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Where The Money Goes
About This Indicator
What Does This Chart Show?
Every dollar of federal spending, split six ways: Social Security, Medicare, Medicaid, defense, interest on the debt, and everything else. Quarterly since 1966; Medicaid is only the federal share.
Read It Against Who Pays
Spending past revenue is borrowed, and the Interest wedge is what all that past borrowing costs each year, plus the interest that builds up on federal employee pensions. Much of the debt is refinanced within a few years, so higher rates soon reach it.
What It Says
In 1966 defense took more than two fifths of spending and the three benefit programs about a seventh; by the mid-1970s the three took more than defense.
What the Defense Wedge Covers
Pay, operations, purchases, and investment in weapons, equipment, and research. Veterans' benefits and hospitals fall in Everything Else, so part of a war's cost arrives there for decades after it ends.
Key Idea
Four wedges follow standing law, not yearly spending bills: Social Security, Medicare, Medicaid, and interest. The more of the donut they take, the less Congress decides each year, so a change of party moves this donut only as fast as it can change the laws behind the benefits.
Source: BEA; OMB. Social Security, Medicare, Medicaid, defense, interest, and everything else, from the spending series listed above.
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