Federal Government Expenditures

Congress submitted a nearly $4 trillion spending budget for fiscal year 2016. These expenditures, as well as ones of selected years since 1940, are included in the following table. The table shows that in nominal terms, the size of the federal government in 2016 is more than 400 times greater than in 1940. After adjusting for inflation, the size of the government is more than 25 times greater than in 1940. This is an increase of 2,500%. Social Security, Medicare, Medicaid, unemployment and welfare programs, defense, and interest on the debt have experienced the largest increases.

 

Federal Government Spending Category 1940 1950 1960 1970 1980 1990 2000 2007 2009 2011 2013 2014 2015 2016 (est.)
National Defense 1.6 13.7 48.13 81.69 134 299.3 294.4 551.0 661.0 705.6 660 603 590  604
Social Security .03 .78 11.60 30.27 118.5 248.6 409.4 586.2 683.0 730.8 818 850 857  929
Income Security (Unemployment, Housing, food stamps, Federal Retirement, Welfare Spending, etc.) 1.5 4.1 7.38 15.65 86.5 147.0 253.7 366.0 533.2 597.4 564 514 509  528
Medicare 0 0 0 6.21 32.1 98.1 197.1 375.4 431.1 485.6 511 512 546  595
Health (Medicaid, Research, OSHA, etc.) .06 .27 .80 5.91 23.2 57.7 154.5 266.4 334.3 372.5 372 409 482  526
Total Net Interest on the Debt .9 4.8 6.95 14.38 52.5 184.2 222.9 237.1 186.9 230.0 223 229 223  240
Education and training 1.9 .24 .97 8.63 31.8 38.8 53.8 91.7 79.7 101.2 85 91 122  114
Veterans’ benefits and services .57 8.8 5.44 8.68 21.2 29.1 47.1 72.8 95.4 127.2 140 150 160  178
Transportation .39 .97 4.13 7.01 21.3 29.5 46.9 72.9 84.3 93.0 94 92 90  92
Agriculture and farm subsidies .37 2.05 2.62 5.17 8.84 12 36.5 17.7 22.2 20.6 27 24 19  26
Administration of justice .08 .19 .37 .96 4.58 10 28.5 41.2 51.5 56.1 61 50 52  64
Natural Resources and Environment 1 1.3 1.56 3.07 13.9 17.1 25.0 31.8 35.6 45.5 38 36 36  43
General science, space, and technology 0 .06 .60 4.51 5.83 14.4 18.6 25.6 29.4 29.5 31 29 29  31
International affairs .05 4.67 2.99 4.33 12.7 13.8 17.2 28.5 37.5 45.6 57 47 49  46
General government .27 .99 1.18 2.32 13.03 10.7 13.0 17.5 22.0 25.5 30 27 21  24
Community and regional development .29 .03 .22 2.39 11.3 8.5 10.6 29.6 27.7 23.8 38 21 21  28
Commerce and housing credit .55 1.0 1.62 2.11 9.4 67 2.0 5.1 291.5 -12.6 18 -95 -38  -27
Energy .09 .33 .46 1.0 10.2 3.3 -.76 -.86 4.7 12.2 15 5 7  7.5
Total* 9.5 42.56 92.2 195.6 590.9 1253.1 1789.2 2728.9 3,517.7 3,603.1 3,685 3,506 3,688  3,951

* The total does not add to the sum of numbers in the categories listed, because there are several
other small categories of spending not included in this table. Visit http://www.whitehouse.gov/omb/budget/Historicals/ (table 3.2) for more details.

The Top Six Federal Government Expenditures

Defense and Social Security are the largest government expenditure. The first “Baby Boomers” retired  around 2010 and many more will be retiring within the next decade. Therefore, the expenses for Social Security will further increase significantly. For information about the Social Security program, click HERE .

Because of the United States’s heavy war involvement and concern for other national security issues, defense spending is significant, even though it has decreased slightly the last several years.

Unemployment and Welfare spending includes non-Social Security retirement and disability spending, unemployment compensation, housing assistance, food and nutrition assistance and other income security. It was only $4.1 billion in 1950. In 2016 it is estimated to be $528 billion.

Medicare, the federal government health assistance program for persons 65 and older, is the fourth-largest federal government expense at $595 billion for the estimated 2016 budget. Further increases are on the horizon because of the increase in the elderly population.

Medicaid, federal government health assistance to the poor, and other health-related programs have more than doubled since the year 2000. It is the fifth-largest federal spending item.

Net interest on the debt, the amount of money that the government pays households and businesses for borrowing from them minus the amount of interest that the federal government receives, is the sixth-largest federal government expenditure. It fell in 2009 because of increases in interest received from trust funds and generally lower interest rates. Because of vastly increasing recent deficits and expected large future deficits, the net interest amount is expected to rise to $523 billion in 2020.

The Growth of the United States Government

Below is a table, which shows the changes in United States government expenditures (outlays) as a percentage of GDP during selected years. The last column shows the growth in the United States federal debt as a percentage of GDP.

The amount of federal government spending as a percentage of our total economy (GDP) has risen significantly during the past several decades. The percentage was near 20% during the 1980s, 1990s and most of the 2000s. After the 2008/2009 recession it averaged around 24%. In recent years it has come back down to approximately 21%.

The United States total federal debt as a percentage of nominal GDP has risen steadily and significantly during the past several decades. It is currently above 100%. A rising national debt will pose increasing financial burdens on future generations.

Year Federal Government Outlays as a Percent of nominal GDP Gross Federal Debt as a Percentage of GDP
1935 9.2 N/A
1940 9.8 52.4
1950 15.6 94.1
1960 17.8 56.1
1970 19.3 37.6
1980 21.7 33.3
1990 21.8 55.9
2000 18.4 57.8
2007 19.6 64.2
2008 20.7 65.5
2009 25 91.7
2010 23.8 96.7
2011 23.5 99.1
2012 23.7 100
2013 21.9 102
2014 20.1 103
2015 20.5 104.1
2016 20.7 104.5

Sources: www.bea.gov (nominal GDP) and www.usdebtclock.org (national debt)