Medicare, Medicaid, and CHIP: Three health insurance programs - Medicare, Medicaid, and the Children's Health Insurance Program (CHIP) - together accounted for 21 percent of the budget in 2012, or $732 billion. Nearly two-thirds of this amount, or $472 billion, went to Medicare, which provides health coverage to around 48 million people who are over the age of 65 or have disabilities. The remainder of this category funds Medicaid and CHIP, which in a typical month in 2012 provided health care or long-term care to about 60 million low-income children, parents, elderly people, and people with disabilities. Both Medicaid and CHIP require matching payments from the states.
Two other categories together account for another fifth of federal spending:
Safety net programs:
About 12 percent of the federal budget in 2012, or $411 billion, supported programs that provide aid (other than health insurance or Social Security benefits) to individuals and families facing hardship. Spending on safety net programs declined in both nominal and real terms between 2011 and 2012 as the economy continued to improve.
These programs include: the refundable portions of the Earned Income Tax Credit and Child Tax Credit, which assist low- and moderate-income working families through the tax code; programs that provide cash payments to eligible individuals or households, including Supplemental Security Income for the elderly or disabled poor and unemployment insurance; various forms of in-kind assistance for low-income families and individuals, including SNAP (food stamps), school meals, low-income housing assistance, child care assistance, and assistance in meeting home energy bills; and various other programs such as those that aid abused and neglected children.
Such programs keep millions of people out of poverty each year. A CBPP analysis shows that government safety net programs kept some 25 million people out of poverty in 2010. Without any government income assistance, either from safety net programs or other income supports like Social Security, the poverty rate would have been 28.6 percent in 2010, nearly double the actual 15.5 percent.
Interest on the national debt: The federal government must make regular interest payments on the money it has borrowed to finance past deficits - that is, on the national debt held by the public, which reached $11 trillion by the end of fiscal year 2012. In 2012, these interest payments claimed $220 billion, or about 6 percent of the budget.
As the chart above shows, the remaining fifth of federal spending goes to support a wide variety of other public services. These include providing health care and other benefits to veterans and retirement benefits to retired federal employees, assuring safe food and drugs, protecting the environment, and investing in education, scientific and medical research, and basic infrastructure such as roads, bridges, and airports. A very small slice - about 1 percent of the total budget - goes to non-security programs that operate internationally, including programs that provide humanitarian aid.
*** Estimates of spending in fiscal year 2012 were based on the most recent historical data released by the Office of Management and Budget (OMB). (The federal fiscal year 2012 ran from October 1, 2011 to September 30, 2012.)
Reference: "Policy Basics: Where Do Our Federal Tax Dollars Go?," Center on Budget and Policy Priorities, March 12, 2013. Accessed at: http://www.cbpp.org/cms/?fa=view&id=1258
Publisher's note: Diane Rufino has her own blog, For Love of God and Country.
Come and visit her. She'd love your company.
