What Do We Pay For?
Let’s start with the big picture.
In 2011, the three biggest expenses of the federal government were:
Social Security & other income support: $1,338 trillion (37.4% of all federal spending)
Medicare & other health care: $868 trillion (24.3%)
Department of Defense & other military: $839 trillion (23.5%)
Net interest was 3.3% of total spending, which left just 11.5% of the federal budget for everything else – including transportation, education, scientific research, social services, prison systems, international relations, economic development, agriculture, energy, housing, and the environment.
The federal budget is constantly in flux, due to political jockeying and changing external realities. This makes life difficult for government employees and contractors and customers, who can’t make stable plans until they know what they can pay for.
Any of the various versions can, however, be used to get a big picture vision. There are discrepancies between different versions, but the gestalt is the same. My summary is based on the 2011 budget as presented by the Government Publications Office in May 2011.
More details are below. But the big picture alone has, I think, two important messages.
(1) It is impossible to reduce federal spending a lot unless we focus on the three big ticket items. Even if you, for example, think that our agricultural subsidies, extension services, and other programs are a complete waste of money, that’s only $82 per American per year. Cutting agricultural services completely wouldn’t save anyone a lot of money. (See more about Social Security, health care, and military spending.)
(2) The “small stuff” category includes a huge range of programs that American people and American businesses need to thrive. In the grand scheme of things these programs don’t cost very much. The entire federal justice system, for example, costs just $176 per person per year – roughly the price of 30 minutes of a lawyer’s time. A business can easily lose thousands of dollars, or hundreds of thousands of dollars, waiting for a slow court decision. Similarly, federally funded R&D has time and again provided the basic research that has made our industries innovative, profitable, and world-changing. We spend only $99 per person per year on science, space, and technology. That’s a really good bargain! But it might well be a better bargain if we spent more.
Asking how to spend our shared resources well is always a worthy question. But if we care about the health of the American economy, then cutting these essential but small-budget items is often extremely counter-productive. And spending more on many of them could be quite cost effective. (See some suggestions in Where Government More Than Pays for Itself,)
Total Federal Spending: $3,575,149 million ($11,459 per capita)
DOD & Other Military: $839,384 million (23.5% of all spending, $2,690 per capita)
Social Security: $735,546 million (20.6%, $2,358 per capita)
Income Security, not including Social Security: $602,024 (16.8%, $1,930 per capita)
Medicare: $494,783 million (13.8%, $1,586 per capita)
Health Care, not including Medicare: $373,575 million (10.4%, $1,197 per capita)
Net Interest & Income: $118,863 million (3.3%, $381 per capita)
Transportation: $92,673 million (2.6%, $297 per capita)
International Affairs: $69,665 million (1.9%, $223 per capita)
Administration of Justice: $54,832 million (1.5%, $176 per capita)
Education: $50,549 million (1.4%, $162 per capita)
Natural Resources & Environment: $38,495 million (1.1%, $123 per capita)
Science, Space, & Technology: $31,032 million (0.9%, $99 per capita)
General Government: $28,967 million (0.8%, $93 per capita)
Community & Regional Development: $26,247 million (0.7%, $84 per capita)
Agriculture: $25,594 million (0.7%, $82 per capita)
Social Services: $17,874 million (0.5%, $57 per capita)
Training & Employment & Labor Services: $10,425 million (0.3%, $33 per capita)
Energy: $9,064 million (0.3%, $29 per capita)
Commerce & Housing: -$44,443 (-1.2%, -$142 per capita) Yes, this category turned a profit, due largely to returns from the Troubled Asset Relief Fund.
In case you want even more details …
Numbers are millions of dollars. Percents are percent of federal spending.
