The federal government seized from the American people almost $5 trillion ($4.896119 trillion) in fiscal year 2022 (Oct. 1, 2021 through Sept. 30, 2022), according to The Monthly Treasury Statement of Receipts and Outlays of the United States Government (MTS), published by the Bureau of the Fiscal Service.
But this was still not enough to quench Uncle Sam’s huge appetite for spending money. During the same period of time, the federal government spent $6.271508 trillion, resulting in a budget deficit of $1.375389 trillion and a national debt that increased to over $31 trillion. The growth in federal spending over the past 20 years is mind-boggling considering that the federal budget did not even reach $2 trillion until fiscal year 2002.
Where did all that the money come from that Congress burned through in just a year? It came from eight sources: individual income tax, corporate income tax, social insurance and retirement receipts (employment and general retirement, unemployment insurance, other retirement), excise taxes, customs duties, estate and gift taxes, miscellaneous receipts, and borrowing.
At $2.632145 trillion, the largest category is the individual income tax. But not all individuals pay income tax. According to a new report from the nonpartisan Tax Policy Center, 57 percent of U.S. households paid no federal income tax in 2021. The corporate income tax gave the federal government another $424.865 billion. Social insurance and retirement taxes amounted to $1.483526 trillion. Excise taxes, on things like airline tickets, fuel, tires, tobacco, and alcohol, brought in $87.726 billion. Customs duties came to $99.908 billion. So much for free trade. Estate and gift taxes amounted to $32.550 billion. Miscellaneous receipts (God only knows what that includes) contributed another $135.397 billion. The rest of the money that was spent was borrowed. This, combined with the borrowing of all the previous years, resulted in interest payments of $717.611 billion during fiscal year 2022.
This is an obscene amount of money. Liberals like to complain about the salaries of CEOs and professional athletes being too high, but I have never heard any of them complain about the amount of money that Uncle Sam takes in. At least CEOs and professional athletes do something productive to earn their money.
What is it that the federal government spends so much money on? The amount of money that it costs the federal government to repair roads and bridges; manage national parks and federal lands; maintain Air Force One; cool and heat federal buildings; operate federal courts and prisons; monitor the weather; collect economic statistics; keep satellites in the air; operate the Smithsonian Institution; and pay the salaries of members of Congress and their staffs is less than insignificant when compared to the federal budget as a whole.
There are two types of federal spending: mandatory and discretionary. Mandatory spending, which accounts for about two-thirds of the federal budget, refers to the portion of the budget that Congress legislates outside of the annual appropriations process. Discretionary spending, which accounts for about one-third of the federal budget, refers to the portion of the budget that is decided by Congress through the annual appropriations process.
Mandatory spending includes spending on Social Security, Medicare, Medicaid, welfare and subsidies, food stamps, unemployment benefits, refundable tax credits, and veterans’ benefits. Discretionary spending includes spending on the military, education, NASA, foreign aid, job training, Head Start, veterans’ benefits, scientific research grants, and the Women, Infants, and Children (WIC) program.
In other words, the main thing that the federal government spends money on is income transfer programs. As explained by the late Walter Williams, economist at George Mason University:
Tragically, two-thirds to three-quarters of the federal budget can be described as Congress taking the rightful earnings of one American to give to another American — using one American to serve another. Such acts include farm subsidies, business bailouts, Social Security, Medicare, Medicaid, food stamps, welfare, and many other programs.
The many other programs include things like federal grants for art, culture, and the humanities.
And the next largest expense of the federal government is spending on the military. Although military spending was officially $726.571 billion in fiscal year 2022, we know from the work of Robert Higgs and Melvin Goodman that defense-related parts of the budgets of other departments push real defense spending up over $1 trillion.
Five trillion dollars is not enough for the profligate spenders in Congress, but there is no reason for the federal budget to be over even $1 trillion, not if spending were strictly limited to what is specifically authorized in the Constitution. This means no welfare, grants, or subsidies; no Social Security, Medicare, or Medicaid; no war on drugs, cancer, or obesity; no space exploration, public broadcasting, or Amtrak train service; no departments of Education, Agriculture, or Health and Human Services; and no foreign aid, foreign wars, or foreign military bases.
Although the Republicans are projected to take control of the House of Representatives once the election results are sorted out, don’t think for a minute that that will result in any measure of fiscal responsibility. The national debt increased by about $5 trillion during George W. Bush’s two terms as president. And the debt increased by almost $4 trillion during Donald Trump’s three “pre-pandemic” years as president. The federal budget has never decreased when Republicans had control of the government.
The post Five Trillion Dollars Is Not Enough appeared first on The Future of Freedom Foundation.
The Future of Freedom Foundation was founded in 1989 by FFF president Jacob Hornberger with the aim of establishing an educational foundation that would advance an uncompromising case for libertarianism in the context of both foreign and domestic policy. The mission of The Future of Freedom Foundation is to advance freedom by providing an uncompromising moral and economic case for individual liberty, free markets, private property, and limited government. Visit https://www.fff.org