Government Spending

How Much does the US Government Spend?

As of 12-2020
* Spending shown for the budget years each President was responsible for
On average, federal spending is about 20% of the size of the economy (the Gross Domestic Product or GDP)
In 2019 federal spending was 21.1% of GDP
Over the last 40 years:
  • Defense spending is down (from 4.7% to 3.1% of GDP)
  • Non-defense spending is down (from 5.0% to 3.2% of GDP)
  • Mandatory spending for Social Security, Medicare & Medicaid is up (from 9.2% to 13% of GDP)
  • Interest spending is about the same at 1.8% of GDP
In 2020 federal government spending was 31% of the GDP. This included new spending associated with economic support due to COVID-19, unemployment, and a reduced GDP.
Does the US spend too much? What does the government spend money on? How much is the government spending? What is the US defense budget?

How has Spending Changed Across Presidents?

As of 2-2020
  • Across all administrations, Mandatory spending for Social Security, Medicare and Medicaid has grown steadily. This has decreased the share of the budget for all other spending categories.
  • Spending on Defense and Non-defense is approximately equal at 15% of the budget. But both have decreased as a share of the budget due to the increasing requirement for Mandatory spending (Social Security, Medicare, Medicaid, & Other).
  • Interest payments are down due to lower rates, but are starting to increase again due to increases in the National Debt.
How much does the US spend on military? How much does the US spend on social security? How much does the US spend on interest? Do democrats spend more? Do republicans spend more? How much does the US spend on welfare?

Why is there such an increase in Mandatory Spending?

As of 2-2020
  • Medicare and Medicaid costs have increased more than 3-fold (growing from 1.6% to 5% of GDP in 2019) due to signficant inreases in healthcare costs over the past 40 years
  • The Congressional Budget Office projects these costs will rise to 12% of GDP by 2050
• Social security costs have begun to increase from around 4.1% to 4.9% of GDP in 2019
  • Significant increases in federal spending on Social Security are projected as the baby boom generation retires (from 44 million in 2010 to 73 million in 2030)
  • These costs are expected to rise to 6.3% of GDP by 2024
• Other means tested entitlements have grown from around 1.1% to 1.7% of GDP
  • Includes aid for low-income such as nutrition programs for children (SNAP), Pell grants, Children's Health Insurance Program (CHIP), temporary assistance for needy families, Earned income Tax Credits, COBRA, veteran's assistance, and Affordable Care Act Subsidies
• Other remaining expenditures have dropped from 3.1% of GDP 1980 to around 1.9% in 2019
  • Includes federal retirements, agriculture subsidies, deposit insurance, and Fannie Mae/Freddie Mac
Why is mandatory spending increasing? How much has social security spending increased? How much does the US spend on welfare? How much are medicare costs increasing?

What do we Spend our Defense Money on?

As of 2-2020
  • Defense spending was 15% of the Federal Budget in 2019
  • The majority of defense money is spent on military personnel and current operations (59%)
  • Another 33% is spend on modernizing the force to replenish equipment and maintain technological superiority, including spending for R&D and procurement
Defense Spending has gone down from 4.7% of GDP in 1980 to 3.1% of GDP in 2019 The US Military has declined from over 2.2 million people in 1989 to less than 1.4 million in 2019. We still have the highest military spending compared to other countries. **
The US has the 3rd largest miliary in the world. In comparison:
  • 1st - China has the largest military at 2.2 million military personnel
  • 2nd - India has 1.44 million military personnel
  • 4th - North Korea has 1.3 million military personnel
  • 5th - Russia has 1 million military personnel ** **(Data Source: World Atlas)
Why do we spend so much on military? How does US military spending compare to other countries? Who has the biggest military?

What do we Spend Non-Defense Money on?

As of 2-2020
  • Non-Defense Spending includes all other functions of the government besides Defense, Mandatory, and Interest
  • It was 15% of the Federal Budget in 2019
What is non-defense spending? What does the government spend tax money on? How much does the government spend on education?

What do we Spend our Tax Dollars On?

As of 2-2020
U.S. Tax Dollar (2019 Expenditures)
WHAT DO WE SEPND ON EDUCATION? What do we spend on prisons? What do we spend on research? What do we spend on foreign aid? What do we spend on welfare? What do we spend on education? What do we spend on the environment? What do we spend on the post office? What do we spend on agriculture? What do we spend on transportation?

How is Federal Spending Projected to Change?

As of 8-2020
  • Federal Spending will remain at over 20% of GDP for the foresable future

  • Federal Spending is projected to increase by another 10% of GDP over 2019 spending levels by 2050
  • Due to projected required increases in Mandatory Spending and Interest on an increasing National Debt
  • Even if Defense and Non-Defense spending both decrease from current levels (to 2.8%)
  • If all Defense and Non-Defense spending were to be completely eliminated, Federal Spending will still increase by another 4% of GDP Either the Federal Debt will continue to grow substantially or increases in revenue will be needed

Why do we spend so much on military? How does US military spending compare to other countries? Who has the biggest military?

Spending Bottom Line

As of 6-2020
US federal spending has hovered at around 20% of GDP over the past 40 years:
  • As costs for healthcare and the number of retirements have grown, a greater portion of the federal budget has been directed towards mandatory spending (61%).
  • Federal Spending on both Defense and Non-Defense are down to historic lows of around 3.2% of GDP.
  • Approximately 16% of Federal spending goes back to the states or local governments in the form of grants

Future Spending:
  • Future increases in Mandatory spending and Interest on the debt will raise this portion of the budget to almost 80% of the Federal Budget by 2050
  • Total federal spending will need to increase from 21% to over 31% of GDP to maintain current Defense and Non-Defense services