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Government The Almighty Buck United States

70% of U.S. Government Spending Is Writing Checks To Individuals 676

An anonymous reader writes with this excerpt from Investor's Business Daily:"Buried deep in a section of President Obama's budget, released this week, is an eye-opening fact: This year, 70% of all the money the federal government spends will be in the form of direct payments to individuals, an all-time high. In effect, the government has become primarily a massive money-transfer machine, taking $2.6 trillion from some and handing it back out to others. These government transfers now account for 15% of GDP, another all-time high. In 1991, direct payments accounted for less than half the budget and 10% of GDP. What's more, the cost of these direct payments is exploding. Even after adjusting for inflation, they've shot up 29% under Obama." It's very hard to lay blame on only one part of the U.S. government, though; as the two largest parties are often fond of pointing out when it suits them, all spending bills originate in the House.
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70% of U.S. Government Spending Is Writing Checks To Individuals

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  • by jeff4747 ( 256583 ) on Tuesday March 11, 2014 @04:44PM (#46457673) []

    Feel free to run on eliminating it. After all, it's what you're complaining about in your post.

  • by grahamwest ( 30174 ) on Tuesday March 11, 2014 @04:52PM (#46457753) Homepage

    "Individual" in this case does NOT mean "person".

    If you download the spreadsheet you can see that they classify total spending as either "direct" or "grants", of which the vast bulk is "direct". Everything that is not a grant must be being paid to an entity of some kind, whether an actual person, a company, a non-profit or something. You can verify this is the total Federal spending using the Monthly Treasury Statements at [] - I recommend the PDF versions.

    As for the percentage going to veterans, I expect the number of veterans isn't growing very much, whereas the Federal budget is. So a constant amount in a larger total is going to be a smaller fraction.

    Bottom line, this article is FUD and should not be taken serious by anyone.

  • by TubeSteak ( 669689 ) on Tuesday March 11, 2014 @05:04PM (#46457887) Journal

    By the way, taxing the rich won't cut it -- taxing 100% of the rich's income would gain you an additional $500 billion a year (assuming they continue to work for free, good luck with that and keeping their salaries pointlessly high). This is still hundreds of billions a year short.

    The richest have been undertaxed for decades.
    So you're right, taxing them at 100% won't fix the problem, because it was a problem decades in the making.

    These types of budget problems cannot be fixed overnight, they require long term planning and gradual change.
    Oh, and they require higher taxes.

  • Re:And... (Score:4, Informative)

    by Grishnakh ( 216268 ) on Tuesday March 11, 2014 @05:12PM (#46457993)

    No, the landscapers where I used to live in Phoenix all worked under the table. They were paid in cash. You don't need an illegal ID to get paid cash for a job. Go pick up some day laborers from Home Depot on Thomas Rd. and ask them if they ever needed an ID to get a job that way.

  • by stdarg ( 456557 ) on Tuesday March 11, 2014 @05:23PM (#46458081)

    I hope you're joking about Baby Boomers earning Social Security. SS taxes were half the current level when the Boomers started their careers. See []

    I'm all for paying them back based on what they paid in, but they have not earned the current benefit level.

  • by Bartles ( 1198017 ) on Tuesday March 11, 2014 @05:24PM (#46458095)
    There is no such thing as a mandatory program unless it is mandated by the Constitution. We can choose to recognize this fact, or we can be forced to recognize this fact. Either way it will eventually happen.
  • Macroeconomics 101 (Score:4, Informative)

    by Geoffrey.landis ( 926948 ) on Tuesday March 11, 2014 @05:29PM (#46458145) Homepage

    ...When the federal reserve increases the supply of money, inflation is the net result. The net result of the fed increasing the money supply and inflation, is a tax on everyone who currently owns US dollars, as each of their dollars now purchases fewer real goods

    Not exactly. The (money supply) times (velocity of money) equals (cost of goods), times (production rate).

    So, if the amount of money increases but velocity of money and the production rate (amount of goods produced per unit time) stay the same, the result is inflation.

    However, conversely, if the production rate increases but the money supply and velocity of money does not, then the cost of goods decreases-- that's deflation. (Note that this is production rate, not productivity: production rate equals productivity time population times employment fraction.)

    A steady economy is one in which the money supply increases exactly at a rate equal to the production rate-- in this case, the cost of goods stays constant (assuming that the velocity of money doesn't change).

  • by LordLimecat ( 1103839 ) on Tuesday March 11, 2014 @05:56PM (#46458417)

    Complaining about a conservative lean on slashdot is one of the silliest complaints ive ever seen. Does noone remember the comments around the hurricane during the 2012 RNC, with a large majority of posters wishing (some claiming to be serious) that key RNC leaders would drown?

