Mirror of Justice

A blog dedicated to the development of Catholic legal theory.
Affiliated with the Program on Church, State & Society at Notre Dame Law School.

Monday, August 4, 2008

Social Spending by Government in the United States and The Burden on Taxpayers: Getting the Numbers Out

From the way our friends on the leftward side of our Catholic academic community here on the Mirror of Justice sometimes talk about government social programs and spending on the poor in this society, a person understandably might be left with the impression that we live in a libertarian regime in which the capitalist market distributes all income, government is small and starved for resources, taxes are low, and the disadvantaged are utterly neglected. Thus, Eduardo Penalver laments in a recent post that “a serious governmental commitment to human development among the poorest Americans” has never been manifested in the United States, “at least not during [his] lifetime.”

I want to suggest that the dollar-and-cents reality is something quite different. We can debate whether an even larger government presence and more government spending, accompanied by higher taxes, higher compliance costs, and more draws against economic productivity, is a good thing or not. But we should not be unaware of the enormous level of government expenditures already in place, among which social spending is by far the largest segment. We should also debate whether a state-centric approach to social justice is a good thing, either in material or spiritual terms. But only by appreciating the real-world economic realities can we fairly evaluate the remaining differences among us.

During fiscal year 2007, the total amount of government spending at all levels was $4.9 trillion. To place this in perspective, based on a Gross Domestic Product of $13.67 trillion, government spending consumed 35.9 percent of our economic production as a nation. The following table was helpfully compiled from Census Bureau statistics by usgovernmentspending.com:


To see the same figures stated as percentages by category of overall government spending and in the form of a pie-chart:


Of that government spending, social spending constituted some 55.8 percent of total spending, totaling more than $2.88 trillion. Defining social welfare spending more narrowly to include only welfare, health care, and education, these spending categories add up to more than 40 percent of overall government spending and some 15 percent of our entire economic output. (And this social spending figure dwarfs the expenditures on national defense, which now stands at 13.4 percent of government outlays and less than 5 percent of GDP.)

Far from there being an absence of a serious government commitment to the poor during our lifetime, the trend in government spending during my lifetime at least has been nothing less than dramatic. Looking only at the federal budget, which significantly understates the total government spending on social programs, Michael Hodges on his web page documents how the percentage of the federal budget devoted to defense has plummeted while social spending has skyrocketed:


Nor should we look only to the government spending side and ignore the source of those revenues―the burden on the taxpayer. As calculated by the Tax Foundation from Bureau of Economic Analysis data, the average American spends nearly a third of each year working simply to earn enough to pay various local, state, and federal taxes:


Now I understand that some of our friends on the Mirror of Justice would like to see these numbers go higher, both in spending and taxes (and the two of course move together). They envision a still larger role for government in moving our society toward social justice. (And if Barack Obama does become President, as he at least appears to presume, we undoubtedly will see just such a major expansion of government.) But we should never pretend that government is not already a monumental presence in our lives, that government does not already expend gigantic sums of money, that the government does not already consume a huge segment of our national economy, and that we are not already paying a hefty part of our incomes in taxes.

Greg Sisk


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