The top programs the Federal Government pays for are Social Security, Medicare and Medicaid, and the military. Everything else is in the small single digit percentages.
If you're not fighting a war or retired, it's not a surprise that you don't see much direct benefit from federal spending.
State operations like schools, streets and roads, airports, transit, and police are much more visible in daily life. Still, state budgets are supplemented with grants from the federal government, too.
But the big point here is that retirement and health care and war are the biggest federal operations. And, to reference op, you don't get much benefit of that living overseas.
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Incidentally, the TSA is paid for by air ticket taxes and the interstates were paid for mostly by federal gas taxes and maintained by state taxes. Only new highway construction is paid for out of federal income taxes since the gas tax became unpopular in Congress in the 1990s and was allowed to drop too low to pay for highway grants so it was replaced with income tax money. So even your visible federal tax benefit examples aren't really paid out of federal income tax.
Social Security and Medicare are not entitlement programs. They are insurance programs that are largely acutuarily sound. They should not be considered government expenditures as they are funded by the users of the insurance programs.
They are entitlement programs. Current taxpayers pay for current beneficiaries, and it has been that way since the programs were founded. Who do you think paid for the first recipients of social security?
The distinction is meaningless. It is always the case that the currently economically active part of the population pays for those who aren't active. [1]
If you prefer thinking in monetary terms (as most people do), think about somebody who has a retirement savings account. Their money comes out of payments that firms make (in the form of interest on bonds, or in the form of dividends etc.). This is money that could otherwise have gone to the employees of those firms.
To get an even clearer picture, think about it in real terms. Retirees use up real resources and services that are generated by the currently working population. So the current workers provide for the current beneficiaries, plain and simple. The movements of money that are used to reflect the movements of real resources is really just a thin layer on top, and it would be wise not to focus too much on the cosmetics of that thin layer.
[1] Mostly children and retirees and, if you allow yourself to be honest about the reality of capitalism, the rich and powerful.
I don't think that is correct for social security.
I just started taking social security (yes, I am an old programmer :-) and unless I live a very long time I will never get back all that I have paid into social security, if you take I to account what I put in and earn a small amount of interest on the money (which is not so small with compounding).
Medicare is more of a government handout - I agree with you there.
They actually didn't intend to; it was supposed to have around a decade of money paid in before any started going out. Also, though, remember that it didn't cover the same people it covers now.
Can we go back to a scheme where we have a decade of money paid in? I'd happily pay a little more if it helps end the endless name calling and what not.
I found it interesting that the system looks to be in far better shape today than it has been for many decades. In the early ears, assets outweighed expenditures by a huge amount, sometimes by more than a factor of 10. As you move down the table, this stops, and in the 1970s it hits a 1:1 ratio of yearly expenditures to assets, then shoots way past. In 1983, the trust fund had under $20 billion in assets but the program spent $153 billion! That's clearly a program where current taxpayers are paying for current retirees, rather than the savings program it's painted as.
By the late 80s, things start looking much better, as income substantially outweighs expenditures. In 2001, the trust fund exceeded $1 trillion while expenditures were at a considerably more modest $378 billion. The 2013 figure has about $2.7 trillion in the trust fund, with expenditures of about $679 billion. Not a factor of 10, but certainly far better than the 60s, 70s, or 80s.
I knew that SS was in better shape than many people say, but I had no idea that it used to be so much worse. The picture painted by the naysayers is one of a long slide towards disaster, whereas it looks like the program is currently doing great. Future demographic shifts will certainly hurt a lot, but compared to the years when the trust fund was essentially nonexistent there's almost nothing to worry about.
In effect they hit the budget, as they only "invest" in US government securities. Now that SOcial Security doesn't have a surplus, it is drawing off of debt service payments paid by the treasury.
It's an entitlement program masquerading as an investment program, largely by design, as the high payroll taxes that accompany the program are meant to provide it political legitimacy.
>Everything else is in the small single digit percentages.
What is aggravating is that this is where they want to make the most cuts. Not to defense or large social programs. 2 or 3 billion to NASA will make huge progress for our country and technology, and it is a drop in the pond for the government. Yet, that is where they want to make cuts.
To pick a nit, people in the armed services don't get benefits, they get compensation. The beneficiaries of the armed forces are the ones not fighting.
You also leave off debt service, which is approaching the military budget in size.
>You also leave off debt service, which is approaching the military budget in size.
There's a lot of FUD and wrong opinions approaching the national debt, and people don't think about it correctly.
Very briefly, I'll make one point to bring some of this to light: 40% of the national debt is owned by the government.
* 16% by social security (so this portion isn't debt service, it's SS funding)
* 13% by other government entities (likewise funding these agencies)
* 12% by the Federal Reserve (whose profits are remitted to the Treasury, this money is free)
Another 25% of the debt is owned by Americans in some form or another.
For comparison, the two largest foreign debt holders are China and Japan each with about 7%.
If default is the worst case scenario, defaulting on foreign banks seems preferable to defaulting on your retirees. The same is true for money printing, as retirees are harmed greatly by inflation.
If you owe debts to other countries you have to pay that money outside the system. So it takes a certain percentage of production (GDP) and pays the benefit of that production to people in other countries. Japan has a much bigger debt problem than the USA in percentage terms. Nearly all their debt is owed to those in Japan so when it is paid it merely redistributes wealth (rather than losing it to those overseas).
While inflation can allow you to payoff debt with less valuable $ and thus reduce the value of what is given to other countries (also to retirees and other holders of government debt but for the matter of losing wealth to other countries that isn't a factor). But markets adjust and unless you have now paid off all your debt and owe nothing you have to borrow again, and lenders will demand larger interest payments to make up for the risk of your debasing the currency to pay them back worthless dollars. So while this can maybe work in the short term if you fool the markets it most likely doesn't work in the long term for the USA.
I would say it is probably true defaulting on foreign banks would be preferable but it isn't that neat. The USA would default to everybody and it would be chaos (because of the central role of the USA - different than if some minor economic power defaults). The USA owes lots to foreigners and those in the USA and while spreading the costs of default overseas sounds better really it would be so catastrophic I doubt it matters. Debasing the currency through inflation is what would happen instead in the case of the USA. Which would have bad costs to the USA and to those holding USA government debt.
If you're not fighting a war or retired, it's not a surprise that you don't see much direct benefit from federal spending.
State operations like schools, streets and roads, airports, transit, and police are much more visible in daily life. Still, state budgets are supplemented with grants from the federal government, too.
But the big point here is that retirement and health care and war are the biggest federal operations. And, to reference op, you don't get much benefit of that living overseas.
--- Incidentally, the TSA is paid for by air ticket taxes and the interstates were paid for mostly by federal gas taxes and maintained by state taxes. Only new highway construction is paid for out of federal income taxes since the gas tax became unpopular in Congress in the 1990s and was allowed to drop too low to pay for highway grants so it was replaced with income tax money. So even your visible federal tax benefit examples aren't really paid out of federal income tax.