Federal Spending

A Closer Look


Here, we will look at how much does the federal government spend per citizen. We do this for two reasons. First, the citizens must pay the taxes. Essentially, we are asking, "if it were split equally what would each person's share be?" Second, ideally spending is the cost of ensuring the common defense, and promoting the domestic welfare of the people. Thus we are asking "what is the average spent on each citizen?"

Here we see spending remaining about constant under Carter, increasing at about $140 per citizen each year under Reagan, dropping about $50 per citizen each year under Clinton, and rising rapidly at about $300 per citizen each year under G.W. Bush. Below we will break down the spending to see what the major factors in the change were.

All graphs in 2011 dollars
The changes in defense spending are very notable. The peak in 1968 represents the Vietnam War. The peak in the 1980s represents the Reagan defense buildup. The persistent rise in the new millennium represents the combined wars in Afghanistan and Iraq. These wars represent a major cost increase. In 2001, defense was averaging less than $1600 per citizen, by 2010 more than $2800 per citizen. That's an average increase of about $130 per citizen each year. About 40% of the increase in spending was for defense.
When it comes to Social Security and Health & Human services spending, we see a few surprises. The only SSI spending decrease occurred during the Carter administration. The fastest SSI increase occurred under Nixon and Ford. In contrast the fastest increase in Health and Human Services occurred under both Bushes, while under Clinton, before the Republican Contract with America, Health and Human Services spending actually stopped increasing. Since then under Republican control it's been increasing at its fastest rate - at about $67 per citizen per year.
Here we group various agencies into two classifications commerce and social regulatory. By doing this we can see that commerce spending has remained about constant for 40 years. Social regulatory spending has increased. Those increases occurred in three distinct phases: Bush, G.W. Bush first term, and Obama's first term. The increases that occurred during the 12 Bush years alone come to nearly $1300 per citizen each year. No significant increases occurred under Carter, Reagan, or Clinton.
Treasury spending, which includes interest on the debt, rises mostly. But we see a decline that start in 1997 and continues until 2004. After that the pattern returns to rising. The peak in 2009 represents the cost of the bailout. It is pertinent to remember that the first half of the bail out was pushed through congress in late 2008 by G.W. Bush.
Justice spending, after falling under Carter has been persistently rising since. All told that represents an increase in cost of about $80 per citizen per year over the last 30 years.
Legislative spending has remained roughly constant over 40 years, but with slight downward trends under Carter, and Clinton's first term (both Democrats) A peculiar jump in executive costs appears under G.W. Bush.

Overview:

To evaluate where cuts are most needed, or most possible, we might look at how various budgets have changed since 1980 till 2010. The largest single increase has been Health and Human Services having increased by nearly $2000 per citizen. The fastest increases in Health and Human Services occurred during both Bush administrations and Obama. Defense and Social Security both increased by about $1000 per citizen since 1980. The fastest increase in Social Security spending occurred while G.W. Bush was president, and the fast increases in Defense occurred under Reagan and for the combined Afghan and Iraq wars. Only a few departments saw average cuts since 1980. The largest cuts were the EPA, the Interior, and International Assistance.

Reviewing spending by administration, we notice at the high end, under G.W. Bush all agencies, except two, got funding increases, some rather large. Under both Reagan and Clinton most agencies experienced funding reduction. However, under Reagan the combined increases in Defense, Social Security, Health and Human Services, and the Treasury (deficit), were larger than the combined cuts to other agencies. Only under Clinton were the combined cuts larger than the combined increases. Current idealistic projections for Obama predict more cuts than increases. But politics rarely allow this to happen. Since 1969 we see the best budget management under Clinton (D), Carter (D), the elder Bush (R), and projected for Obama (D). We see the worst budget management under G.W. Bush (R), then Nixon-Ford (R), and Reagan (R).

Last Modified: May 28, 2011

 

 

 

 

 

 

Note: at some sites, reviews adjust spending for inflation, but not for population growth. This is misleading. We need to adjust for both inflation and population growth to get meaningful comparisons.

 

 

Data Sources

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Discretionary Spending All graphs in Y2K dollars

Some would say a true account of the actions of congress require us to look at discretionary spending only. This is the spending that congress and the whitehouse truly have control over. Again the trends we see are not what we expect.
Under Bush SR, and Clinton, before the Contract with America, total discretionary spending was decreasing. This resulted primarily from decreasing military spending. The Contract with America starts with an initial drop in both defense and non-defense spending. However, after the Contract non-defense spending increases slightly. In 2001, with Bush in the Whitehouse and Republicans controlling congress spending accelerated. Non-defense spending is now increasing roughly four times faster than it was before the election of George W. Bush.
A closer look shows most parts of non-defense discretionary spending were stable or decreasing from the election of Bill Clinton through 1997. After that most types of spending increase. After Bush took office in 2001 most types of spending accelerated again. Reflect on the myths that Democrats promote big government and Republicans are fiscally conservative. These trends show the opposites.

Observations

Between 2000 and 2005 federal discretionary spending increased by $232 billion. If you figure the typical job costs about $100,000 to sustain then the discretionary increase should have created about 2.3 million jobs. However, during this time only 2.2 million jobs were created, or 100,000 less jobs than we paid for. (Remember the tax cut was supposed to create jobs also.)

In contrast, between 1992 and 1997 discretionary spending dropped by about $60 billion. This drop in spending might have accounted for a loss of 600,000 jobs. However, during this time employment increased by 14 million jobs. (Odd that during this time many said that a tax increase stifled the economy.)

Both the myth that spending creates jobs, and the myth that tax cuts create jobs, appear to be erroneous.

Section last modified 2006