Government

Policy Basics: Where Do Our Federal Tax Dollars Go? | Center on Budget and Policy Priorities

We all know we are going to be inundated with federal spending rhetoric over the coming months  Expand this, cut this, we spend too much on this and not enough on that. Let’s insulate ourselves from the BS with the facts which are:

🤑 Most of the federal spending goes back to citizens, mostly older citizens

🤑 Social Security and Medicare (and other health programs) consume the largest share of the budget followed by defense

🤑 All safety net programs together represent 10% of the budget

🤑 So-called foreign aid is a very small part of the budget

🤑 We continue to spend more than the revenue received by the federal government 

🤑 The federal debt will continue to rise in the years ahead

🤑 Expansion of any existing programs or the introduction of new ones will require substantial tax increases on all Americans and even if we pay for these new programs, the federal debt will continue to rise to dangerous levels

The federal government collects taxes to finance various public services. As policymakers and citizens weigh key decisions about revenues and expenditures, it is instructive to examine what the government does with the money it collects.In fiscal year 2015, the federal government spent $3.7 trillion, amounting to 21 percent of the nation’s gross domestic product (GDP). Of that $3.7 trillion, over $3.2 trillion was financed by federal revenues. The remaining amount ($438 billion) was financed by borrowing.  As the chart below shows, three major areas of spending each make up about one-fifth of the budget:

Source: Policy Basics: Where Do Our Federal Tax Dollars Go? | Center on Budget and Policy Priorities

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