everyday economics and tax impact

One Reason That $1.1 Trillion is Not So Much

by Elaine Schwartz    •    Jan 23, 2014    •    1722 Views

The Congress just agreed on $1.1 trillion in federal spending.

But let’s look a bit more closely…

Each year, I give my class a federal budget graph and ask them to identify the relative size of 17 main spending categories. Together, these 17 examples of federal spending represent close to the entire $3.8 trillion budget that has been proposed for 2014:

Federal Budget Spending White House Proposal 2014

Which bar do you think is defense? Agriculture? Income Security? Medicaid (Health)? Medicare? International Affairs?


Here are the answers:

Federal Budget Spending 2014


Another way to look at it (not all slices are labeled):

Federal Spending Pie Graph 2014


Now, let’s just look future spending for 2 big slices…Medicare and Social Security.


(healthcare primarily for people 65 and older but includes some younger disabled)

You can see the federal budget part getting larger as premiums and payroll taxes become increasingly inadequate.

Federal Budget spending on Medicare

Social Security:

(OASDI–Old-Age, Survivors, and Disability Insurance Program)

Same thing. Because cost exceeds income, funds could come from general revenue.

Federal Budget Social Security Spending

So yes, for the time being we do have Congressional agreement on the budget. The House, the Senate and the President agreed to $1.1 trillion in discretionary spending. Called discretionary because lawmakers do not have to spent it a certain way, half of that $1.1 trillion is for defense and the other half, lots of things. For example, do you recall those incandescent light bulbs that we all have to switch to? The Congress decided not to fund enforcement of the new requirement.

Seeing the media focus on the budget deal, I just wanted to place it in perspective.

Your opinion?

Sources and Resources: With a helpful interactive series of graphics, in addition to the numbers I used in my 17 expenditures graph, the Washington Post has a good budget summary. For worries with which you can agree or disagree, economist Lawrence Kotlikoff described his concern about our current deficit in an excellent Econtalk discussion and here is how Paul Krugman disagrees with him. As for the current budget negotiations, you can read about them here while the annual government reports on Medicare and Social Security were the sources of my graphs.


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