Government spending

Extracted Attributes

• Components

  Government final consumption expenditure, Government investment (gross capital formation)

• Definition

  All government consumption, investment, and transfer payments

• Economic Role

  Major component of gross domestic product, Key element of fiscal policy, Provides public goods and services, Influences income levels and distribution

• Alternative Names

  Government expenditure, Public expenditure

• Financing Methods

  Government borrowing, Taxes, Custom duties, Sale or lease of natural resources, Various fees (e.g., national park entry, licensing fees)

• Consequence of Borrowing

  Incurs interest costs

• US Federal Budget (2020)

  Around $7 trillion (due to COVID-19 pandemic response)

• US Federal Spending (2019)

  Approximately 55% of total government spending

• US Federal Tax Breaks (2020)

  Cost over $1.3 trillion (tax expenditures)

• US State & Local Spending (2019)

  Approximately 45% of total government spending

• US State & Local Spending (FY 2021)

  $3.7 trillion on direct general government expenditures

• Historical Context (Pre-20th Century)

  Limited by laissez-faire philosophies

• US Federal Spending Categories (2019)

  Mandatory/entitlement spending, Discretionary spending, Interest on government debt

• US General Government Spending (2022)

  $9.372 trillion or 36.7% of GDP

• US Federal Spending (FY 2024 estimate)

  $6.9 trillion, amounting to 24% of GDP

• Largest US Mandatory Spending Item (2019)

  Social Security (38% or nearly $1,050 billion of $2,736 billion total mandatory spending)

• Next Largest US Mandatory Spending Items (2019)

  Medicare, Income Security

Timeline

• Before the 20th century, public expenditure was largely limited due to prevailing laissez-faire philosophies. (Source: Wikipedia)

  1800-01-01

• In the 20th century, John Maynard Keynes argued that public expenditure was pivotal in determining levels of income and distribution in the economy, shifting economic thought. (Source: Wikipedia)

  1900-01-01

• The total US federal budget ran around $7 trillion, significantly higher than usual due to steps taken to address the COVID-19 pandemic. (Source: Web Search)

  2020-01-01

• Mark Cuban theorized that a 2020 oil production deal orchestrated by Donald Trump was a key trigger for subsequent inflation, partly due to excessive government spending. (Source: Mark Cuban document)

  2020-01-01

• US state and local governments spent $3.7 trillion on direct general government expenditures. (Source: Web Search)

  2021-01-01

• US general government spending was $9.372 trillion, or 36.7% of GDP. (Source: Web Search)

  2022-01-01

• US federal government spending is estimated at $6.9 trillion for fiscal year 2024, amounting to 24% of GDP. (Source: Web Search)

  2024-01-01

Government spending

Government spending or expenditure includes all government consumption, investment, and transfer payments. In national income accounting, the acquisition by governments of goods and services for current use, to directly satisfy the individual or collective needs of the community, is classed as government final consumption expenditure. Government acquisition of goods and services intended to create future benefits, such as infrastructure investment or research spending, is classed as government investment (government gross capital formation). These two types of government spending, on final consumption and on gross capital formation, together constitute one of the major components of gross domestic product. Spending by a government that issues its own currency is nominally self-financing. However, under a full employment assumption, to acquire resources produced by its population without potential inflationary pressures, removal of purchasing power must occur via government borrowing, taxes, custom duties, the sale or lease of natural resources, and various fees like national park entry fees or licensing fees. When these sovereign governments choose to temporarily remove spent money by issuing securities in its place, they pay interest on the money borrowed. Changes in government spending are a major component of fiscal policy used to stabilize the macroeconomic business cycle. Public expenditure is spending made by the government of a country on collective or individual needs and wants of public goods and public services, such as pension, healthcare, security, education subsidies, emergency services, infrastructure, etc. Until the 19th century, public expenditure was limited due to laissez faire philosophies. In the 20th century, John Maynard Keynes argued that the role of public expenditure was pivotal in determining levels of income and distribution in the economy. Public expenditure plays an important role in the economy as it establishes fiscal policy and provides public goods and services for households and firms.

