As Washington prepares for another congressional clash over federal spending I thought it might be helpful to look at some facets of said spending.
- In the recently completed fiscal year, the federal government reportedly spent nearly $3.7 trillion, about $12,000 for every American, according to a Politico.
- About $2.5 trillion of this spending, about 70 percent of the total, is mandatory which means it automatically goes out the door unless Congress specifically hits the brakes and says no. The mandatory spending includes Social Security, Medicare, Medicaid and TRICARE – health care coverage for active duty soldiers, their families, reservists and retirees as well as several other smaller expenditures.
Mandatory spending for 2016 will set a new record at $2.543, according to OMB.- The next largest item in spending after the DOD budget, $229 billion, is interest paid on the national debt which as about $18,415 trillion, or $154,494 for every taxpayer.
- The fight regarding federal spending will actually be over a mere $1.1 trillion, give or take a billion or two, the amount Congress actually appropriates through the annual budget process.
Within healthcare, there are some interesting trends – and most are not positive.
- Every 8 seconds, another Baby Boomer signs up for Social Security and Medicare benefits.
- By 2030, the number of Americans eligible for Medicare and Social Security will rise by 4.2 million per year, factoring in deaths.
- Today there are 47 million Medicare beneficiaries. By 2030 that number will be 80 million and they will be living longer and based on current trends, their care will be substantially more costly.
The funding balance for these programs will begin to shift over the next 15 years as there will be more people benefiting from these entitlements than are working and paying to support them.- A two-earner couple receiving an average wage – $44,600 per spouse in 2012 dollars – and turning 65 in 2010 would have paid $722,000 into Social Security and Medicare and can be expected to take out $966,000 in benefits. So, this couple will be paid about one-third more in benefits than they paid in taxes, according to Politifact.
- Healthcare spending for the military is reaching crisis proportions. Former Sec. of Defense Robert Gates said, “Healthcare costs are eating the defense department alive.”
- Defense spending for healthcare rose from $19 billion in 2001 to $55 billion in 2012. By 2017, that number is forecast to pass $65B and in 15 years will be about $95 billion
- Pentagon officials say the great threat to defense is not declining appropriations from Congress, but how funds are spent internally – in other words healthcare.
One of the fastest-growing categories of federal spending is another form of insurance – disability payments. In case you are caring for someone with a disability, there are several financial options you can look into. When you become unable to work, disability insurance generally compensates some of your income. Those who are new to disability insurance, may not know how to first go about it and will need additional help in that area. Seeing if they can get disability insurance with no exam may be at the forefront of their mind, so they will need to bring questions like that to the relevant authorities.
- 14 million American people receive disability payments each month. The vast majority of disability do not work.
- In 2005, the Old Age Survivor Insurance (OASI) spending was about $440 million a year. Disability spending amounted to $90 billion,
- In 2015, OASI spending rose to $750 billion and payments for disability claims shot up to $150 billion.
- Following the implementation of the welfare reform in the 1990s, some states began hiring consulting companies that specialized in qualifying residents on welfare, a cost they shared with the federal government, for disability insurance, a cost for which the federal government is solely responsible.
If you look at the total amount of money this country spends on various benefits, from old age pensions to healthcare and disability, the old adage about Washington seems to be more about truth than fiction:
The federal government is actually just a very large insurance company with an army.