Breakdown of Higher Government Spending

AB noted that this morning the CBO released its new estimates of the budget deficit for 2004 and beyond. The news continues the almost monotonous upward revisions in the US’s budget deficit problems over the rest of the decade. This dovetails with a debate that has been growing of late, and which has been reflected in the Conservative v. Bush issue: what is the cause of the budget deficit? Is spending indeed out of control, and if so, spending on what? (For an example of what people are saying in this debate, you might want to read this NYTimes piece from over the weekend.)

I’ve put a table together to get at this question. The table shows government spending (and percent changes) in both discretionary and mandatory spending during the 4 years before Bush was elected and the 4 years after. Note that Bush and the Congress only have direct, budget-to-budget control over the discretionary portions of spending. To change mandatory spending, they would have to alter one of the US’s social benefit policies. Anyway, here are the results:

Clearly, skyrocketing defense spending over the past few years is the single biggest contributor to the increase in spending in both dollar and percentage terms… but there are lots of other contributions, too. Government spending on health care comes in as culprit #2. Discretionary non-defense spending has been rising, too, though not as fast as defense spending.(*) Later this week I’ll show you a further breakdown of the data by sub-category within non-defense discretionary spending.

One interesting note: surprisingly, Social Security is not a major contributor to higher government spending right now. But as I’ve noted elsewhere, that will change soon enough.


(*) note: the figure in the table includes $27bn for homeland security in 2004. Excluding HS, non-defense discretionary spending is $418 in 2004, which represents a 31% rise from 2000.