Census Outlines Endless Government Spending Growth

The U.S. Census Bureau has disclosed the endless spending and obligations of the federal domestic spending programs.  The numbers for spending increases during 2009 are mind-boggling.  Federal domestic spending rose a massive 16% in fiscal year 2009, to $3.2 trillion, or $10,548 per person living in the United States.  Imagine if you tally it up as every taxpayer.  Here is the kicker, that 16% jump represents the largest gain since the Census Bureau began compiling these data in 1983.

The release noted that the increase “is in part from the American Recovery and Reinvestment Act of 2009.”  Medicare, Medicaid and Social Security came to 45.7% of all funding, or $1.5 trillion.  Social Security accounted for $709.7 billion of that total.  The one-year increase of $136.0 billion in spending for these three programs was about $401 for every person in the United States.

These reports do not include interest paid on the federal debt and foreign aid.  States with the lowest per capita federal spending were Nevada ($7,148), Utah ($7,435) and Georgia ($8,538). States that had the highest per capita federal spending were Alaska ($20,351), Virginia ($19,734), and Hawaii ($19,001).

Federal spending includes expenditures or obligations for grants, salaries and wages, procurement contracts, direct payments for individuals for retirement and disability, and other direct payments.  Grants represented 23.0% of federal spending in fiscal year 2009, totaling $744.1 billion. Three federal departments accounted for 77.9% of all federal grant money in 2009:

• Health and Human Services ($414.9 billion)
• Education ($83.2 billion)
• Transportation ($81.6 billion)

Salaries and wages for federal employees was 9.2% of all federal spending, or $299.4 billion.  Of that, the largest share was Department of Defense payrolls at 45.8%, followed by federal civilian payrolls at 35.3%, followed by the U.S. Postal Service payrolls at 18.9%.

A total of $550.8 billion, or 17% of total federal spending, went to procurement contracts. Defense contracts were 64.4% of that amount, with Energy after that at 5.8% and Veterans Affairs at 4.0%.

Retirement and disability came to 27.2% of all federal spending with a grand total of $881.1 billion.

Other direct payments (housing assistance, unemployment compensation, Medicare) came to 23.6% of the federal spending at $762.9 billion.  The table on a state by state basis shows just how much the 2009 rise in unemployment benefits by state.

Other highlights from the Consolidated Federal Funds Report (verbatim from report):

• The federal government spent $85.8 billion on unemployment compensation in 2009, an increase of 114.6 percent from 2008. Forty states saw increases in unemployment compensation of more than 100 percent. Meanwhile, 27 states allocated more than $1 billion for unemployment compensation.
• In addition to direct expenditures and obligations, the federal government committed $1.9 trillion in direct loans, guaranteed loans and insurance in 2009. Insurance comprised 69.6 percent of that total, including flood insurance ($1.2 trillion), crop insurance ($77.8 billion) and life insurance for veterans ($14.4 billion).
• Guaranteed or insured loans totaled $510.0 billion, led by home mortgage insurance loans, which accounted for $310.0 billion.
• Direct loans were $54.4 billion, led by federal direct student loans, which accounted for $36.7 billion.
• Medicare and Medicaid per capita obligations were highest in Hawaii ($6,990), Kansas ($4,367) and Wisconsin ($3,544). States that had the lowest were Utah ($1,118), Nevada ($1,216) and Colorado ($1,352).
• Total obligations for two major welfare programs — Temporary Assistance for Needy Families and the Supplemental Nutrition Assistance Program (previously known as the food stamp program) — reached $68.4 billion in 2009, a 31.7 percent increase.
• Grants for the Department of Housing and Urban Development obligated $43.9 billion, a 58.6 percent increase from 2008.
• Department of Transportation grants totaled $81.6 billion in 2009, a 52.9 percent increase from 2008.

For better or worse, most likely worse, American politicians and American citizens are going to face a serious reckoning very soon.  Tax hikes cannot get us there.  Deficit-neutral claims cannot get us there.  Low borrowing rates by having Japan-like sovereign coupon payments won’t get us there.  The largest answer is the most painful one and it is the hardest for any politician to sell to the public:

“REAL AND SUSTAINED SPENDING CUTS”

Companies and individuals are supposed to cut expenses during recessions.  Not even the government of our nation can keep increasing expenses during hard times.

The new normal…

JON C. OGG