Over the next several years, policymakers will face important choices about the level of government revenues. Since the government collects taxes in order to finance public services, it is useful to examine where tax dollars go when thinking about these crucial tax-policy decisions.
Source: U.S. Census Bureau
From the press release:
The federal government disbursed $2.45 trillion in domestic spending in 2006, according to two reports published by the U.S. Census Bureau. That represented an 7.5 percent increase in federal spending over 2005.
The first of the new reports, Consolidated Federal Funds Report: 2006 (PDF; 2.6 MB), provides a broad overview of how and where the federal government allocates funds. Statistics are provided for each federal department and agency, and presented by state, county and subcounty area.
The second report, Federal Aid to States for Fiscal Year 2006 (PDF; 3.7 MB), contains data on federal grants to state and local governments.
Defense spending totaled $400 billion in 2006. This amount includes procurement contracts, payroll, military pensions and grants. Department of Homeland Security spending totaled $57 billion.
Per capita spending among states was highest for Louisiana ($16,263). Mississippi was second ($14,516), followed by Alaska ($13,805). The states that received the lowest per capita distribution of federal funds were Nevada ($5,852), Utah ($6,162) and Minnesota ($6,175).
California received 10.3 percent of the total distribution of federal expenditures while Texas received 6.8 percent, followed by New York at 6.2 percent.
Nearly half of all domestic government spending (excluding interest on the federal debt) went to Social Security, Medicare and Medicaid, which accounted for $1.16 trillion. The one-year increase in spending for these three programs was approximately $170 for every person living in the United States.
The government spent $739 billion on retirement and disability. Of that amount, 80 percent, or $594 billion, went to Social Security. Social Security was comprised of retirement insurance payments ($350 billion), survivors insurance ($107 billion), disability insurance ($99 billion) and supplemental security income payments ($38 billion). The remaining federal dollars spent on retirement and disability went to civilian government workers’ retirements ($59 billion), military retirements ($36 billion) and veterans’ benefits ($34 billion).
Economists often refer to the U.S. trade deficit and the federal budget deficit as problems of inadequate domestic saving. They speak of these deficits “crowding out” domestic investment. They allude to unspecified relationships between these deficits but seldom explain them, confusing everyone.
The Center analyzes state budget issues including multi-state trends, the adequacy and equity of tax policies, structural budget issues, and budget transparency.
▪ Policy Points: Four Helpful Hints for States Dealing With Deficits
▪ Fiscal Stimulus at the State Level?
▪ Income Tax Surcharges Can Help States Close Budget Gaps
▪ It’s Time for Many States To Use Their Rainy Day Funds
▪ and more.
From the summary:
Both last year and this year, President Bush called for large funding increases for defense and related programs while demanding considerable restraint in domestic appropriations. And this year, like last year, he has threatened to veto appropriations bills if Congress does not adhere to his tight domestic levels.
The President’s 2009 budget would provide some $20.5 billion less for domestic discretionary programs outside of homeland security — a broad category of programs that includes everything from child care to environmental protection to medical research — than the 2008 level, adjusted for inflation.
The budget calls for reductions in a broad range of services, including some areas that have seen sizable cuts in recent years. For example, the budget would cut child care, environmental protection, and job training — all areas for which funding in 2008 is well below funding earlier in the decade, after adjusting for inflation.
Issued by the Office of Management and Budget (OMB), the Budget of the United States Government is a collection of documents that contains the budget message of the President, information about the President’s budget proposals for a given fiscal year, and other budgetary publications that have been issued throughout the fiscal year. Other related and supporting budget publications, such as the Economic Report of the President, are included, which may vary from year to year
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December 2007, Congress extended the expiring State Children’s Health Insurance Program through March 2009. As part of his fiscal year 2009 budget, the President proposes to reauthorize SCHIP through the end of fiscal year 2013. The budget proposal would provide an additional $19.7 billion to states for their SCHIP programs, above the $5 billion-a-year funding level assumed in the budget baseline.
The proposed funding increase has been portrayed in some media reports as a significant expansion of SCHIP to cover more children. Yet while the $19.7 billion amount does substantially exceed the amount proposed for SCHIP in the budget the President submitted a year ago, it would not provide sufficient funding for states to significantly expand their SCHIP programs and cover many more uninsured low-income children. In fact, the amount that the President’s new budget proposes for SCHIP likely would not even be sufficient to enable states simply to maintain their current SCHIP programs.
Bush Budget Gives States Little to Cheer About
Source: Daniel C. Vock and Pamela M. Prah, Stateline.org, February 5, 2008
Grants to state and local governments have long been an important way in which the federal government supports and administers programs efficiently. The new budget, however, continues to significantly erode those grants. This leaves states and localities the option of either curtailing services or increasing their own taxes to compensate for declining federal funds. These cuts would come at a particularly difficult time, when many states already are cutting programs to balance their budgets and half of the states face budget gaps for the upcoming fiscal year of more than $34 billion.
The President’s budget would provide more tax cuts heavily skewed to the most well-off while cutting vital services for low- and moderate-income Americans, generating large deficits, and increasing the strain on states already confronting budget problems as a result of the economic downturn. The budget reflects misguided priorities that would leave the American people more vulnerable in a number of ways.