Where Does Our Federal Spending Go?
I’m pretty well done with sifting through Federal Spending, Tax Revenue, and all that fun stuff, but I do have one more thing I’d like to share. Trust me, it will be fun (it’s full of numbers) and I’m trying to delve into how the Federal Government spends money. This seems particularly relevant when we’ve heard so much talk of how we need to cut Federal Spending (and where it should be cut) ever since Elon Musk and his team of grifters at DOGE got involved. Even as the net result of the 2025 Congressional Budget Bill is to increase Federal Spending while cutting down on Federal Revenue. It’s like Ronald Reagan and Alan Greenspan never left us, or they’re still with us in Spirit.
Personally, I think that means we need an Exorcism post haste.
This additional deep dive into Federal Revenue and Spending came about, partially in response to someone on Threads who insisted (despite all evidence to the contrary) that Donor States were still a drain on the Economy because many of them received more in Federal Funds than less populated States that couldn’t hope to contribute as much.
He clearly didn’t comprehend that words have agreed-upon meanings. No matter how much he wished it, he couldn’t arbitrarily change those definitions (not without some sort of consensus involved). It’s disingenuous at best to accuse Donor States of being a drain, when they are contributing more than they are taking. It really doesn’t matter that these states might be receiving more than others (that take more than they contribute). I continued that discussion far longer than I should have, when I simply needed to point out that he was wrong from the beginning, and wasn’t getting any less wrong the more he tried to argue his point.
That’s the problem with the way many people look at things today. They think that their sense of what is correct holds the same value as the reality of the thing, whatever that thing might be. Just because something doesn’t feel right, because it doesn’t correspond with one’s worldview, is not the same as something not being right or accurate. Some people (mostly men, it seems) think everything is up for debate and interpretation, but that simply isn’t how reality works. We don’t get to negotiate with reality the way we do with one another. One’s level of confidence in their being correct does not influence whether they are (even if it makes them seem like they must be), but there’s no convincing some people of that.
This is why, not so long ago, when more than a thousand people were polled, 12% of Men responded that they believed they could score a single point on Serena Williams in Tennis. Of course: 17% of Men also believed they could beat a Chimpanzee in a fight, 8% were confident they could defeat a Gorilla, and 6% suggested they could successfully fight a Bear. Keep in mind that these men are unarmed and the animals are neither infants nor infirm. So, there’s clearly no accounting for human stupidity, or the confidence that goes with it.
But, back to the topic at hand.
In 2023, the Donor States (those that paid out more in Federal Revenue than they received back) produced a combined surplus of $619 Billion. That was such a great surplus in Total Revenue that it offset the total amount consumed by states that received more than they paid out, with more than $105.1 Billion left to spare.
Fully 88% of that Federal Revenue came from Income and Individual Taxes (this includes Social Security and Medicare), with the remaining 10% coming from Business Taxes, Estate Taxes, and so on.
The Federal Government spent a grand total of just below $6.2 Trillion that year (which is more than the total Federal Revenue), which means Donor States provided roughly 10% of the total amount of Federal Spending in just the surplus between what they paid out vs. what they received back from that $6.2 Trillion.
It’s worth referring back to my earlier discussion of Sanctuary States to point out that 11 of the states classified as Sanctuary States, when broken down by Per Capita Revenue, generated more than they received that year. When looking solely at total amount of outgoing versus incoming Revenue at the State Level, it was seven Sanctuary States operating in the black. When we adjust our focus, in terms of total population, we’re looking at 11 Sanctuary States that paid in more than they cost the Federal Government per person. I keep bringing that up because it’s imperative to hammer in the point that people should stop trying to use Sanctuary States as a budgetary talking point as if they’re a drain on the economy. After all, the reality is quite the opposite.
It’s a simple thing to ignore context and simply accept that the Federal Government distributed a grand total of $4.56 Billion back to the various states and their residents. That’s still less than was obtained in Federal Revenue, by a little over $100 Billion. This isn’t entirely painting an accurate portrait, suggesting that the money actually went to the states. Defense Spending is included in this, which was disproportionately redistributed to wherever the largest military bases, contractors, and manufacturing facilities were located. Strangely enough, unlike the U.S. Postal Service, no one seems to expect the U.S. Armed Forces to turn over a profit, even though the U.S. Postal Service doesn’t receive direct Taxpayer funding.
So, to really dig into where Federal Spending is directed, we’re going to have to spend a little more time breaking things down. It doesn’t sound like much fun, but at least I’ll save you the time and effort of doing the math.
Only $2.4 Trillion of the total $6.2 Trillion in Federal Spending returned to the States for purposes of Medicaid, SNAP (Food Stamps), Social Security, Veterans Benefits, Transportation, and Education. That leaves $3.8 Trillion in spending left unaddressed. It’s worth noting that a large portion of the money spent through Medicaid, as well as some of what was spent on Veterans Benefits, went directly to Insurance Companies. In fact, according to the Congressional Budget Office, Federal Subsidies for Insurance Companies in 2023 totaled an estimated $1.8 Trillion (which included Medicaid, Medicare, CHIP, Affordable Care Act Marketplace Subsidies, and more). Referring to that as money that went to residents of the states in question seems disingenuous to me, but we’ll let it stand.
$658.8 Billion went toward payment of Interest on the National Debt (which totaled $34.7 Trillion as of last June), which is 17% of the previously unaccounted for $3.8 Trillion…leaving us with roughly $3.2 Trillion to track down.
Excluding Active Duty Military salaries, the Federal Government spent roughly $336 Billion on payroll for Federal Workers, which translates into approximately 10.5% of the remaining $3.2 Trillion, leaving $2.9 Trillion that we’ve not accounted for.
