It is the week after the deadline for filing taxes. Many taxpayers are waiting for their refunds, or have just realized they owe the government money. Many are aware of just how much of their earnings just went to taxes, and they’re probably wondering how their governments are spending taxes gained from their hard-earned money.
Healthcare and Retirement are almost half of the entire federal budget
Another 24 cents goes toward non-defense healthcare costs (veteran’s health comes under another category). The programs are Medicare, Medicaid, CHiP and the recent exchanges set up for the Affordable Care Act. These programs cover some 118 or so million people in the USA.
Medicare is another benefit for retirees, a national healthcare program that is available to people 65 and older. 48 million people are in Medicare. It’s easy to see that a large bulk of taxes goes toward ensuring retirement and health benefits for older Americans.
Medicaid helps around 46 million low-income Americans who wouldn’t be able to get health insurance. Those who make up to 133% of the Federal Poverty Level go on this program.
CHIP is health insurance for children of low income but not poverty level families. It only covers children, and is used primarily by families making about 200% of the Federal Poverty Level. Almost 8 million children in the USA have been covered by CHIP, and the program was recently extended out to almost 4 million more during recent changes in healthcare law.
Defense
The USA has one of the largest defense budgets in the world. And it shows comes tax time. 18% of taxes goes toward keeping soldiers paid, ships moving across oceans and planes ready to fight.
The US Defense Budget is higher than the next nine countries combined, according to Wikipedia. That includes China, Russia and Saudi Arabia, who would have about half of the US budget if all three of them were combined.
Safety Net Programs
Temporary Assistance for Needy Families is a cash benefit to the poor. It is less than a fifth of the SNAP program, taking about a half a cent out of every tax dollar. Other cash benefits include foster care and adoption assistance for children who are orphaned or who cannot live with their families.
Read: Do Low Income People Pay Taxes?
Housing is another area where the safety net programs spend money. The most famous is public housing, which is barely over 1% of the tax bill. In addition to section 8 and public housing, there are low income tax house credits to developers, homeless assistance grants, rural housing services and grants, elderly housing and disability housing. All of that together adds up to $56 billion, which sounds like a lot, but is just a section of the 11 cents that goes toward Safety Nets.
Interest Payments
How much does the government owe? Over $10 trillion. That sounds like a lot. It is a lot. However the US government doesn’t have to pay high interest like a regular citizen. Governments right now can get debt financed for 1-2% APR. That’s why, even with only $10 trillion in debt, only 7% of the budget goes to payments. The average US salary is $52,000 a year. If the government was an average salary worker, the interest payments would be like a $303.33 payment a month.
Federal employees and veterans care
Government employees and veterans take up 8% of the budget. Veterans have served their country, and the government is obligated to take care of them. These promises include retirement benefits, medical care, education benefits and more.
Federal employees are employees of the government. And just like a large corporation provides for healthcare and retirement, the US government acts as a responsible employer and takes care of the people who currently work for it and have worked for it.
Transportation infrastructure
America is famous for it’s car-oriented culture and large distances. It takes a lot of money to pave the highways that run from sea to shining sea, and that accounts for 3%, or 3 pennies for every tax dollar.
Unfortunately those 3 pennies are not enough to keep up with road needs. One in ten U.S bridges needs repaired due to age and condition.
Education
The US has a very educated populace, with a 99% literacy rate. That comes due to investment in education, which is about 2% of the taxes spent. From Kindergarten on through high school, public schooling makes sure all Americans have a chance at education. This money also includes investments in buildings and college assistance.
What about Foreign Aid… and NASA?
Americans consistently wildly overestimate how much of their tax money goes to foreign aid, with 28% being the average answer. The truth? About 1% of the budget goes to foreign aid, and it comes out of defense spending.
Sources:
Policy Basics: Where Do Our Federal Tax Dollars Go? – CBPP.org
Social Security: Who’s Counting On It? – AARP
Official Social Security Website – SSA.gov
Medicare – Wikipedia.org
Medicaid – Wikipedia.org
CHiPs – Wikipedia.org
In U.S., Uninsured Rate Dips to 11.9% in First Quarter – Gallup
National debt of the United States – Wikipedia
One in ten U.S. bridges in urgent need of repair – Reuters
The budget myth that won’t die: Americans still think 28 percent of the budget goes to foreign aid – Washington Post