November 6, 2013
Still living with the misguided idea that the bulk of government spending goes to defense? Wrong.
As the just released Treasury refunding presentation shows, for yet another year in a row, the bulk of government outlays was for Medicare and Medicaid, as well as Social Security, both amounting to just shy of $900 billion in 2013, a sizable increase compared to the prior year. Defense spending?
It declined once again to just over $600 billion, as did Interest outlays, which net of the Fed’s remittances on interest payments, declined from under $500 billion to just about $400 billion in the past year.
The other tiems were largely in line, and far less material to the US government’s spending addiction.
So how did the government fund these outlays? Well in addition to net debt issuance of just over $1 trillion in the 2013 fiscal year, the other more traditional sources of funding – tax receipts – were the following:
Notably, while monthly individual income taxes rose on an LTM basis to a record $110 billion as a result of changes to the tax code in early 2013, corporations continue to see their overall income taxes decline as more seek offshore tax shelters, and avoid paying US taxes while building up record cash hoards.
This is also visible on the following chart of Y/Y percentage changes in tax receipts, showing that for the first time in years, corporate taxes are about to decline compared to the previous year.
Ironically, corporations may be people as per the SCOTUS, but people are increasingly corporations, at least for IRS purposes.
This article was posted: Wednesday, November 6, 2013 at 11:07 am