Thursday, September 15, 2011

Government Spending

Sounds like a fantastically interesting blog post to come, eh?  Stick with me...I think you might find it more through-provoking than you think.

Before I start I want to make a few statements about the information below.  First of all, when I say "government spending," I'm talking about the United States federal government.  I am not talking about what an individual state government spends on any given program.  Secondly, I am obviously not going to cover every single government program in existence.  I'm just going to touch on the big ones and the "hot button" topics.  Third, what follows is by no means a scientific analysis of the federal budget.   I've basically gathered this information doing Google searches and am simply spelling out my findings.  If you want a thorough analysis, go buy a book or something.  And finally, the numbers below are not exact figures.  As anyone who has ever tried to make sense of the federal budget can attest, it is extremely complicated.  We like to compartmentalize things and simplify them, but in reality there's nothing simple about it.  For instance, we tend to think of "Welfare" as some official program that has a specific budget.  In fact, it's a whole slew of programs that have a wide variety of budgets and funding sources.  Social Security, for instance, is a form of welfare, but most people aren't thinking of Social Security when they think of "the Welfare program."

Okay, now on to the good stuff.

1.  Planned Parenthood.  Funding for Planned Parenthood has long been a hot button topic when it comes to government spending.  Opponents say it's a liberal program that spends enormous sums of money to help people get abortions and encourage teens to have sex.  Supporters say it teaches healthy sexual behavior and provides vital medical services to citizens.  Regardless of your opinion about Planned Parenthood, the fact is that about $350 million is spent by the government every year on this program.  Sounds like a lot, doesn't it?  In fact, if you compare that to the U.S. population, it averages out to about 1 dollar a year for every American.

Now, obviously, not every American is a tax-paying citizen.  A 5-year-old doesn't work, after all.  According to the IRS, something like 100 million people pay taxes every year.  So if you are a taxpayer, Planned Parenthood costs you about $3.50 every year.  Three dollars and fifty cents.  Per year.

It hardly seems worth complaining about, no?

2. NPR.  If all the time spent fighting Planned Parenthood over $3.50 a year seems silly, you'll really be shocked by this one.  This spring, there was a big fight about ending the federal funding of NPR, with conservatives saying it was money that could be spent better elsewhere, and liberals saying the conservatives just didn't like NPR because it's not FOXNews.  Regardless of your stance there, what most people don't realize is that this fight was over roughly 3 million bucks.  I call it "3 million bucks" intentionally, to imply what an infinitesimal amount of money this is, when compared to the federal budget.  Roughly $0.03 comes out of your paycheck every year to fund NPR.  That's 3 pennies.

By comparison, the amount of taxpayer money spent by Congress this spring to draft this legislation, debate it, and vote on it, probably cost more than the actual amount of taxpayer dollars spent to fund NPR for a whole year.  Think on that for a minute.

3. Medicare.  Medicare is always a popular topic in major elections and every candidate has his or her own opinion on what should be done about Medicare.  For our purposes here, I will simply note that it costs about $800 billion a year, and that number includes Medicaid, which provides health services for the poor and elderly.  This is roughly 23% of the total U.S. federal budget.  (This data, and the data the follows, is based on numbers from 2010).

4. Social Security.  Like Medicare, everyone has an opinion about this.  The government spends about $700 billion on Social Security every year, or about 20% of the total budget.

Together, Medicare and Social Security account for about 1.5 trillion dollars, or roughly 45% of the total U.S. federal budget.

7. Welfare.  This  is a biggie.  Eeee'rrbody wants to fix Welfare.  Too many hard-earned taxpayer dollars going to support losers who won't work.  The interesting thing about this is that there is no single government program called "Welfare."  "Welfare" is just a generic term referring to government money given to citizens.  Technically speaking, Social Security is a type of welfare, and so is Medicare.  For that matter, so is money given to people for disaster relief.  

So in order to define what I mean when I say "Welfare" (with a capital "W"), simply understand that I am specifically referring to government money that is given to poor people to help with their life expenses.  These officially include housing, food expenditures, and "other income security."  In 2009, those expenditure totaled about $285 billion.  That's a lot of money, no question.  But unfortunately, it doesn't actually tell the whole story.  Some of the programs included in that total are not specifically directed at the poor.  They are programs that are available to the poor, but they are also available to people who do not qualify as "poor."  Counting only those programs that give money to poor people, and only poor people, the number drops to about $190 billion dollars.

