How big is Government in the United States?
How big is Government in the United States?
Some perspective is needed. We all know the rhetoric. Most of us probably believe some of it, and some of us believe all of it – without checking to see how much truth there is to it. It’s simply true, or so we assume.
The government in the United States is a huge bureaucracy – perhaps not all government, but the federal government surely is. The federal government’s sheer size dwarfs state and local government. Government employees are all freeloaders who live off the hard work of taxpayers. Government employees are “bureaucrats”, and of course that is a bad word. The government keeps growing and growing. Government spending is out of control, and this keeps getting worse, especially while President Obama is in charge. The deficit keeps growing and growing. President Obama is the biggest deficit spender in history.
These and similar statements are accepted as facts by a large percentage of Americans. People accept them, but they don’t take the time to look at the data behind the claims. They don’t have facts to back up these statements, only rhetoric. Many people don’t feel the need to listen to anybody who will provide the facts, as long as they can listen to pundits who will give them the rhetoric that they are willing to believe. Or perhaps, the rhetoric has a few factual statements mixed in – facts that, without proper perspective, imply a different meaning than they would if they were provided in perspective.
For example, it is a fact that in terms of raw numbers, the United States government is huge. We can’t comprehend a number as huge as $3.5 trillion or larger. When we see that the federal government spends that much money every year, then that must mean that the government is bloated and spending is out of control, right?
But let’s put the numbers in perspective, and see what difference that makes to our thinking. The federal government is huge, but the U.S. economy is bigger. The U.S. population is quite large.
Is the government really growing, as many believe? Is the deficit growing, as many believe? Here are some numbers that, individually, are quite large. But put them together, and they provide some perspective – perspective that doesn’t match the rhetoric.
GDP: $16.768 trillion dollars in 2013, compared to $16.163 in 2012
U.S. population: 316.5 million people in 2013, compared to 314.2 million people in 2012
GDP per capita: $52,986 in 2013, compared to $51,435 in 2012
With the numbers for the size of the economy and the population size for perspective, here are the figures relating to the size of the federal government:
Fiscal Year 2015 (proposed): $3.9 trillion, which is 21% of GDP
Fiscal Year 2014: $3.7 trillion, which is 22% of GDP
Fiscal Year 2013: $3.5 trillion, which is 22% of GDP
Federal spending is increasing in absolute dollars, but not in relation to the size of the economy.
Fiscal Year 2015 (proposed) total federal deficit: $564 billion, which is 3% of GDP
Fiscal Year 2014 total federal deficit: $649 billion, which is 4% of GDP
Fiscal Year 2013 total federal deficit: $680 billion, which is 4% of GDP
Compare these numbers to fiscal year 2009, the last year of a Bush budget:
Fiscal Year 2009 total federal deficit: $1.413 trillion, which is 10% of GDP
Deficits are shrinking, both in dollars and as a percentage of the economy. The facts contradict many statements from political pundits on this matter. Many people actually believe that deficits have been rising, in an out-of-control manner, throughout the Obama presidency. The opposite is true.
While we are looking at federal budget numbers, let’s take a look at where the federal government gets its money.
- Individual income taxes 46%
- Payroll taxes (Social Security, Medicare) 32%
- Corporate income taxes 13%
- Excise taxes 3%
- Customs Duties 1%
- Miscellaneous 5%
Payroll taxes have replaced corporate taxes as a major source of federal revenue. While corporate tax receipts are near historical lows, they have increased somewhat as a percentage of federal revenue in recent years.
Now, on to a category that everybody seems to be interested in – federal spending. Where do our federal tax dollars go?
- Health Care (Medicare and Federal Medicaid) 27%
- Pensions (Social Security) 25%
- Unemployment and other entitlements (Welfare) 11%
The above three categories, accounting for 63% of government spending, are collectively known as entitlements. There is a common misconception that entitlements are “money taken from taxpayers and given to freeloaders”. Actually, the word “entitlements” only refers to the fact that this money is earmarked for a specific purpose; it is available for people who are “entitled” to it. Most entitlements are kept in funds that recipients pay into for possible future use, and are not paid out of income tax receipts.
