Federal Resource Allocation Efficiency Audit

This report applies systems engineering methodology to quantify allocative inefficiency in U.S. federal spending. We define government efficiency as the rate of converting fiscal inputs into two terminal outcomes: after-tax real median income growth and median healthy life years. Analysis reveals the U.S. system operates at 52-67% efficiency versus 75-85% for OECD benchmark nations. Using Monte Carlo simulation across five subsystems (defense, healthcare, justice, regulatory/tax, and subsidies), we estimate an Aggregate Efficiency Gap of $1.85-3.47 trillion annually (P5-P95 range, mean $2.27T). Closing this gap to OECD median levels would recover approximately $1.5 trillion per year. The economic equivalent of current inefficiency equals 22.7 million QALYs or 165,700 VSL-equivalents annually.