Still a lot of money, right?  But there's still more to the story.

Roughly 60% of that $190 billion goes to organizations which help the poor.  That means it is money being spent only indirectly on the poor.  If you count the actual amount of money given directly to the poor each year (i.e. "the welfare check," or food stamps, or government housing), the total is about 80 billion dollars.

There's no question that 80 billion dollars is a lot of money.  But it's only about 3% of the total amount of tax dollars received by the federal government every year (in 2008, that total was $2.7 trillion).  So if you want to simplify it, you can imagine that for every 100 dollars you give to the IRS every year, exactly 3 of those dollars goes directly to help the poor and indigent.

Anyone who has a problem with that probably needs to re-evaluate their opinion.    

6. Defense.  Defense spending is enormous, and includes everything from the Department of Homeland Security to the U.S. military.  It's budget is broken up into several parts, some of which are expenses associated with the Department of Defense, and some of which are expenses that come from outside the Department of Defense, but which are still classified as "defense" expenditures.  These would include things like money spent on FBI counter-terrorism, or the money paid to a doctor at a VA hospital for treating a soldier.

All together, defense spending costs taxpayers about 1.5 trillion dollars a year.  The same as Medicare and Social Security.  However, since Medicare and Social Security have more varied sources of funding than simply taxpayer dollars, the amount of actual taxpayer dollars that go to defense spending every year is something like 55% of all taxpayer dollars spent every year by the U.S. government.

That means that for every 100 dollars taken out of your paycheck and given to the IRS, roughly 55 of those dollars go to defense spending.

Let me repeat that:

55% of your taxpayer dollars funds defense spending every year. 

Compare that to the 3% that funds direct government assistance to the poor.

The ironic thing about this is that when people talk about the 14 trillion dollar budget deficit - or whatever it is right now - it's NPR and Planned Parenthood and Welfare that they want to cut out of the loop.  No one would dare suggest that maybe our defense spending is what's really eating up our tax dollars.  Don't get me wrong...I'm not suggesting we weaken our military or refuse to provide services like healthcare to veterans.  I'm simply saying that when people consider the debt crisis, it is ironic that the single biggest eater of American taxes gets totally ignored.  Defense spending is as great as Social Security and Medicare combined!!  And when you compare something like government assistance for the poor to these enormous consumers of taxpayer dollars, it's just a tiny little fraction of the total - a few percent!

What I hope my readers may take from this post is that it is very easy to get fixated on hot button issues and government programs that politicians like to criticize for political points, but the fact remains that when it comes to the U.S. budget crisis, things like Welfare and NPR and Planned Parenthood and half a dozen other programs are nothing but chump change to spenders like Medicare and Social Security and the biggest spender of them all, defense.

What's really scary is that in researching Tea Party groups for my last blog post, I found at least one that said it wants to increase military spending, while simultaneously decreasing taxes and balancing the budget.  Evidently they want a military junta to be in control of this country, because the military is all we could afford if we balanced the budget, lowered taxes, AND increased defense spending.


Anonymous said...

My brother-in-law once told me, on the eve of our trip to Europe: "It's like America, if we didn't spend all that money on defense." Suffice it to say I had a good time walking around Europe.

Trent N. said...

To Anonymous - I agree we tend to overspend on defense. HOWEVER, it is incredibly naive to think that the world would be "sunshine and lollypops" if America all the sudden decided to have the defense budget of say... Spain.

Over the past 70 years, had America NOT chosen to spend "all that money" on defense, then your quaint little vacation with your brother-in-law most likely would not have been to Europe, but instead to what would now be known as "Western Russia".

Scott said...

There are certainly good arguments on both sides of the debate when it comes to defense spending. A little moderation would be the right answer, I think.

We don't have to be Spain, but we don't need to be the military power of the universe either.

Of course, if people DO want to be the military power of the universe, then they have to pay taxes to support it.