Section 3: Federal Spending
Federal Spending Has Increased Steadily Regardless of Congressional Leadership Real annual federal spending has more than tripled since 1965 and has nearly doubled since 1980.
Since 9/11, Federal Spending Has Increased Much Faster Than Inflation Total nominal spending has increased 97.6 percent since 1992, while the Consumer Price Index has increased a relatively modest 47 percent, which means that government spending is growing much faster than inflation. Less than half of the increase in federal spending came from defense and homeland security spending.
Federal Government Spending per Household Is Near an All-Time High Total federal spending per household has risen 115 percent since 1965; the sharpest increase occurred during the Bush Administration and totaled 11 percent.
Federal Spending per Household Has More Than Doubled Since 1960 Federal spending per household soared by more than $11,500 between the Administrations of President John F. Kennedy and President George W. Bush.
Federal Spending Grew Nine Times Faster Than Median Income Federal spending has increased 334 percent since 1965, nine times faster than median income, which rose just over 35 percent.
Non-Defense Discretionary Spending Increased Steadily While Defense Spending Fluctuated Non-defense discretionary spending has increased almost continuously — a total of 246 percent since 1965 — while inflation-adjusted discretionary defense spending has fluctuated widely, resulting in periods of a hollow military.
Despite War Costs, Defense Spending Falls Below Historical Average At 4 percent of GDP, defense spending is 1.5 percentage points of GDP below the 45-year historical average and well below Cold War and Vietnam War levels.
Mandatory Spending Has Increased Almost Five Times Faster Than Discretionary Spending Discretionary spending, the portion of the budget subject to annual review or budget debate, has risen 152 percent since 1965. Mandatory spending, consisting mostly of Social Security, Medicare, and Medicaid, which run on autopilot, has risen 759 percent since 1965.
Mandatory Spending Increased 759 Percent Mandatory spending, which includes Social Security, Medicare, and Medicaid spending that is not subject to annual review or budget debate, grew (in inflation-adjusted dollars) from $169 billion in 1965 to $1.45 trillion in 2007 — 58.2 percent of the budget.
Mandatory Spending per Household Has Increased by Over $9,500 Since 1965 Mandatory spending per household has increased $9,546 since 1965, when Medicare and Medicaid were introduced.
Total Government Spending Has More Than Doubled Since 1965 The total spending burden on American households has grown 129 percent since 1965. State and local spending per household has increased 156 percent, while federal spending has increased 115 percent.
Medicare and Medicaid Spending Will Rise With Increasing Health Care Costs Health care costs have risen faster than the economy over the past few decades. This directly contributes to the uncontrolled growth of Medicare and Medicaid costs. It is expected that health care costs will continue to increase rapidly in the future and that this will be one of the main drivers of future increases in entitlement spending.
Social Security Spending Soon to Rise Rapidly Although Social Security spending has remained relatively constant since the early 1980s, the approaching wave of aging “baby boomers” is set to send Social Security spending to levels never before seen.
Retired Workers Receive the Largest Share of Social Security Benefits Retired workers comprise 63 percent of Social Security spending, but as the baby boomers begin to retire, these workers will comprise a growing share.