    Thats just the one that sticks out most for me because of how brazen it was (accusing the right of being the party of hate all the while wishing them to die for their political beliefs), but its by no means unique. Slashdot has an incredibly liberal lean. Any post involving anything conservative is gonna be a moshpit of democrats going off on how retarded and backwards conservatives are.

    Generally I ignore it because its to be expected on an internet forum, I just think its hillarious to see a complaint that its too conservative.

  • Re:And... (Score:5, Informative)

    by LynnwoodRooster ( 966895 ) on Tuesday March 11, 2014 @05:57PM (#46458429) Journal
    Just fill this out [] and you get an ITIN - which is as accepted as a Social Security number. It's even the same 3-2-4 type of number as a SSN, so it works great for illegal aliens to use for opening bank accounts, getting benefits, etc. And yes, a past girlfriend of mine (Thai national) had overstayed her visa about 8 years and used her ITIN for everything. At least she earned a living doing nails at a local nail salon, but it was a cash business (she "leased" her nail station). Never had a problem filing a tax return or getting benefits when she needed them... ITIN to the rescue!
  • Re:And... (Score:5, Informative)

    by boristdog ( 133725 ) on Tuesday March 11, 2014 @05:59PM (#46458453)

    I worked at the IRS for eight years in a program that checked all income sources reported by employers and others (1099s, W2s, etc) against income reported on individual tax forms.

    If you had a hispanic last name the odds were good someone illegal was using your identity for a job. We'd get 20 or more W2's reported for some people who only had one or two jobs. That means illegal workers are paying withheld taxes, SS & Medicare into the system, with no hope of recieving benefits.

    I saw thousands of these cases, and I was only one person of about a hundred working this program in a 5 state area. The amount paid into these programs by illegal immigrants is huge.

  • Re:Makers and takers (Score:1, Informative)

    by RightSaidFred99 ( 874576 ) on Tuesday March 11, 2014 @06:00PM (#46458459)
    Nice talking point, only the facts are contrary to said talking point. The rich pay most of the taxes and pay a higher percentage of income on taxes than everyone else. This is without exception other than a small blip somewhere high up in the brackets, e.g. something like people who make over $700k a year may pay a percent or two higher tax rate than people who make $2M a year.
  • by shutdown -p now ( 807394 ) on Tuesday March 11, 2014 @06:15PM (#46458605) Journal

    The entire argument about "passing the tax along" is bullshit. By the same logic, personal income tax is "passed along" to corporations, as people purchase less. It's disingenuous to focus on one particular link in the circular wealth transfer that is a functioning economy, and claim that taxing at that particular link is somehow unfair, while taxing all the others are fair.

    As for "getting back at them rich", we just need to start taxing capital gains same as regular income (or better yet, more - it's only fair that "sweat of the brow" earnings are taxed less than collecting rent).

  • Re:Makers and takers (Score:2, Informative)

    by MugenEJ8 ( 1788490 ) on Tuesday March 11, 2014 @06:21PM (#46458649)

    But I guess we are supposed to assume that 70% of the money we pay in taxes is spent on welfare on top of the 50% that goes to foreign aid and 30% on interest and 400% on nasa and 50000000% on foreign wars....

    Whoa, whoa, whoa... 70% + 50% + 30% + 400% + 50000000% = more than 100% -- How could they possibly spend more than they bring in?!?!

  • Re:Makers and takers (Score:5, Informative)

    by nbauman ( 624611 ) on Tuesday March 11, 2014 @06:46PM (#46458829) Homepage Journal

    It would change America's mindset. If suddenly the "freeloaders" and system "cheaters" couldn't extract cash from an ATM with their foodstamp card, then they would have to go about it a different way.

    There are plenty of cases where people live in gov't funded housing, get food stamps, slang drugs and have more than I do as professional. Take away the gov't funded housing, and suddenly they have some skin in the game... makes fuckin' sense to me. Maybe they find other avenues of illegitimate income, but maybe they don't. Either way, if we keep closing loopholes, eventually they have to do it the way I am.

    Yeah, let's get rid of the freeloaders and cheaters.

    From FTA: []

    The 1% Handouts

    Instead, a surprisingly large amount of federal money is handed out to wealthy Americans through Social Security, Medicare, farm subsidies, unemployment benefits, conservation programs, disaster payments and other programs.

    An IBD analysis found that the richest 1% of Americans, in fact, receive roughly $10 billion each year in federal checks.

    Outgoing Sen. Tom Coburn, R-Okla., who exposed these vast payment programs available to the rich, said "this reverse Robin Hood-style of wealth distribution is an intentional effort to get all Americans bought into a system where everyone appears to benefit."

