Where your tax dollars go

COMMENTARY Budget and Spending

Where your tax dollars go

Apr 13, 2015 2 min read

It's a question that naturally springs to mind when tax season rolls around: Where are all those tax dollars being spent?

In total, Washington will spend $12,304 per citizen. Unfortunately, the government will only collect $10,878 in tax revenue per person. That means that, you, the American citizen, will be left with a tab of $1,426. The $1,426 dollars placed on every citizen's tab represents this year's deficit of $455 billion.

Let's put this into perspective. Adjusting for inflation, the government spent $894 per person in 1940, $7,319 per person during the peak of World War II (1945), $6,026 per person in 1980, and slightly more than $7,000 during the 1990s. That means that spending per person jumped about 1,276 percent between Frank Sinatra's public debut and today.

So what exactly does that $12,304 per person spending get you? Let's take a look:

Social Security: $2,884 per person. Social Security is the largest federal program, or roughly a quarter of all federal spending. Social Security provides benefits to the elderly, individuals with disabilities, and dependents and survivors. According to the Congressional Budget Office, Social Security is expected to grow at an unsustainable pace of 6 percent per year. By 2025, Social Security is expected to support more than 65 million people; nearly a 40 percent increase relative to 2014.

Medicare: $2,103 per person. Like Social Security, Medicare is on an unsustainable trajectory. In 10 years, Medicare spending is expected to nearly double. The number of beneficiaries will climb from 55 million in 2014 to more than 70 million by 2025. Together, Medicare and Social Security costs - nearly $1.6 trillion - is greater than the economy of Spain.

Food stamps: $241 per person. The number of beneficiaries receiving food stamps is projected to drop from the peak it reached during the financial crisis. However, while the number of people receiving stamps will decrease as the economy improves, spending is projected to increase as the average benefits per beneficiary will increase with the inflation. CBO estimates that more than 46 million American will receive food stamps this year.

Other mandatory and welfare programs: $2,530 per person. Removing the largest mandatory programs, such as Social Security, Medicare and food stamps, the amount spent per person remains staggering. Medicaid ($1,129 per person), Supplemental Security Income ($188 per person), and unemployment compensation ($113 per person) are just a few examples of other mandatory spending. Total mandatory spending is projected to swell to 14.2 percent of gross domestic product in 10 years, consuming 78 percent of all federal revenues.

Defense: $1,774 per person. That amount includes funding for military bases, troop pay and weapons procurement. It also includes the various operations occurring around the world, including those in Iraq and Afghanistan. This is a slight decrease from 2013, when estimated spending per person was $2,000. The drop in spending per person can be attributed to budget restraints enacted in 2011 and the drawdown in war spending.

Education: $1,340 per student. According to the National Center for Education Statistics, the United States spends about $12,000 per student. A majority of the funding originates at the state and local levels. Although spending per pupil has more than doubled since the 1970s, test scores in math, reading and science have remained the same.

Net Interest: $868 per person. Net interest is the cost of our $13 trillion public debt. This year every American will have to pay $868, the result of excessive government spending beyond what the government can afford. Unfortunately, the problem is projected to further deteriorate. By 2025, every person will pay $2,330 in interest payments.

Taxpayers will have to determine if they believe the government spending $12,304 per person is a decent bargain. Anyone who has reservations should take further note: If nothing is done now, the federal government will spend $17,400 per person in 2025 - nearly 40 percent more.

 - John Gray is a research fellow in federal fiscal affairs in the Roe Institute for Economic Policy Studies at The Heritage Foundation.

Originally distributed by the Tribune Content Agency

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