Federal Government Spending

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2010 U.S. Federal Budget - by category of spending

2009 U.S. Federal Budget - by category of spending

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THIS TABLE NEEDS TO BE FORMATTED AND UPDATED.

U.S. Federal Government Expenditures by Category
(Billions of dollars)
Fiscal Year
Total Expend-itures
National Defense
Inter-national Affairs
Health
Medicare
Income Security
Social Security
Net Interest
Other
2006
estimates
2,567.6
447.4
38.4
268.4
345.7
359.5
544.8
211.1
352.2
2005
estimates
2,479.4
465.9
32.0
257.5
295.4
350.9
519.7
177.9
380.1
2004
2,292.2
455.9
26.9
240.1
269.4
332.8
495.5
160.2
311.3
2003
2,159.9
404.9
21.2
219.6
249.4
334.4
474.7
153.1
302.6
2002
2,011.0
348.6
22.4
196.5
230.9
312.5
456.0
170.9
273.2
2001
1,863.0
304.9
16.5
172.3
217.4
269.6
433.0
206.2
243.3
2000
1,789.1
294.5
17.2
154.5
197.1
253.6
409.4
222.9
239.8
1999
1,701.9
274.9
15.2
141.1
190.4
242.4
390.0
229.8
218.1
1998
1,652.6
268.5
13.1
131.4
192.8
237.7
379.2
241.1
188.8
1997
1,601.2
270.5
15.2
123.8
190.0
235.0
365.3
244.0
157.4
1996
1,560.5
265.8
13.5
119.4
174.2
229.7
349.7
241.1
167.3
1995
1,515.8
272.1
16.4
115.4
159.9
223.7
335.8
232.1
160.3
Source: Economic Report of the President, Feb. 2005

The largest category of federal government expenditure is Social Security. Social Security is the government program that imposes taxes on wage earners and employers, and provides old-age, survivors’, disability, and medical benefits to workers covered under the Social Security Act. It is an example of a transfer payment. A transfer payment is a government payment not made in exchange for a good or service.

The second largest expense for the federal government is national defense. National defense includes both the salaries of military personnel and the purchases of military equipment, such as guns, fighter jets, and warships.

Another large category of federal government expenditure is income security, which includes most entitlement programs. Income security includes transfer payments to poor families. One program is Temporary Assistance for Needy Families (TANF), often simply called “welfare.” Another is the Food Stamp program, which gives poor families vouchers that they can use to buy food. The federal government pays some of this money to state and local governments, which administer the programs under federal guidelines.

The federal government also spends billions of dollars each year for interest payments on borrowed funds. If the government fails to collect enough revenues to cover annual expenditures, it borrows funds to pay its bills. Funds are borrowed from American and foreign citizens, foreign governments, and U.S. government agencies. For example, the Social Security system is designed to collect more in Social Security taxes now than it needs to pay current benefits. The additional Social Security funds are collected now to help pay for the huge increase in Social Security benefits that is expected in the future. The federal government borrows some of these Social Security funds to pay current general expenses. Unless these funds are repaid, however, they will not be available to pay future Social Security benefits. Net interest is the amount the government pays on loans from the public. It does not represent the gross interest due on the entire public debt.

Medicare is the government’s health plan for the elderly. Spending in this category has risen substantially over time for two reasons. First, the elderly population has grown more quickly than the overall population. Second, the cost of health care has risen more rapidly than the cost of other goods and services.

Health spending includes Medicaid, the federal health program for the poor. It also includes spending on medical research, such as through the National Institutes of Health.

If Medicare and health expenses are added together, however, they would make up the second largest federal government expense.

The “other” category includes the federal court system, the space program, farm-support programs, and the salaries of Congress and the president.

Attempts to reduce spending on most of these categories face stiff opposition from some constituents. Of the major expenditure categories, decreased spending on net interest probably faces the least opposition. A reduction in net interest spending can be achieved by a reduction in the public debt. The public debt can be reduced if the federal government collects more in revenues than it spends.