Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Investing

Where Did Your Tax Dollars Go? A Federal Budget Breakdown

by April 20, 2023
April 20, 2023
Where Did Your Tax Dollars Go? A Federal Budget Breakdown

Romina Boccia

It’s officially Tax Day. Time to take stock.

The federal government spent $6.3 trillion in 2022. Tax dollars paid for $4.9 trillion or 78 percent. The rest (22 percent) was borrowed. Borrowing is deferred taxation, so ultimately deficit spending too will be paid for by taxes.

Where did all that money go?

The federal government spends the most on transfer programs. That is when the government redistributes money from one group to another rather than supplying governmental services like national defense.

As Figure 1 below shows:

Major entitlements—Medicare, Medicaid, other health care, and Social Security—devoured nearly half of the 2022 budget, consuming 46 percent of all spending. ($2.9 trillion)

Other federal transfer programs consumed another 18 percent. “Income security” and other benefits include federal employee retirement and disability, veterans’ benefits, unemployment benefits, and welfare programs such as food and housing aid.

Overall, two‐​thirds of government spending in 2022 went to pay some sort of benefit to someone. And that’s before accounting for student loan forgiveness.

Interest on the U.S. federal debt consumed 8 percent of the budget. ($476 billion)

Meanwhile, 12 percent of all federal spending went toward national defense. ($766 billion)

Most noteworthy, spending on education more than doubled compared to 2021, due to $379 billion in student loan debt forgiveness, initiated by the Biden administration.

The federal government’s budget outlook is quite dismal as well. Federal health care programs and Social Security make up 60 percent of projected spending growth over just the next 10 years. Interest costs from servicing the federal debt are projected to add 22 percent to spending growth. Combined, major entitlement programs and interest will be responsible for 82 percent of projected spending growth over the next 10 years.

Meanwhile, congressional Republicans are primarily focused on cutting and capping discretionary spending growth. They must start somewhere.

Unfortunately, if legislators continue to refuse to seriously consider health care and old age entitlement reform, there isn’t much they’ll be able to do to avoid massive middle‐​class tax increases. Medicare and Social Security are responsible for 95 percent of long‐​term unfunded obligations. Benefit growth is unsustainable and the alternative of doing nothing risks a future fiscal crisis. There’s simply not enough money to grab from higher‐​income earners to make the math work.

And there is no way to grow out of this fiscal situation either. Social Security is indexed to grow with average wages and Medicare spending is growing faster than economic growth as the U.S. devotes an increasing share of the economic pie toward health care. As John Cogan with the Hoover Institution at Stanford University has shown, policies to limit the growth in inflation‐​adjusted Social Security benefits and Medicare expenditures can play a key role in meeting the U.S. fiscal challenge.

Deficits today represent tax increases tomorrow. So, if you thought your taxes were too high and burdensome this year, I have bad news for you. Without reducing the growth in Medicare and Social Security benefits, Congress will have no choice but to raise taxes on most Americans at some point in the future.

0
FacebookTwitterGoogle +Pinterest
previous post
A Handsome Settlement in the Dominion‐​Fox News Case
next post
State Department’s Human Rights Reports and Their Failures

You may also like

Social Security’s Financial Crisis in Pictures

May 7, 2025

There Is No “Little Secret” Speaker Power over...

October 29, 2024

Pushed Out and Underserved? Examining Alternative Education Campuses

November 9, 2023

Friday Feature: Spyrja Academy

March 14, 2025

“Suppression” or No, Most Voting‐​Law Changes Don’t Alter...

July 21, 2023

Friday Feature: Dragonfly Academy, a Microschool Where Neurodivergent...

September 1, 2023

How Maduro Clings to Power

September 27, 2024

David Boaz’s Legacy of Liberty

June 7, 2024

Unintended Consequences of Vaccine Mandates: Good Intentions Are...

March 4, 2024

The Government Doesn’t Want You Using Cash

June 28, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Trump gave the Oval Office a gilded makeover – and covered the cost himself

      August 24, 2025
    • Trump learns a lesson grounded in faith, how best to stand tough on trade with China

      August 24, 2025
    • Latest Decode Casino Bonus Code Deals You Shouldn’t Miss

      August 24, 2025
    • Israel set to launch Gaza City offensive: High stakes, high costs ahead

      August 24, 2025
    • New RNC chair Joe Gruters vows to ‘ride the president all the way to victory’ in midterms

      August 24, 2025
    • Russia looks to update nuclear program amid ‘colossal threats’ from West

      August 24, 2025

    Categories

    • Business (8,866)
    • Investing (2,235)
    • Politics (16,474)
    • Stocks (3,228)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved