Aren’t governments supposed to make things better?
Maybe that question is too broad, but it seems like a valid one to ask at a time when the price of gasoline and the unemployment rate feel like they’re in direct competition to see which one can rise higher faster. And all of this at a time when the increased population would seem to mean more tax dollars to spend on the things that we need.
In 2011, the federal government spent $3.6 trillion dollars, and $2.3 trillion of that came from tax revenue. So, then: where is all of our tax money going? Most of the biggest spenders probably won’t surprise you all that much.
Healthcare – $769 billion. At 21% of the budget, healthcare is the single highest expenditure we have. That $769 billion might seem like a lot, but it includes three health insurance programs (Medicare, Medicaid, and the Children’s Health Insurance Program) that combined cover over 100 million people – close to a third of the population of the United States.
Who’s getting this government help? Medicare goes to people over 65 or who have disabilities, while Medicaid and CHIP cast a wider net that helps to ensure the health of kids and parents from low income families, as well as those with disabilities and the elderly. And before you start to argue that states need to pick up the bill, both CHIP and Medicaid only work if states give them matching funds.
Social Security – $731 billion. Around 56 million retired workers, spouses and children of retired workers, surviving children and spouses of deceased workers, and disabled workers and their eligible dependents received retirement benefits in December 2011. The national average for Social Security benefits is $1,229 per month, which comes out to just under $15,000 each year for retirees to live off of. Yes, it’s a lot of money, but it’s not exactly like Social Security is giving people enough money to live out their Golden Years like kings.
Defense spending – $718 billion. Arguably, defense spending is for all Americans, so if you were going to list the number of beneficiaries, it would include our entire populace of over 300 million. What’s not arguable, though, is that we spent $159 billion in 2011 supporting the military operations in Afghanistan and Iraq, and it’s difficult to say which taxpayers are directly benefiting from that – perhaps all of us, perhaps none. We just have to wait and see how things pan out.
Three areas, and they account for over 60 percent of our tax money. Add in low-income assistance programs and (wait for it) interest that we owe on the national debt, and that number starts to hover near 80 percent. So, what’s not getting our money?
Science and medical research – 2%. The United States of today never would have been the first country to the moon spending a paltry 2% of the budget on scientific research. And that’s all research, not just space. Wonder why we’re not curing any more diseases or making all kinds of scientific breakthroughs? The answer comes in dollars and cents.
Education – 2%. But hey, there’s no point in funding research in science and medicine if no one is trained to implement that research, and that’s where we’re headed spending only 2% of the budget on education. And this doesn’t just include primary and secondary schooling, but also vocational studies and job training programs. Maybe unemployment is so high right now partially because the workforce just isn’t trained to do that jobs employers need.
Transportation – 3%. Our highways, bridges, and mass transit systems are falling apart even as oil jumps up in cost and evidence grows that gas-fueled personal automobiles damage the environment and our air quality. Why aren’t we doing more to stop this from happening? Because too little money has been allocated to solve all of the problems we have.
Of course, it is way too easy to demonize the federal government for doing things wrong, and far harder to come up with an actual plan that puts money where it needs to go. Yes, we likely need to spend more on science, education, and transportation, but where does it come from? It is only by knowing where our money is actually going that we can make informed decisions and try to implement realistic change.
About the Author: Joyce Del Rosario is part of the team behind Open Colleges. It is one of Australia’s pioneers and leading providers of Accounting courses and Bookkeeping Courses. When not working, Joyce enjoys blogging about health and finance.
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.
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