Business / Economy

COMMENTARY: The Federal budget – where does the money go?

You perceptions of budget spending may not be reality

According to the Office of Management and Budget (OMB), the proposed Fiscal Year 2015 federal budget had total spending of $3.8 trillion making up about 21 percent of the U.S. Gross Domestic Product (GDP). That’s also about $12,000 for every woman, man and child in the United States.  The first question is where does the money go?

Before you read the answers I suggest you jot down, by percentage, where you think the money goes; after you’re finished we’ll check your perceptions against reality and see how well you did.

Understanding that the spending categories may “leak” from blurred lines, the six general categories in alphabetical order are:

  • Defense, including military spending and Veterans’ Benefits.
  • Education, Science, Energy and the Environment.
  • Interest on the Debt.
  • International Affairs.
  • Social programs, including Medicare and Health, Social Security, Unemployment and Labor, Housing and Community Development.
  • Transportation, Food and Agriculture.

Answers:

Defense, military spending combined with Veterans’ Benefits, accounts for 20 percent of the budget, 16 percent for military and 4 percent for Veterans’ Benefits.It could be argued that Veterans’ Benefits are more of a social program than a defense program, but in either case the cost is significant. In dollars, the total for the two categories is $760 billion, $608 billion for military spending and $152 billion for Veterans’ Benefits.

Education, Science, Energy and the Environment together account for 4 percent of the federal budget, $152 billion.They are actually three separate categories. Education is 2 percent, or $76 billion; Science is 1 percent or $38 billion; Energy and the Environment together is also 1 percent, another $38 billion.

Interest on the Debt equals 6 percent, $228 billion, three times the Education category; for that cost we get to borrow money.But, like all debt, we have only limited options when it comes to paying it off.

International affairs account for 1 percent of the budget, $38 billion.

As you probably guessed, Social Programs are the big eaters when it comes to the budget. Medicare and Health, Social Security, Unemployment and Labor, Housing and Community Development together use 63 percent of the budget or $2.4 trillion in round numbers.Medicare and Health is 27 percent, more than $1 trillion; Social Security, Unemployment and Labor is 33 percent, $1.25 trillion; and Housing and Community Development is 3 percent, $114 billion.

Transportation, Food and Agriculture together us 6 percent of the budget, $228 billion.This is broken up equally, 3 percent ($114 billion) each, for the Transportation and the Food and Agriculture categories.

There you have it, 67 percent of the federal budget goes to social spending when you include the 4 percent Veterans’ Benefits in that category, as I would.  The rest of Defense is 16 percent and that leaves 17 percent for everything else.  In one way it looks very lopsided and 2 percent or 3 percent does not sound like much; however the dollar figures are enormous.

That’s the same as spending $10.4 billion every day or $433.8 million every hour around the clock for a year.

Be honest, how did you do? I’d say if you were plus or minus 5 percent in the two major categories, Social Programs and Defense, you should go to the head of the class.

Marty Richman

Born and raised in Brooklyn, NY, Marty (Martin G.) spent his teen years in northern New Jersey. He served more than 22 years on active military duty, mostly in Europe, and is a retired U.S. Army Chief Warrant Officer 4, Nuclear Weapons Technical Officer. Marty then worked 25 years in various engineering and management positions in the electronics and energetic materials industries supporting the communications, computer, aerospace, defense and automotive sectors. He is a graduate, summa cum laude, from The College of Hard Knocks, among his numerous awards and accomplishments. He was a regular weekly Op/Ed columnist and feature writer for The Hollister Free Lance for seven years and a member of its editorial board for five years. Marty is a frequent commentator and contributor to BenitoLink on a wide variety of local, state, national and international subjects.   Marty was elected to represent the City of Hollister District 4 on the City Council in November, 2018. Marty and his wife, Joyce, have been residents of Hollister since 1996.