How US Tax dollars are spent.

by wchurchill Thu Apr 12th, 2007 at 03:47:04 PM EST

This is an interesting overview of how US tax dollars are spent--taxes collected at the Federal, not state, level, such as income tax, capital gains, social security, medicare, etc.

Most of the spending is for commitments that are already made:

About 70 percent of the annual budget pays for commitments already incurred -- everything from Social Security benefits to interest on the national debt. Neither President Bush nor Congress has much say over that.

The social safety net portion of the budget has grown over the years.

In fact, all government payments to individuals amount to about 58 percent of the budget. That's twice the share of the budget such payments claimed 40 years ago. And the percentage continues to climb -- giving those pushing reform of such entitlement programs a powerful argument.

Interest of the national debt has increased over the Bush presidency, surprise, surprise,

Interest on the debt claims about 10 percent of the budget. When President Bush took office, the national debt was $5.6 trillion, but deficits have pushed that number closer to $9 trillion today.

The military spending is the largest portion of what's left after commited spending.

The military gets the biggest piece of what's left -- the 30 percent of the budget called discretionary spending because it's the part of the budget that Congress and the White House can control from year to year.
<snip>
You might think a fifth of the federal government's total spending is a lot to put into defense. But in comparison to some earlier periods in our country's history, it's actually a smaller share. During President Ronald Reagan's defense buildup, the military claimed 26 percent of the budget. And at the height of the Vietnam War in 1968, 46 cents of every tax dollar Americans paid was for defense.

The US will spend more than it collects

This year, the federal government will spend about $200 billion more than it will take in. Next year, the deficit will run about $300 billion. Coincidentally, that's just about the same amount that the government figures it's being stiffed by individuals and companies who don't pay all the taxes they owe, either by intent or by error.

Assuming roughly a $12 trillion US economy, these deficits represent 1.7% and 2.5%, both under the 3% maximum used by the EU as a goal.

How US Tax dollars are spent. | 10 comments (10 topical, 0 editorial, 0 hidden)

Re: How US Tax dollars are spent. (none / 1)

I think the American economy is pushing $13tn, at this point.

That's the on-budget deficit, though, which does not take into account spending the Social Security surplus or the emergency packages on Iraq, which together add a solid $250bn, or more, to the deficit. Let's call it $500bn. Divide it out and you get 3.8% of GDP -- not terrible, but the increase in the debt is, nonetheless, beating the growth rate with those figures, so the debt is becoming more difficult to pay off.

Two things are working in favor of budget hawks: Everybody knows the war is going to be over soon. Whether it happens under Bush or the next president is anybody's guess. (I think it's going to happen under a President Edwards or Obama, personally.) The other bit is that different parties control Congress and the White House, and the utter arrogance of the White House is as close to a guarantee of deadlock as you'll ever get, I'm betting.

One way or another, the deficit must necessarily fall relative to national income because of the PAYGO rules.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Fri Apr 13th, 2007 at 08:58:49 AM EST

Re: How US Tax dollars are spent. (none / 0)

I think you are right on the military spending. To this point additional funds have been added in supplemental bills for Iraq.

And I also like breaking out social security from other spending.

however, for the purpose of comparing our spending to other countries, I don't think we should break out the social security trust funds. Other countries such as those in Europe are also on a "pay as you go" system for funding pensions, as i understand it. Perhaps someone with more knowledge of those systems than I could elaborate on this point, but I believe they are committed to paying pensions of future retirees from future tax revenues, as is the US effectively. Legally of course the US has a limit on paying retirees, in the sense of keeping a scorecard of money that has gone into the system, and legally that is all the country has to pay. but in reality, it's hard to see social security benefits being cut by 40% in 2044 when the tally sheet shows no money left. I imagine the US is in the same boat as most European countries in that all will have to address this issue sometime with a mixture of programs such as raising taxes, reducing benefits and extending the retirement age.

by wchurchill on Fri Apr 13th, 2007 at 12:24:20 PM EST
[ Parent ]

Re: How US Tax dollars are spent. (none / 1)

Here's a nice graphic for your edification:

Pie Chart

Discussions of the budget are distorted by the slight of hand LBJ performed to hide the true cost of the Vietnam war. He moved dedicated trust funds into the budget.

The federal government has two broad functions. In one case it spends money for national programs (like the army or the federal highway system), in the other it acts as a collection and disbursement agent. The funds collected are dedicated to a specific program (like Social Security) and the government's function is strictly administrative. I call these government-administered programs. By tossing these into the budget the fraction spent on militarism is understated.

As you can see from the chart cited in reality about half of the federal discretionary budget is spent on militarism. The distortions to the economy are obvious to anyone who wants to see it. Underfunded education, health services, infrastructure, massive foreign debt, and a trend towards social control at all levels because of "security" needs.

Unchecked you get either Russia or Prussia - neither ended well.