National Defense 839,384 23.5%
DOD: Personnel 151,826
DOD: Operations & Maintenance 294,122
DOD: Procurement 134,165
DOD: Other 105,059
Veterans’ medical care 50,776
Veterans’ pensions & other income security 55,068
Veterans’ education & training & readjustment 10,261
Other veterans’ services 7,749
Atomic energy defense activities 17,255
FBI 4,410
Other 8,693
Social Security 735,546 20.6%
Old age and survivors benefits (off-budget) 600,680
Disability insurance (off-budget) 129,152
Administrative expenses (off-budget) 5,797
Other (on-budget) (83)
Income security (other than Social Security) 602,024 16.8%
Federal employee retirement & disability 128,650
General retirement & disability (railroad etc.) 8,113
Unemployment compensation 135,557
Housing assistance 50,185
Food & nutrition assistance 105,621
Supplemental Security Income (SSI) 55,999
Other income security 117,899
Medicare 494,783 13.8%
Hospital insurance 259,947
Supplemental medical insurance 231,179
Prescription drugs 66,082
Administrative expenses 7,330
Premiums & collections (69,755)
Health (Other than Medicare) 373,575 10.4%
Grants to states for Medicaid 260,783
Children’s Health Insurance Program 13,504
Other health care services 61,621
Health research & training 33,231
FDA, OSHA & other consumer & occupational health & safety 4,436
Interest & Income 118,863 3.3%
Interest paid on Treasury bills 430,437 12.0%
Other interest, paid and received (225,011)
Other income (86,563)
Transportation 92,673 2.6%
Highways 44,278
Mass Transit 10,773
Railroads 4,400
Other ground transportation 648
Air transportation 22,006
Water transportation 10,158
Administration & other 410
International Affairs 69,665 1.9%
Development & Humantiarian 22,924
Security Assistance 13,398
Conduct of Foreign Affairs 14,703
Information & Cultural Exchange 1,555
Export-Import Bank 3
Mandatory 17,082
Administration of Justice 54,832 1.5%
Border & transportation security directorate 22,322
Federal judiciary 13,449
Federal prison system 7,627
Other 11,434
Education 50,549 1.4%
Education for the disadvantaged 15,914
Special Education 12,587
Other elementary, secondary, & vocational education 12,556
Higher education: student financial assistance 1,832
Higher education: other 3,805
Corporation for Public Broadcasting 516
Library of Congress, Smithsonian, etc. 3,339
Natural Resources & Environment 38,495 1.1%
Water resources 6,454
Conservation & land management 12,090
Recreational resources 3,683
Pollution control & abatement 9,977
Other (discretionary & mandatory) 6,291
Science, Space, & Technology 31,032 0.9%
General science & basic research 12,709
Space research & operations 18,223
Mandatory 100
General government 28,967 0.8%
Tax administration 11,507
Other (Congress, executive branch, etc.) 17,460
Community & Regional Development 26,247 0.7%
Disaster relief & insurance 16,404
Other 9,843
Agriculture 25,594 0.7%
Crop insurance 6,994
Commodity Credit Corporation 7,941
Tobacco Trust Fund 960
Other farm income stabilization 4,654
Research & services 5,045
Social Services 17,874 0.5%
Training & Employment & Labor Services 10,425 0.3%
Energy 9,064 0.3%
Energy conservation & renewables 2,313
Nuclear R&D 787
Nuclear waste 209
Fossil energy 696
Electricity delivery & reliability 166
Emergency preparedness 255
Policy & regulation 458
Other discretionary 2,630
Tennessee Valley Authority 1,048
Recovery Act grants in lieu of energy tax credits 4,754
Other mandatory (1,939)
Commerce & Housing (44,443) -1.2%
Regulatory agencies 341
Troubled Asset Relief Fund (42,774)
Federal Housing Administration & other mortgage credit (12,096)
Deposit insurance (8,482)
Postal Service (228)
Other advancement of commerce (23,637)
Back to Our Country’s Finances
Or other topics that might be of interest …
Where Government More Than Pays for Itself : Which programs are especially cost-effective?
Health Care Inflation : The crux of the problem
Social Security : Not the problem, not the solution, but needs tweaking
Military Spending : How do we make it best serve our country’s interests?
Economic & Environmental Sustainability : The economic implications of environmental changes
Our Current Tax System : Where we are now
Raise Our Taxes! : Testimony before the Massachusetts’ Legislature’s Joint Committee on Revenue
Thought Pieces : Articles by other people that got me thinking
Bibliography : Books worth knowing about
Organizations : Where to get more information and/or move into action