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Jan 20

Rethinking 'One China': Readings


  • In 2001, 2002, and 2003, total spending grew by 4.2 percent, 7.9 percent, and 7.3 percent, respectively.
  • In 2003, inflation-adjusted federal spending topped $20,000 per household for the first time since World War II. Throughout most of the 1990s, it had remained steady at $17,800 per household.


What about defense and 9/11?

  • From 2001 through 2003, federal spending expanded by $296 billion, of which:
    • $100 billion (34 percent) went for defense;
    • $32 billion (11 percent) went for 9/11-related costs such as homeland security, international assistance, rebuilding New York, and compensating terrorism victims; and
    • $164 billion (55 percent) went to new federal spending totally unrelated to defense and 9/11.
  • Spending outside of defense and 9/11 jumped 11 percent from 2001-2003, its fastest growth in a decade.

Where is all the money going?

  • Since 2001 there has been a major education bill, farm bill, Medicare drug bill, several extensions of unemployment benefits, a federal bailout of the states, and expansions of low-income tax credits.
  • From 2001 to 2003--a span of only two years--the following program categories received major spending increases: unemployment benefits (85 percent), education (65 percent), air transportation (52 percent), community & regional development (43 percent), defense (33 percent) and health programs besides Medicare and Medicaid (32 percent).

Discretionary spending

  • From 2001 through 2003, discretionary outlays jumped 27 percent, from $649 billion to $824 billion.
  • Excluding defense and 9/11 costs, discretionary spending expanded 16 percent, from $340 billion to $395 billion.
  • Assuming passage of the omnibus spending bill, 2004 discretionary spending will grow another 9 percent to $900 billion.

Mandatory spending

  • In 2003, mandatory spending (excluding net interest) reached 11 percent of GDP for the first time ever.
  • The Medicare drug benefit is estimated to cost $2 trillion (in 2003 dollars) between now and 2030, or $16,127 per household. This is in addition to the payroll tax and the extra income taxes needed to cover the impending bankruptcy of the current Medicare program.
  • In the absence of reform, CBO projects that the retiring baby boomers will bring on an increase in Social Security and Medicare costs sufficient to raise federal spending by:
    • 5 percent of GDP by 2030 (the current equivalent of $5,200 per household annually).
    • 13 percent of GDP by 2050 (the current equivalent of $13,500 per household annually).

Wasteful spending

  • The $80 billion corporate welfare budget remains sacrosanct
  • Spending on pork projects reached $23 billion in 2003, and the total number of earmarks has quintupled since 1998 to 10,000.
  • Congress's own auditors have identified over $100 billion in waste, fraud, and abuse, yet lawmakers have refused to implement the recommended reforms to save taxpayer dollars.

Federal Spending - By the Numbers

by Brian Riedl


Overall Spending

  • Federal spending has grown twice as fast under President Bush than under President Clinton.
  • Federal spending reached $2.157 trillion in 2003, with a budget deficit of $374 billion.
  • In 2003, inflation-adjusted federal spending topped $20,000 per household for the first time since World War II.
  • Overall for 2003, the federal government spent $20,300 per household, taxed $16,780 per household, and ran a budget deficit of $3,520 per household.

More About the Speakers

Hon. Peter Deutsch
(D-FL) United States Congress

William Kristol
Project for the New American Century

Ross Terrill
Author of The New Chinese Empire:
And What It Means for the United S

John J. Tkacik, Jr.
Research Fellow, Asian Studies Center,
The Heritage Foundation

Arthur Waldron
Lauder Professor of International Relations, The University of Pennsylvania

Hosted By

Asian Studies Center Asian Studies Center

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