Tuesday, August 31, 2010

16 Percent Increase in Federal Domestic Spending in 2009, Over $10,000 per Person

By Bob DeMarco
All American Investor

The U.S. Census Bureau announced today that obligations for federal domestic spending increased 16.0 percent in fiscal year 2009 to $3.2 trillion. The 2009 spending total is equivalent to $10,548 per person living in the United States.

The annual percentage change (16.0 percent) is the largest since the Census Bureau began compiling these data in 1983. The increase is in part from the American Recovery and Reinvestment Act (ARRA) of 2009.

Entitlement programs Medicare, Medicaid and Social Security comprised 45.7 percent of all funding, or $1.5 trillion. Social Security alone accounted for $709.7 billion of that total. The one-year increase ($136.0 billion) in spending for these three programs was approximately
$401 for every person in the United States.

States that had the highest per capita federal spending were Alaska ($20,351), Virginia ($19,734) and Hawaii ($19,001). States with the lowest were Nevada ($7,148), Utah ($7,435) and Georgia ($8,538).

These new figures come from Consolidated Federal Funds Report: 2009, which describes the distribution of federal funds by department and agency, and by state and county. A companion report also released today, Federal Aid to States: 2009, shows federal grants to state and local governments. These reports do not include interest paid on the federal debt and foreign aid. Although federal expenditure and obligation totals for fiscal year 2009 in these reports include money from the ARRA, specific dollar amounts are not identifiable for all programs.

Federal spending includes expenditures or obligations for grants, salaries and wages, procurement contracts, direct payments for individuals for retirement and disability, and other direct payments.

Grants represented nearly one-quarter (23.0 percent) of federal spending in fiscal year 2009, totaling $744.1 billion. Three federal departments accounted for 77.9 percent of all federal grant
money in 2009 -- Health and Human Services ($414.9 billion), Education ($83.2 billion) and Transportation ($81.6 billion).

Salaries and wages for federal employees accounted for $299.4 billion (9.2 percent) of all federal spending. The largest share of this category went to Department of Defense payrolls (45.8 percent),
followed by federal civilian payrolls (35.3 percent) and U.S. Postal Service payrolls (18.9 percent).

Approximately one in six federal dollars went to procurement contracts, which totaled $550.8 billion, or 17.0 percent of total federal spending. Defense contracts comprised 64.4 percent of that amount, followed by Energy (5.8 percent) and Veterans Affairs (4.0 percent).

Retirement and disability accounted for more than one-quarter (27.2 percent) of all federal spending, at $881.1 billion.

Other direct payments (e.g., housing assistance, unemployment compensation, Medicare) made up 23.6 percent of the federal spending at $762.9 billion.

Other highlights from the Consolidated Federal Funds Report:
  • The federal government spent $85.8 billion on unemployment compensation in 2009, an increase of 114.6 percent from 2008. Forty states saw increases in unemployment compensation of more than 100 percent. Meanwhile, 27 states allocated more than $1 billion for unemployment compensation.
  • In addition to direct expenditures and obligations, the federal government committed $1.9 trillion in direct loans, guaranteed loans and insurance in 2009. Insurance comprised 69.6 percent of that total, including flood insurance ($1.2 trillion), crop insurance ($77.8 billion) and life insurance for veterans ($14.4 billion).
  • Guaranteed or insured loans totaled $510.0 billion, led by home mortgage insurance loans, which accounted for $310.0 billion.
  • Direct loans were $54.4 billion, led by federal direct student loans, which accounted for $36.7 billion.
  • Medicare and Medicaid per capita obligations were highest in Hawaii ($6,990), Kansas ($4,367) and Wisconsin ($3,544). States that had the lowest were Utah ($1,118), Nevada ($1,216) and Colorado ($1,352).
  • Total obligations for two major welfare programs -- Temporary Assistance for Needy Families and the Supplemental Nutrition Assistance Program (previously known as the food stamp program) reached $68.4 billion in 2009, a 31.7 percent increase.
  • Grants for the Department of Housing and Urban Development obligated $43.9 billion, a 58.6 percent increase from 2008.
  •  Department of Transportation grants totaled $81.6 billion in 2009, a 52.9 percent increase from 2008.

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Original content Bob DeMarco, All American Investor