Since Trump and Republicans are interested in cutting spending. I was interested in seeing what Musk and his side kick Ramaswamy might be looking at to reduce. What you are looking at is a Pie Chart showing all items in the budget. The breakout of the Payroll Tax Chart from the Pie Chart (further down) depicts funding for Social Security, Medicare, and Unemployment.Much of the issue with running deficits is the result of Tax Breaks by the Bushs (2001 and 2003) and Trump (TCJA) which were supposed to pay for themselves and didn’t. In 2025, the nation can look forward to a continuance of those tax breaks and a possible addition of another Trump tax break.Policy Basics: Where Do Our Federal Tax Dollars Go? CBPP,In fiscal year 2023, the federal government spent $6.1 trillion, amounting to 22.7 percent of the nation’s gross domestic product (GDP). About nine-tenths of the total went toward federal programs; the remainder went toward interest payments on the federal debt. Of that $6.1 trillion, over $4.4 trillion was financed by federal revenues. The remaining amount was financed by borrowing.
As the chart shows, three major areas of program spending make up the majority of the budget:– Health insurance: Four health insurance programs: Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and Affordable Care Act (ACA) marketplace health insurance subsidies. Together they accounted for 24 percent of the budget in 2023, or $1.6 trillion. Roughly half of this amount, or $848 billion, went to Medicare, which in March 2023 provided health coverage to around 65.7 million people who are age 65 or older or have disabilities. The rest of this amount funded the federal costs of Medicaid and CHIP ($633 billion) and ACA subsidy and marketplace costs ($91 billion). Both Medicaid and CHIP require states to pay some of their total costs.In March 2023, Medicaid and CHIP provided health coverage or long-term care to 93.9 million low-income children, parents, older adults, and people with disabilities. That was significantly higher than the 70.9 million enrollees before the pandemic because of temporary pandemic-related coverage protection, which expired in April 2023. With its expiration, enrollment dropped to 82.8 million by March 2024 and is likely to fall further, though projections are highly uncertain.In February 2023, 14.3 million of the 15.7 million people enrolled in health insurance through ACA marketplaces received subsidies that lowered their premiums and out-of-pocket costs. Additionally, 20.8 million people opted for ACA marketplace coverage during the 2024 open enrollment period, a significant increase over enrollment in 2023.
Payroll Taxes Fund Social Security, Medicare, and Unemployment Insurance
– Social Security: In 2023, 21 percent of the budget, or $1.4 trillion, was spent on Social Security, which provided monthly retirement benefits in March 2023 averaging $1,833 to 49.1 million retired workers. Social Security also provided benefits to 2.7 million spouses and children of retired workers, 5.9 million surviving children and spouses of deceased workers, and 8.7 million disabled workers and their eligible dependents.– Defense: Another 13 percent of the budget, or $820 billion, was spent on national defense activities. About 95 percent of the spending in this category reflects the underlying costs of the Defense Department, largely for operations and maintenance; military personnel; procurement of weapons; and research, development, testing, and evaluation.
Three other categories together account for the remaining program spending:
– Economic security programs: About 8 percent (or $545 billion) of the 2023 federal budget supported programs that provide aid (other than health insurance or Social Security benefits) to individuals and families facing hardship. Economic security programs include: the refundable portions of the Earned Income Tax Credit and Child Tax Credit, which assist low- and moderate-income working families; programs that provide cash payments to eligible individuals or households, including unemployment insurance and Supplemental Security Income for low-income people who are over age 65 or disabled; various forms of in-kind assistance for low-income people, including the Supplemental Nutrition Assistance Program (formerly known as food stamps), school meals, low-income housing assistance, child care assistance, and help meeting home energy bills; and other programs such as aid for abused or neglected children.Economic security programs keep millions of people above the poverty line each year. They also reduce, but do not eliminate, racial and ethnic differences in poverty rates.– Benefits for veterans and federal retirees: In 2023, about 7 percent ($481 billion) of the budget provided benefits to veterans and former career employees of the federal government, both civilian and military. About nine-tenths of the benefits available to all veterans are either disability payments or medical care, which is often specialized to deal with the unusual conditions that military service may impose. In March 2023 there were more than 18 million veterans of U.S. military service, of whom 2.2 million were retired career military who have earned monthly retiree pensions or survivor benefits. There were also 2.7 million federal civil service retirees.– All other program spending: As the chart above shows, the remaining federal program spending (the dark blue slice of the pie) supports a variety of other public services. They include investing in education; investing in basic infrastructure such as roads, bridges, and airports; maintaining natural resources, farms, and the environment; investing in scientific and medical research. Also enforcing the nation’s laws to promote justice and other basic duties of the federal government. A very small slice or 1 percent of the budget goes to programs that operate internationally, including humanitarian aid and the operation of U.S. embassies and consulates.In addition to program spending, the federal government makes regular interest payments on the money it has borrowed to finance past and current deficits. The net federal debt reached $23.7 trillion by the end of fiscal year 2023 and led to $658 billion in interest payments in 2023. A10 percent of the budget. Interest costs reflect debt accumulated over the nation’s history. The net impact of deficits and surpluses since 1789 resulting from both revenue levels and program costs, past and present.While critics often decry “government spending” in the abstract, it is important to determine whether the actual public services and investments the government programs provide are valuable. Federal revenue is used to pay for these services and investments. Consequently, when thinking about the costs that taxes impose, those costs should be weighed against the benefits the nation receives from the expenditure of those funds.Federal Tax Cuts in the Bush, Obama, and Trump Years, 2001 and 2003More By This Author:Federal Student Loan Repayment Under The Second Trump Administration Federal Worker Cuts Are Mostly Not Gonna Happen Consumer Price Index – October 2024
