The U.S.
government managed expenditures of about $3.5T in 2010 (23% of the $16T GDP).
- $1T went to the military and security (DOD, DHS, StateDept,
TSA, NSA, ATF, FBI, CIA, etc)
- $1T to the elderly (Social Security, Medicare),
- $1T to the poor (unemployed, welfare, Medicaid, housing,
food, etc.) and
- $0.5T to infrastructure spending.
Direct spending made up 40% of the budget while transfer
payments to individuals and the states were 60%. Taxes raised $2T (18% of GDP),
with the income tax and payroll taxes raising $1T each. Government increased the currency supply and
borrowed more to make up the $1T deficit.
The government often spends more than it takes in, especially
when economic growth is slow. This is
consistent with mainstream Keynesian economic theory which says government
should control instability in the economy with negative feedback via fiscal
policy. Keynesian theory has been challenged since the 1980’s by the
Republican’s insistence on “Supply Side,” or “Trickle Down” economic theory
which says tax cuts increase revenue by promoting growth. With the competing
theories ratcheting debt under each new administration, the accumulated debt
has risen from 50% to 100% of the GDP since 2000, tax rates are at historic
lows and growth is stagnant.
50 state and 90,000 local governments tax and spend $3.1T
per year, providing education, police, fire, roads and other services. Federal grants have become an important source
of state funding amounting to $624B in 2011. Most of the federal grants support
Medicaid, housing, food stamps and other federally mandated, state operated
programs. The gasoline tax supports the federal highway grant.
The Federal Government owns nearly 650 million acres of land
- almost 30 percent of the land area of the United States. Federally-owned and
managed public lands include National Parks, National Forests, and National
Wildlife Refuges. Reserved lands include Indian reservations and military
installations.
The federal government employs 2 million civilians, 1.4
million military and ½ million postal employees. 320,000 federal employees are
concentrated in Washington D.C. State
and local governments employ 15 million more Americans including 8 million
teachers as well as 2 million in law enforcement, 320,000 fire fighters,
600,000 utility, 500,000 welfare and 1.2 million healthcare workers. Private
employment is growing slowly at about 135 million but state government layoffs
have kept unemployment around 8%.