Web Search Results

• Government spending in the United States - Wikipedia

  For most governments around the world, the majority of government spending takes place at the federal/national level. As of 2019, in the United States, approximately 55% of government spending is spent by the federal government, while the remaining 45% of government spending is spent by state and local government.( Federal government spending in the United States can be broken down into three general categories: mandatory/entitlement spending, discretionary spending, and interest on government [...] Figures published by the International Monetary Fund for 2022 shows general government spending at $9.372 trillion, or 36.7% of GDP.( Components of federal government spending ----------------------------------------- [edit] Further information: United States federal budget Image 8 CBO: U.S. Federal spending and revenue components for fiscal year 2023. Major expenditure categories are healthcare, Social Security, and defense; income and payroll taxes are the primary revenue sources. [...] _Figure A_ provides a breakdown of the major mandatory government spending categories as of the fiscal year 2019 budget approved by Congress. As _Figure A_ suggests, Social Security "Social Security (United States)") is the single largest mandatory spending item, taking up 38% or nearly $1,050 billion of the $2,736 billion total. The next largest expenditures are Medicare "Medicare (United States)") and Income Security, with the remaining amount going to Medicaid, Veterans Benefits, and other

• State and Local Expenditures | Urban Institute

  From 1977 to 2021, in 2021 inflation-adjusted dollars, state and local government spending increased from $1.2 trillion to $3.7 trillion, a 202 percent increase. Real per capita expenditures increased from $5,551 to $11,087, a 100 percent increase, over the same period. [...] 2 State and local general expenditures include spending on schools, health care services, and general administration (among other activities in the general government sector) but exclude government-run liquor stores, utilities, and insurance trusts, which are accounted for separately in the census. For more information about how the US Census Bureau classifies government expenditures, see the US Bureau of the Census, Government Finance and Employment Classification Manual (Washington, DC: US [...] --- State and Local Expenditures State and local governments spent $3.7 trillion on direct general government expenditures in fiscal year 2021.1 States spent $1.8 trillion directly and local governments—cities, townships, counties, school districts, and special districts—spent $1.9 trillion directly.2

• Federal Spending | U.S. Treasury Fiscal Data

  The federal government spends money on a variety of goods, programs, and services to support the American public and pay interest incurred from borrowing. In fiscal year (FY) 2024, the government spent $6.75 trillion, which was more than it collected (revenue), resulting in a deficit. [...] The federal government spends money on a variety of goods, programs, and services that support the economy and people of the United States. The federal government also spends money on the interest it has incurred on outstanding federal debt. Consequently, as the debt grows, the spending on interest expense also generally grows. [...] Federal government spending pays for everything from Social Security and Medicare to military equipment, highway maintenance, building construction, research, and education. This spending can be broken down into two primary categories: mandatory and discretionary. These purchases can also be classified by object class and budget functions.

• Policy Basics: Where Do Our Federal Tax Dollars Go?

  In fiscal year 2024, the federal government spent $6.9 trillion, amounting to 24 percent of the nation’s gross domestic product (GDP), according to the June 2024 estimates of the Congressional Budget Office (CBO). About nine-tenths of the total went toward federal programs; the remainder went toward interest payments on the federal debt. Of that $6.9 trillion, almost $4.9 trillion was financed by federal revenues. The remaining amount was financed by borrowing. (Note: In this analysis, the [...] While critics often raise concerns about “government spending” in the abstract, it is important to determine whether the actual public services and investments that government programs provide are valuable. Federal revenue is used to pay for these services and investments. Consequently, when thinking about the costs that taxes impose, those costs should be weighed against the benefits the nation receives from the expenditure of those funds. ### Appendix

• Federal Spending: Where Does the Money Go

  The total federal budget of the United States has recently run about $4 trillion or more each year. In 2020, the total federal budget ran much higher, at $7 trillion, because of all of the steps the government took to address the COVID-19 pandemic. [...] The U.S. Treasury divides all federal spending into three groups: mandatory spending, discretionary spending and interest on debt. Together, mandatory and discretionary spending account for more than ninety percent of all federal spending, and pay for all of the government services and programs on which we rely. Interest payments on the national debt account for a much smaller amount than the other two categories. The pie chart shows federal spending in 2020 broken into these three categories. [...] In fact, tax breaks function as a type of government spending, and they are officially called "tax expenditures" by the Treasury Department. Tax breaks cost the federal government more than $1.3 trillion in 2020 – nearly as much as all discretionary spending in the same year. FacebookTwitter Source: OMB, National Priorities Project

Government spending or expenditure includes all government consumption, investment, and transfer payments. In national income accounting, the acquisition by governments of goods and services for current use, to directly satisfy the individual or collective needs of the community, is classed as government final consumption expenditure. Government acquisition of goods and services intended to create future benefits, such as infrastructure investment or research spending, is classed as government investment (government gross capital formation). These two types of government spending, on final consumption and on gross capital formation, together constitute one of the major components of gross domestic product. Government spending can be financed by government borrowing, taxes, custom duties, the sale or lease of natural resources, and various fees like national park entry fees or licensing fees. When Governments choose to borrow money, they have to pay interest on the money borrowed. Changes in government spending is a major component of fiscal policy used to stabilize the macroeconomic business cycle.