Where Do Your Taxes Go?

While you are struggling to get taxes in before April 17th this year you might wonder where all that money is going. Why does the federal government siphon off so much of your hard earned wages? What do they spend it on?

There is a handy, dandy little pie chart for 2011 that just came out to show you! It gives the percentage of the federal budget spent on the largest categories. How timely!

It comes to us from the Center on Budget and Policy Priorities(CBPP).

The Breakdown

I don’t have anything against the CBPP, but lets arrange and present their data slightly differently. Notice in their graphic defense spending is on top. Lets gather the chart data into related meaningful groupings and list them by percentage from the highest percentage of spending to the lowest.

  • 54% – Social programs
  • 20% – Everything else
  • 20% – Defense
  • 6% – Interest on the national debt

Social programs listed in order of percent from most to least are:

  1. Medicare, Medicaid, CHIP
  2. Social Security
  3. Social Safety Nets

CHIP is Hillary Clinton’s worthy Children’s Health Insurance Program. The social safety nets are things like unemployment insurance, food stamps, etc.

“Everything else” includes every service the federal government pays for that are not within any of the above categories… such as education, transportation, R&D, EPA, NASA, Department of Justice, Department of Labor, Small Business Administration, etc., etc.

By a HUGE margin, the United States spends the largest amount of it’s federal tax dollars on social programs. Defense comes in tied for a distant 2nd with “everything else”.

Interest on the National Debt

While figuring your taxes you should be mad as a hatter that “Interest on the national debt” even shows up on a breakdown of major spending categories… especially when there are only four of them!

Did you know, that when the federal government figures each year’s expected total deficit, like say $1.3 trillion, that they do NOT include the interest payment on the national debt! 6% of the 2011 budget was a whopping $454 billion dollars!!!

I don’t know about you, but in my world I’d figure in that amount when doing my next year’s budget! The federal government NEVER does that.

Deficit Spending

The above pie chart breakdowns are all well and good, but it doesn’t even mention how much of that spending is using money it doesn’t have! That is called the deficit.

Deficit spending adds directly to the national debt which, in turn, grows that 6% interest payment ever larger and larger! We don’t get any returned services from that lost money.

Its hard to figure out exactly how much more was spent than budgeted given that a formal budget for 2011 was never approved.  So lets do it using the CBO’s projected 2011 numbers.

According to the CBO, total expected tax revenues for 2011 – that is what YOU are working on right now – is expected to be $2.23 trillion. Expected spending is $3.71 trillion.

Given those numbers, for every 60 cents of tax revenue taken in, the federal government spent an additional 40 cents that it didn’t have in 2011.

When 40% of you budget is borrowed money, then you clearly have a severe spending problem.

Conclusions

The federal government is like an overspending neighbor living beyond their means who refuse to face their own gluttony.

The problem with the federal government as a neighbor is they are spending YOUR money, not their own! Every day they are spending more than they take in and your children and your children’s children will be saddled with the bill.

Our descendents will spend more and more for fewer government services.

Look at your own newly figured tax bill for April 17th and ask yourself, “Am I getting my money’s worth today?”

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About azleader

Learning to see life more clearly... one image at a time!

Posted on Apr 5, 2012, in Debt, Deficit, economics, Life, National Debt, news, Politics, Taxes, Thoughts, U.S. Economy. Bookmark the permalink. 2 Comments.

  1. You said that the interest payments on the debt are “whopping $454 billion dollars!” do you know how much (if anything) the government pays to the principal debt? Or does the gov simply pay toward the interest? Thanks in advance for the help.

    • Yes… I do… NOTHING! What the government does best is run up the tab.

      The last time the government paid anything on the principle on the ND was in either 1956 or 1957. The last time the government paid down the ND consistently over a number of years was in the decade of the 1920s before the Depression.

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