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Fri Apr 13th, 2007 at 10:03:41 AM EST

Re: How US Tax dollars are spent. (none / 1)

While in agreement in general with these statements, I would continue to use the term "national defense" to describe the military budget. One could make a fair argument that the war in Iraq and similar misadventures is more "militarism", than national defense, but that is only one aspect of the national defense budget and relates less to the cost of national defense than to political decisions made by the current administration.

Clearly, the national defense budget might be trimmed somewhat if we were not involved in unnecessary conflicts all over the globe, but pure national defense is an expensive game not easily tamed when the US is not the only participant. The current angst over our ability to support the wars in Iraq and Afghanistan has to do with the fact that our troop levels are the lowest (1.4 million) they have been in many years. However, the costs of troop deployment is expensive and new defense gadgets are not cheap.

I guess my point is that unless peace suddenly breaks out all over the world, defense costs will continue to be a large part of the national discretionary budget, military adventurism or not.

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears

by Gringo (stargazing camel at aoldotcom) on Fri Apr 13th, 2007 at 12:27:57 PM EST
[ Parent ]

Re: How US Tax dollars are spent. (none / 1)

Well one can define "defense" however one wishes, but I think it is a stretch to claim that our 750 overseas military bases are for defense.

In fact when it became necessary to actually defend the US territory the government established a new department to take on the task, "Homeland Security".

The role of the existing military structure is entirely external and works on offense. Along with the misdirection by incorporating social service funds into the federal budget was the Orwellian step of renaming the War Department the Defense Department.

No one is invading Germany and France and their military is a tiny fraction of the size of the US (even on a per capita basis). They also have no problem getting adequate supplies of needed raw materials from elsewhere - they just pay for them.

Sorry, our runaway militarism has gone way beyond what is needed for defense. Sugar coating or euphemisms just obscure what has been going on. Furthermore this has been an unbroken trend since WWII. The variations in spending from one administration to another have not been meaningful.

If you look at the CBO budget figures you will be hard pressed to figure out which party was in power:

http://cbo.gov/budget/historical.pdf

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Fri Apr 13th, 2007 at 01:46:57 PM EST
[ Parent ]

Re: How US Tax dollars are spent. (none / 0)

I agree that the US military budget is currently out of control and should be reduced. I would point out that until recent years many of our overseas military bases were established during World War II or the cold war and were very effective in countering Soviet and communist expansion. One can argue the fine points of this, such as whether the Soviets would have invaded Western Europe, taken over Berlin, or remained a power to be reckoned with until this day had it not been for the US and Western European stance (Europe currently has about 2 million men and women under arms if my sources are correct) during those years. However, it was the Western World's response to these perceived threats that necessitated US overseas troop basing. Have they stayed too long in some locations and in numbers too large? Perhaps. Do we really need bases in all of the former Eastern Bloc countries and Soviet republics? Maybe not. Have all the threats disappeared. Definitely not. Is the best defense a stay at home military? Some will undoubtedly argue yes. My personal opinion is that it is not, but in adopting this position I do not advocate wholesale establishment of US bases in every country that will accept them, nor do I endorse non-defensive military actions such as Iraq.

I do not question your comments about the ever increasing size of the military budget following WW II/Korea, but remember this was also the era of the Cold War and the arms race. While the arms race can be seen as wasteful (I see it that way), the US saw itself forced into the race by the Soviet Union (SU). Both nations spent large portions of their budgets on arms and other Cold War actions (the Soviets a much larger percentage). The greater peacetime increases have appeared since the Reagan era and dissolution of the SU and I, like yourself, find them difficult to justify .

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears

by Gringo (stargazing camel at aoldotcom) on Fri Apr 13th, 2007 at 10:39:22 PM EST
[ Parent ]

Re: How US Tax dollars are spent. (none / 0)

...new defense gadgets are not cheap.

You've got your pork right there. How many of these defence gadgets are necessary? How many work as advertised? How many include realistic oversight to check for value and ROI?

US military spending is largely a corporate welfare scam. It's not designed to defend anything or anyone. A lot of new technology simply doesn't work reliably, and when it does work it has minimal tactical or strategic impact.

The US lost in Vietnam, and it's losing in Afghanistan and Iraq. Hostile powers could easily take out the most of the US information and power infrastructure in minutes.

A clever hostile power could hide the origin of the attack so there would be no one obvious to retaliate against.

What are those trillions buying in the way of stability or safety?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Apr 14th, 2007 at 12:30:28 PM EST
[ Parent ]

Re: How US Tax dollars are spent. (none / 0)

In France total amount of tax fraud recovered by the tax authorities represent 40% of the budget deficit. Then total fraud has been estimated conservatively as way above the deficit.

75-80% of recovered tax fraud amount is from businesses.

Bush has been known to effectively make it impossible for tax authority to do their work:

http://www.eurotrib.com/story/2006/8/20/174649/257

http://maxspeak.org/mt/archives/002818.html

How US Tax dollars are spent.

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