NCPA - National Center for Policy Analysis

Government Spending Most Since World War II

April 19, 2004

Washington is projected to spend $21,671 per household in 2004 -- the most since the Second World War, and $3,500 more than in 2001. A new study by the Heritage Foundation questions whether Americans are getting their money's worth.

The study found that not only are federal spending levels high, they are also outstripping tax revenues. In 2004, tax revenues reached $16,981 per household, leaving a deficit of $4,690. The bulk of the spending -- about 69 percent -- goes to Social Security, Medicare, defense, and low-income support programs:

  • The average household spent $7,165 on Social Security and Medicare -- when the baby boomers retire, the burden on existing workers will cost an additional $5,200 per household by 2030.
  • The defense budget, covering everything from military salaries to operations overseas, costs households an average of $4,240 per year.
  • Households spend $3,479 on low-income programs such as Medicaid, which provides health care to poor families, food stamps, housing and child care subsidies, and welfare.

Adding to these outlays is $1,460 for interest on the federal debt. Today, Washington is $7 trillion in debt, $4 trillion of which is owed to the public in bonds and the rest to other federal agencies. Record-low interest rates have reduced the interest payments by $1,000 per household over the past six years. The Heritage Foundation warns that, as interest rates climb back to normal levels, so will the costs to taxpayers.

Additionally, taxpayers also spend $583 per year on education. Though primarily a state and local function, 8 percent of education spending comes from Washington -- an increase of 76 percent since the 2001 enactment of the No Child Left Behind Act. Other recipients of household spending include $835 annually for federal employee retirement benefits and $619 for health research and regulation.

Source: Brian Riedl (Heritage Foundation), "Where Do Your Taxes Go?" Miami Herald, April 17, 2004.


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