When Americans file their taxes it's natural to wonder: Where do my tax dollars go? What do they fund? And what don't they fund?
So where do our tax dollars go? Some believe most of it goes to welfare and foreign aid. Others believe defense and corporate welfare dominate the budget. In reality, health entitlements--Medicare, Medicaid, Obamacare--and Social Security are the largest programs. These entitlements and interest on the debt are set to consume every dollar of taxes paid in just over 20 years.
Social Security: The single largest federal program, Social Security accounts for roughly a quarter of all federal spending. Its trust funds are already paying out more than they take in, and as more people retire the system will be under continued stress. Without reform, the program's trustees project benefits will need to be cut as much as 21 percent if nothing is done by 2034 (the government projects insolvency will come four years sooner).
Major health entitlements: Federal health programs such as Medicare and Medicaid and Obamacare subsidies are also growing at an unsustainable trajectory. Currently consuming 28 percent of the budget, health spending continues to grow faster than the economy.
Income security: Other income security programs--veterans' benefits, unemployment compensation, food and housing assistance, federal employee retirement and disability--are 18 percent of the budget, surpassing national defense spending.
Defense: The defense budget covers everything from military paychecks, to operations overseas, to the research, development and acquisition of new technologies and equipment. At 16 percent of the federal budget, defense spending is the last major category of federal spending and has been falling as a percent of the budget for the last decade.
And the rest?
Interest: Over the coming decade, U.S. debt held by the public is projected to balloon to 89 percent of gross domestic product--driven primarily by health and Social Security spending. Deficit spending does not come cheap. As the debt increases, so does the cost of the interest we must pay to those who hold the debt, the unfortunate result of excessive government spending.
Without reforming America's massive and growing federal programs, Washington will have to continue to borrow increasing amounts of money, piling debt onto younger generations and putting the nation on an unsustainable economic course.
Congress must rethink how they are spending the people's money. The Heritage Foundation's recently released Blueprint for Balance provides a workable guide for spending reform, listing $10 trillion of spending cuts that balance the budget in seven years.
The first step to putting the federal budget back on a sustainable path is fully accounting for how precious taxpayer dollars are being used. Are you getting your money's worth?
Editorial on 04/15/2017