  • Re:Makers and takers (Score:5, Informative)

    by nbauman ( 624611 ) on Tuesday March 11, 2014 @06:53PM (#46458911) Homepage Journal

    The rich pay most of the taxes and pay a higher percentage of income on taxes than everyone else.

    I know that right-wing talking point and I've checked it out before. Don't forget the footnote:*
    *Footnote: "Taxes" are defined to exclude FICA, which is the largest payment most middle-class and working people pay.

    Percentagewise, the rich pay roughly 30%, the same as the middle-class, although those that can put everything into investment income like Mitt Romney pay about 15%.

    That's why Warren Buffet pays less than his secretary.

  • Re:Makers and takers (Score:4, Informative)

    by Artifakt ( 700173 ) on Tuesday March 11, 2014 @07:21PM (#46459119)

    Not quite: The idea is that you pay as much as the work is worth to the worker, and charge as much as the product is worth to the customer. The difference between these two can still be a positive number because the same good can be worth different amounts to different people. If it is, you profit. If it isn't, why did you start that business, when a market survey should have told you not to. Nobody pays more than what they have to to get workers, or gives a customer a better deal than will gain sales. Still, thank you for at least saying customers rather than consumers.

  • Re:Makers and takers (Score:3, Informative)

    by PopeRatzo ( 965947 ) on Tuesday March 11, 2014 @07:29PM (#46459179) Journal

    Ah, but who are the "takers"?

    Maybe this will help a little: []

  • Re:Makers and takers (Score:5, Informative)

    by swillden ( 191260 ) <> on Tuesday March 11, 2014 @09:50PM (#46460269) Homepage Journal

    Investing money in securities is typically about as useful to the economy as stuffing it in a mattress.

    Umm, no.

    When I buy $100 in Google stock, that money just vanishes as far as the economy is concerned (well, modulo the 30% broker fee, of course)

    Again, this is wrong. For one thing, note that broker fees are on the order of fractions of a percent, not 30%.

    When you buy Google stock from Google (i.e. during an IPO or subsequent public offering), that money goes to the company so that it can invest the cash in growth -- that means buying equipment, facilities, real estate, hiring and paying employees, etc. That money is most definitely in circulation.

    Of course Google isn't selling stock right now because it has plenty of cash to fund growth and doesn't need to raise capital. So if you buy Google stock right now, you're buying it from someone else who bought it from Google (or from someone who did; the chain can be arbitrarily long). But the point is that you're buying it from someone. As it happens, I just sold a non-trivial (for me) chunk of Google stock; there's a check waiting at home for me which I'm going to spend on building a house (well, on covering some of the early incidentals; I'll get a loan for the bulk of it). That money will buy building materials, pay constructor workers, etc. That money is also definitely in circulation.

    But what if you buy your stock from a big investment firm rather than from someone like me? Is it out of circulation then? Nope. The investment bank will take your cash and put it into something else... something, in fact, that it believes will be more productive than Google. At least that's true of the value-investing portion of the investment industry, obviously there are other segments that focus on arbitrage. The money managed by those segments is more debatable, but they do contribute significantly to liquidity, which translates to your ability to buy or sell Google stock on a whim.

    There are some issues with the velocity of money in the US, which is a measure of how quickly it circulates. It's at the lowest point in decades. The fed has been pumping massive amounts of new money into the system, and it's not helping. I'm not enough of an economist to really understand the issues here, but the most sensible explanation I've seen is that circulation is reduced because people are using the money to pay down debt. We had a massive explosion of velocity fueled by an extravagant credit boom, but it was unsustainable. That unsustainability was a big part of the housing crash and the recession, but we still have excessive debt and the correction isn't over yet, so velocity stays low.

  • Re:Makers and takers (Score:5, Informative)

    by alexander_686 ( 957440 ) on Tuesday March 11, 2014 @09:58PM (#46460311)

    No, the politicians had fairly low control for most of the history, most of the time it has been tied to the gold standard. Lincoln went off the gold standard with the Greenbacks but he was punished whenever he drifted to far (IIRC the Greenback at one point trade $.25 to the dollar). FDR weakened the link but it was Nixon who cut it.

  • Re:Makers and takers (Score:2, Informative)

    by Jane Q. Public ( 1010737 ) on Tuesday March 11, 2014 @10:45PM (#46460543)

    "... that some low level inflation is better than low level deflation."

    Are you serious? The healthiest markets today are ALL deflationary markets. Look at smartphones, computers, consumer electronics. Any commodity that is either getting better for the same money, or cheaper to produce. That's deflation.

