Ever wondered where your tax dollars go?
In 2022, the federal government spent $6.3 trillion, the equivalent of 24.2% of GDP. 78% of that was funded by taxpayer money, and the rest was borrowed.
Let’s look at just where the federal government spent the most money in 2022:
Medicare, Medicaid, and other healthcare: 27% of all spending ($1.67 trillion)
Social Security: 19% ($1.22 trillion)
Income security and welfare: 14% ($866 billion)
National defense: 12% ($766 billion)
Education: 11% ($677 billion)
Interest on the national debt: 8% ($476 billion)
Veterans benefits: 4% ($277 billion)
Other spending: 5% ($322 billion)
Now, let’s compare that with the projected numbers for 2023:
Medicare, Medicaid, and other healthcare: 24% ($1.5 trillion)
Social Security: 21% ($1.4 trillion)
Defense: 13% ($806 billion)
Interest on national debt: 10% ($663 billion)
Income security and welfare: 8% (or $522 billion)
Veteran and retirement benefits: 8% ($477 billion)
Education: 4%
Let’s break down each of those categories to figure out exactly what that money covers.
Social security: this provides monthly benefits to retirees, of whom there are 48.6 million in the U.S. It also provides benefits for the spouses and children of retired, deceased, or disabled workers.
Health insurance: This covers Medicare, Medicaid, CHIP (the Children’s Health Insurance Program), and ACA (Affordable Care Act), which ensure that those who are low-income, disabled, or over age 65 can receive health insurance to pay for their care.
Defense: Much of this money goes to the Defense Department, to cover operations and maintenance, weapons, military personnel, and research and development.
Income security and welfare: This provides financial aid to low-income families and individuals. It includes things like the Earned Income Tax Credit, the Child Tax Credit, unemployment insurance, Supplemental Security Income, food stamps, housing assistance, school meals, child care, and programs for neglected or abused children.
Veteran and federal retiree benefits: This includes disability payments and medical care for former veterans and federal employees, as well as monthly retiree pensions and survivor benefits.
National debt interest: This goes toward regular payments on the federal government’s debt, incurred from borrowing to cover past deficits. The net federal debt is currently at $34.14 trillion.
Education: This spending more than doubled in 2022, with $379 billion going toward student loan forgiveness.