Three federal budget trends
Date posted: May 2, 2012
The federal budget creates a lot of discussion and controversy. It’s a very complicated document, with all federal spending totaling over $3.5 trillion. But are there trends within the federal budget that will help us understand some of the issues? N.C. State University economist Mike Walden responds.
“This can be very, very complicated. … And it’s easier for people to have their eyes glazed over, but I think simply it’s good to think about the federal budget in three pieces. Think of that federal budget pie in three pieces:
“First of all, defense. In 1960 defense spending took half of the federal budget. Today it’s down to 20 percent.
“On the other hand, if you look at programs that are for Social Security and health care — primarily it is going to be Social Security, Medicare, Medicaid — just the opposite has occurred: 1960, they took t20 percent of the budget. Today they take about 50 percent. And it’s continuing to rise.
“Everything else in the federal budget – so, education, transportation, courts, foreign aid, interest on the national debt — took about 30 percent of the budget in 1960. Today it takes about 30 percent of the budget.
“So the big tradeoff we’ve seen over the last 50-plus years is we’ve seen that part of the budget going to defense go down dramatically [and] that part of the budget going to Social Security and health care going up. That’s the big tradeoff that we’ve made.”
Category: Economic Perspective