In general, and perhaps not surprisingly, defense spending consumes more of GDP during wartime (well over a third at the height of World War II) and less during peacetime. While spending on human services has grown to represent a greater share of GDP over time, the defense share has become smaller: It was 3.3% in fiscal 2016, versus 4.7% as recently as fiscal 2010. Now, the main growth drivers of human-services spending are Medicaid, Medicare and Social Security. It actually was higher – 16.1% – in fiscal 2010, largely due to greater spending on unemployment compensation, food assistance and other forms of aid during the Great Recession. From less than 1% of GDP during World War II (when many Depression-era aid programs were either ended or shifted to the war effort), federal spending on human services now amounts to 15.5% of GDP. Measured as a share of GDP, the biggest long-term growth in federal spending has come in human services, a broad category that includes various kinds of social insurance, other health programs, education aid and veterans benefits. (We relied on archived historical data from former President Barack Obama’s final budget for our spending data President Donald Trump’s initial budget proposal doesn’t include any historical data.) The biggest recent exception came in the wake of the 2008 mortgage crash: In fiscal 2009, a surge in federal relief spending combined with a shrinking economy to push federal outlays to 24.4% of GDP, the highest level since World War II, when federal spending peaked at nearly 43% of GDP. For most of the past several decades, federal spending has hovered within a few percentage points above or below 20%. In fiscal 2016, total federal outlays were 21.5% of gross domestic product, or GDP. economy, which provides a consistent frame of reference over long periods. It can be helpful to look at spending as a share of the overall U.S. Everything else – crop subsidies, space travel, highway repairs, national parks, foreign aid and much, much more – accounted for the remaining 6%. Education aid and related social services were about $114 billion, or less than 3% of all federal spending. Another $604 billion, or 15.3% of total spending, went for national defense net interest payments on government debt was about $240 billion, or 6.1%. 30, the federal government spent just under $4 trillion, and about $2.7 trillion – more than two-thirds of the total – went for various kinds of social insurance (Social Security, Medicaid and Medicare, unemployment compensation, veterans benefits and the like). When thinking about federal spending, it’s worth remembering that, as former Treasury official Peter Fisher once said, the federal government is basically “a gigantic insurance company,” albeit one with “a sideline business in national defense and homeland security.” In fiscal year 2016, which ended this past Sept. That makes it a good time to look at the federal government’s spending habits in a broader context than just this year’s battles. It’s springtime, which means the start of the budgeting process for Congress and a mad dash for many Americans to file their income taxes.
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