations and other data.

Investigators found that at least 75 of 441 government departments and agencies were listed in the register incorrectly — some of which had been renamed, phased out, or merged with other entities.

So far, Open The Books has mapped out spending at almost five dozen federal organizations.

With Trump attempting to slim down the government through DOGE, Dublois cautioned that executive actions alone won’t be enough.

“At the end of the day,” he said, “Congress is going to need to tighten that belt as part of the budget reconciliation process and find opportunities to right-size major government programs.”