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First, he notes that tax revenues per household will total $16,981, including income tax, payroll tax, and taxes on gas, estates, and other things. Meanwhile, the government is expected to spend $21,671 per household in 2004, which is $3,500 more than in 2001, nearly a 20% increase. The astute observer will notice a gap of $4,690 per household -- that's our deficit per household (and no small amount, is it?), which our children will likely get to worry about.
Here's where the $21,671 will be spent:
- Social Security and Medicare: $7,165.
- Defense: $4,240. Cowen notes that, "Lawmakers drastically cut defense spending throughout the 1990s. The September 11 attacks reversed this trend, and the $1,300 per household increase since 2001 has returned defense spending to its historical levels."
- Low-income programs: $3,479. "Nearly half of this spending subsidizes state Medicaid programs that provide health services to poor families. In line with economywide health-care trends, Medicaid costs are rising 10 percent per year."
- Interest on the federal debt: $1,460. "Washington is $7 trillion in debt. It owes $4 trillion to the public that owns its bonds and the rest to other federal agencies. Record-low interest rates have reduced the interest payments by $1,000 per household over the last six years. As interest rates climb back to normal levels, so will these costs to taxpayers."
- Federal employee retirement benefits: $835.
- Health research and regulation: $619.
- Education: $583. (This is the federal government's portion of education spending -- it's only about 8% of overall public spending on education -- the rest comes from state and local governments.)
- Veterans benefits: $565.
- Unemployment benefits: $451.
- Highways and mass transit: $400.
- Justice administration: $389. This includes federal lawyer costs, as well as prisons and homeland security initiatives.
- International affairs: $320.
- The remaining $1,165 is allocated to all other federal programs, such as farm subsidies, environmental programs, space exploration, air transportation, and community development.
Among those who oppose some of these spending categories, some have proposed that taxpayers be allowed to designate which federal spending categories they want their money to support. It's an attractive idea in some ways, but likely not too practical.
Perhaps the most troubling number above is the deficit of $4,690 per household -- especially since it's a figure for just one year. Add to it deficits for other years and it begins looking a lot like hard-to-dig-out-from-under credit card debt. Be careful, America!
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.