- Defense spending 22%
Entitlements plus defense spending account for 85% of all federal spending.
- Interest on national debt 6%
- Education 3%
- Transportation 3%
- Protection 1%
- General government 1%
- Other 1%
Not all federal spending is equal. Entitlement spending is known as mandatory spending, because this spending is mandated by law and can only be decreased through a decrease in benefits. Mandatory spending does not go through the annual appropriations process, but the amount spent each year depends on economic conditions and changes in demographics.
Federal spending other than mandatory spending and interest is known as discretionary spending. This is money that must be appropriated in the annual budget.
When politicians talk about budget cuts, they are either talking about cutting benefits for entitlements (Medicare, federal Medicaid, Social Security, unemployment compensation), or they are talking about cutting spending for specific categories of discretionary spending. For fiscal year 2015, the president’s proposed budget has for discretionary spending:
- Military 55%
- Education 6%
- Veterans’ benefits 6%
- Government expenses 6%
Every other category is 5% or under of total discretionary spending. Look at those numbers and categories, and then consider where you would find cuts large enough to balance the budget. It is little wonder that some politicians prefer to speak of “entitlements” as something paid to freeloaders by hard-working taxpayers.
The federal government employs a total of 2,792,736 civilians, of which 2,568,433 are full-time employees. The total monthly payroll for these employees is $16,866,805,187. The number of federal employees has been decreasing in recent years.
How does the size of the federal government compare to the cumulative size of state governments, as well as local governments?
These figures have been published a little differently. Here is the breakdown for the states, cumulatively:
Full-time employees 3,729,798
Part-time employees 1,556,304
Full-time equivalent (combined full & part time) 4,312,054
Total monthly payroll $20,172,835,936
Here is the same data for local governments, cumulatively:
Full-time employees 10,644,265
Part-time employees 3,317,003
Full-time equivalent (combined full & part time) 11,933,783
Total monthly payroll $50,821,913,530
Recent trends at all levels of government have been for more part-time employees and fewer full-time employees, with fewer full-time equivalent employees at all levels. Contrary to what many pundits would have you believe, government employment has been going down, not up.
The government employment numbers mean that as a percentage of full-time workers, the federal civilian government makes up 15% of government, state government makes up 22%, and local governments make up 63%. These numbers are the reverse of what many people have been led to believe.
Keep in mind that different levels of government are responsible for different functions. For each of these levels of government (federal, state, local), information on many different categories of workers is available. Instead of showing long lists of these, I have listed the top five categories and their percentages of the total:
National defense and international relations 28%
Postal services 22%
Homeland Security 7%
Police Protection 7%
Note: Postal employees make up 22% of federal employment but are not included in the general budget. The USPS pays its expenses out of its own revenue.
Higher education 34%
Public welfare 6%
Elementary & secondary education 55%
Police protection 7%
Fire protection 3%
These lists contain only the top five categories for each level of government; there are many other categories, but the ones listed in these top-5 lists comprise 72% of what many people are calling “government bureaucracy”.
For perspective on the number of government employees, here are the top ten in a ranking of American corporations in terms of numbers of employees. The numbers listed are worldwide employees, not domestic employees (except where noted). Some of these corporations have sizable domestic workforces; some have sizable overseas workforces. Some employ mostly full-time workers; some employ many part-time workers. Some pay low wages; some pay higher wages. They are all American corporations.
- Walmart 2.2 million employees (1.3 million domestic employees)
- Yum! Brands 523,000 (KFC, Taco Bell, Pizza Hut – 60% of corporate-owned locations are in China)
- McDonald’s 440,000
- IBM 434,246
- UPS 399,000
- Target 361,000
- Kroger 343,000
- Home Depot 340,000
- Hewlett-Packard 331,800
- General Electric 305,000 (134,000 domestic employees)
A version of this essay is included as a chapter in the book Sanity and Public Policy: Separating Truth from Truisms by Jerry Wyant. This book is available in both paperback and eBook formats.
Paperback version from Amazon
Kindle version from Amazon
All eBook formats from Smashwords