Foreign Aid seems to be a sticking point for several people lately, as they complain about how the money could (or should) be spent here at home. The reality is that Foreign Aid is a drop in the bucket. In 2023, Foreign Aid added up to a total of $71.9 Billion (which is less than the $74 Billion spent in 2022). I should note that this amount does not factor in sales of arms or transfers of military equipment; mostly because we typically sell materials and equipment without taking a loss. Even this exceptionally small number, compared to our total Federal Spending, turns out to be a grand total of 1.2% of that amount. Data from the United Nations indicates the U.S. still contributes 40% of all International Humanitarian Aid. That’s something we should be proud of. $14.4 Billion of that went to Ukraine in the form of direct monetary support, which (as I’m sure you notice) is not much at all when compared to total Federal Spending. It’s even appreciably less than the $15.6 Billion that went toward Foreign Disaster Relief and other Humanitarian purposes. Even though the current war in Gaza didn’t begin until October 7th of that year, we spent $3.3 Billion on Foreign Aid to Israel.
But, we still have essentially $2.9 Trillion to account for, so let’s keep going.
Defense Spending totaled $820.3 Billion that year. This amount shouldn’t be surprising, since we spent more than twice as much as the other 30 NATO Nations combined between 2014 and 2022. More than a quarter of that Spending went to the Air Force, and only slightly less went towards the Navy. Army and Marine Corps Spending combined to make up roughly another quarter of that total. This is where Active Duty Military salaries factor into the spending.
We now have just a little bit less than $2.1 Trillion to account for.
The $52 Billion we spent on Small Business Loans hardly makes a dent.
Of the $970 Billion in Discretionary Spending that wasn’t Defense-Related, only a portion of it hasn’t already been accounted for in the previous Spending that went back to the individual States. $83 Billion of that was spent on International Affairs, $74 Billion went toward Administration of Justice, $48 Billion to Natural Resources and Environmental Spending, while $40 Billion was dedicated to Science, Space, and Technology. Adding those totals to what was spent on Small Business Loans, we’re only looking at $1.9 Trillion left to go.
Only $31 Billion went toward Pell Grants for the roughly 6.5 Million college students who received them that year, so that hardly registers.
And unfortunately, it only gets more challenging to trace the money at that point.
Tax Refunds for Earned Income Credits, the Federal portion of Unemployment Compensation, and other dispersals factor into the same Mandatory Spending category as SNAP funding, which totals $448 Billion. But some of that has already been accounted for in the money we discussed being distributed to the States. Unfortunately, it’s exceedingly difficult to sift through itemized spending to discern just how much we’ve already considered in our breakdown of Federal Spending.
There’s also $502 Billion that was distributed between Federal Civilian and Military Retirement Benefits, some additional Veterans’ Benefits, and offsetting costs for other previously discussed areas of Mandatory Spending such as Social Security and Medicaid. But, again, a significant portion of that Spending has already been mentioned.
Even if that was all above and beyond what had been previously accounted for, we would still have more than $900 Billion to account for, which is no small amount. And, if I’m being entirely honest, I don’t know how much more we’ve ticked away at the $1.9 Trillion we were looking at before those areas of Mandatory Spending entered the discussion. For the sake of moving this forward, we’ll go ahead and operate under the assumption that we’re looking at $900 Billion to account for.
Some of that was further distributed to States via Nonprofit Programs and Organizations that received grants. Of course, most of the funding for U.S. Nonprofits comes from sources other than the Federal Government. They received more than $550 Billion in Charitable Giving, with $101 Billion of that coming from Charitable Foundations and an estimated $412 Billion or so coming from Individual Donations or Estates. The rest more than likely came from Businesses and Corporations. Naturally, there are tax breaks involved for those entities.
I’d love to imagine our Federal Government shelling out $550 Billion or so toward Nonprofit Organizations and matching those numbers, but that’s a fantasy. The most liberal estimates indicate the Federal Government, in some capacity, spends an average of roughly $303 Billion on U.S. Nonprofits annually. But it’s difficult to find a breakdown of that Spending specifically for 2023. It probably varies significantly by year, so we’ll focus on the $303 Billion as a total, and assume none of it was already tallied in earlier categories.
This leaves us with (we’ll say) $600 Billion that I simply don’t have the Resources or the Time to track down. The best I can do from here is offer some speculation, and suggest aspects of the Federal Budget that weren’t entirely accounted for previously.
I’m sure that some of it falls through the cracks as Black Budget Items and Surveillance or Espionage Spending that doesn’t get mixed in with the usual Defense Spending, to keep it off the books. But I don’t imagine those Budgetary elements come anywhere close to $600 Billion, when the on-the-books Defense Spending is already more than $800 Billion.
We could assume some of it is Government Contract Spending that isn’t accounted for in the Defense Spending totals, Small Business Grants, and the other Funding already considered. Elon Musk’s various companies were recipients of $3 Billion of that Contract Spending, split between several different Federal Agencies, but most of that has already been accounted for.
Government Contracts devoured $759 Billion in Government Spending for 2023. $470 Billion of that was through the Department of Defense. Assuming the rest (which is surely not accurate) has not been part of the earlier Spending we’ve discussed, that would leave $289 Billion.
We would still be looking at more than $300 Billion left at the Table, which is clearly not the case, because our Deficit wouldn’t be as high as it is. The reality is that there’s definitely upwards of $300 Billion that I haven’t accounted for in my research, and that’s certainly no small amount.
Even with that ultimate failure in my capacity to dig through every Bill and piece of Legislation that slipped through Congress in 2023 (or before, because some of them include spending allotments for years to come, which is why we had the recent Recision Bill that took back funds that had previously been approved by Congress), I hope this has helped to explain where Federal Spending is directed. Sadly, I doubt the people who most need to get a firm grasp on what we’re spending (and where) are the least likely to take the time necessary to read this.