    THIS is what your "low-level inflation" has done over the last 100 years. []

    Government and big investment bankers have been pushing for an inflationary economy because for several reasons (time value of money being just one of them), it is INFLATION that helps the rich. It directly benefits Government, bankers, and Wall Street. It hurts everybody else by, among other thing, insidiously leeching from production and savings.

  • Re:And... (Score:4, Informative)

    by dryeo ( 100693 ) on Tuesday March 11, 2014 @10:50PM (#46460579)

    Funny thing, as far as I know there are only 2 countries that practice direct democracy, one of which is a Republic, namely Switzerland and one has a monarch, namely the Principality of Liechtenstein. Both are very successful countries that have not gone down the path of financial ruin, at that the exact opposite has happened with the Swiss considered one of the most financially stable countries on Earth.
    BTW, all republic really means is not having a sovereign and lots of monarchies have representative governments and some are even federal laid out unions of sovereign states or provinces. There are also lots of republics that are totalitarian dictatorships.

  • by rahvin112 ( 446269 ) on Tuesday March 11, 2014 @11:10PM (#46460695)

    The wealthiest individuals do not pay income tax because they don't have income. Their "income" is actually long term capital gains with the highest rate paid at 20%. They don't pay SSI, Medicare or Medicaide and even if they did they are capped at $125,000 in income. Because of this Mitt Romney had to pay extra taxes for his effective rate (the actual taxation rate) to be 15%.

    For a wage slave to pay an effective rate of 15% they would need to make less than $10,000 per year. Warren Buffet has noted that he has paid less taxes (as a percentage of income) than his secretary since Regan was in office. Most of the 1% in fact avoid almost all taxes, including sales and others by using their wealth to exploit different state level taxation rates (such as keeping a home in a zero income tax state and a home in a zero sales tax state then spending part time in each state with sufficient time spent to eliminate both income and sales tax).

    Properly executed with a good accountant the 1% have paid less than 10% in taxes by careful manipulation of their long term capital gains. It's possible to not only make money on a stock but claim an overall loss. And the best part about capital gains is that, baring dividends, no gains are realized until there is a transaction. This makes is possible to sink 100's of millions into a trust that appreciates in value but never pay taxes on it because a sale of shares never takes place. Then when money is needed a paper loss equal to the 20% tax is realized at the same time to eliminate the liability. This is so common now that the rich like Mitt Romney are forced to pay extra to hit net tax rates of 15%.

    Only the middle class and upper middle class pay high taxable percentages, once you reach a certain asset threshold your taxation rate begins to drop substantially. The middle and upper middle class are the ones getting hosed, all so the richest among us can pay super low rates.

  • Re:Makers and takers (Score:3, Informative)

    by stdarg ( 456557 ) on Wednesday March 12, 2014 @12:45AM (#46461035)

    I find that hard to believe. Just looking at one common item that I've really noticed has gone up, ground beef [] has gone up from $3.005/lbs to $3.467/lbs since 2012, which is 15.4%. Lean ground beef has gone from $3.884/lbs to $5.021/lbs, which is 29.3%.

    That's had a huge knock-on affect in fast food as well. Compare Wendy's "value menu" or "right price menu" or whatever they're calling it to the dollar menu of yesteryear (long ago in the foggy past of 2012). Same food items, now 20%, 30%, 50% more expensive.

    I'd love to see inflation statistics from Visa and Mastercard rather than theoretical "baskets" from researchers.

  • Re:Makers and takers (Score:4, Informative)

    by rioki ( 1328185 ) on Wednesday March 12, 2014 @07:04AM (#46462091) Homepage

    The problem is that you mix tools and how they are used. Fractional reserve banking is not evil in itself. It basically creates, through credits the opportunity for economic growth. That being a company has a great idea, but not the capital to realize it. The bank has the capital, but not the idea. Through a credit it is possible to realize the idea and it is a win/win situation. The company makes a great product which it sells, the bank makes a profit through the credit and maybe even the people putting money into the bank make something off of it, though savings. This is all and well when you ensure that the bank makes proper risk analysis on the credits and on average comes out on top.

    What you should really be afraid of the the credit bubble. What we are currently seeing is that individuals are given credits, which means they are now spending money and helping the economy grow, but this is at the cost that in the future this person will have less money to spend, since he is repaying the credit. So the economy slumps, as a result "to help the economy" more credit is injected. This has been going on since the 60s and in totally high ways since the 80s. The result is that the economic growth is propped up though credits and growing unnaturally. The economy is extracting money from individuals more than they can afford and the only way to keep the current pace is to increase individual debt. The situation is additionally aggravated by greedy bankers which gave out sub prime credits. There will be a point where the individuals dept is so grate that the scheme can't go on. This debt fueled economic growth is the ponzi scheme.

Money is better than poverty, if only for financial reasons.