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What is the spending on Welfare?

In FY 2016 total US government spending on welfare — federal, state, and local — was “guesstimated” to be $1,032 billion, including $591 billion for Medicaid, and $467 billion in other welfare.

Welfare Spending Analysis

This page shows the current trends in welfare spending. There are also charts on welfare spending history. See here for a general history of entitlement spending.

Recent Welfare Spending

Chart S.31t: Recent Welfare Spending

Chart S.32t: Recent Welfare Spending as Pct GDP

Welfare spending was increasing modestly in the mid 2000s with Medicaid (health care) and Other Welfare (cash, food, unemployment, housing) each at about $300 billion. But the Great Recession created a huge spike in Other Welfare, rising to about $700 billion in 2010. In the recovery, Other Welfare has declined to about $450 billion. But Medicaid spending has begun to surge, presumably as part of the Medicaid expansion of the Affordable Care Act.

Viewed from a GDP perspective, overall welfare spending was level-pegging at about 5 percent of GDP in the mid 2000s. The Great Recession caused a spike in Other Welfare so that overall welfare including Medicaid peaked at over 7 percent of GDP in 2010. Medicaid shows a steady increase in cost as a percent of GDP, and is expected to have breached 3 percent of GDP in 2915.

US Welfare Spending Since 1965

Welfare spending, particularly on Medicaid, has surged since the War on Poverty of the 1960s.

Chart S.33t: Welfare Spending since 1965

Welfare was already nearly 2 percent of GDP when Medicaid, a federal and state program to deliver health care to the poor, was created as part of the War on Poverty in 1965. But while spending on Medicaid rose modestly, from 0.12 percent of GDP in 1965 to 0.5 percent of GDP by 1975, Other Welfare increased rapidly, with peaks of 2.8 percent GDP in recessionary 1971, 4.4 percent GDP in the wake of the 1974-75 recession, and 4.0 percent GDP in the 1980-82 recession.

After the 1980s recession Other Welfare declined, with a minor upward blip for the 1990-91 recession declining to 2.2 percent GDP in 2000. But Medicaid spending surged, from 0.7 percent GDP in 1988, blowing past 1 percent GDP in 1991 to peak at 1.76 percent GDP in 1995.

Other Welfare surged to 2.8 percent GDP in 2003 due to recession and then slipped back to 2.34 percent GDP in 2006. But the Great Recession caused a huge increase in Other Welfare, peaking at 4.5 percent GDP in 2010.

Medicaid began a consistent year-on-year expansion starting in 2000, hitting 2 percent GDP in 2002, 2.5 percent GDP in 2009, and is expected to breach 3 percent GDP in 2015.

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Spending Data Sources

Spending data is from official government sources.

Gross Domestic Product data comes from US Bureau of Economic Analysis and measuringworth.com.

Detailed table of spending data sources here.

Federal spending data begins in 1792.

State and local spending data begins in 1890.

State and local spending data for individual states begins in 1957.

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Next Data Update

> Federal Budget FY16

> data update schedule.

Data Sources for 2012_2021:

Sources for 2012:

GDP, GO: GDP, GO Sources
Federal: Fed. Budget: Hist. Tables 3.2, 5.1, 7.1
State and Local: State and Local Gov. Finances
'Guesstimated' by projecting the latest change in reported spending forward to future years

Sources for 2021:

GDP, GO: GDP, GO Sources
Federal: Fed. Budget: Hist. Tables 3.2, 5.1, 7.1
State and Local: State and Local Gov. Finances
'Guesstimated' by projecting the latest change in reported spending forward to future years

> data sources for other years
> data update schedule.

The Feds Borrow More Than The "Deficit"

People naturally assume that the annual Deficit is the total that the Federal government borrows each year. Actually this is not so. The Deficit is simply the difference between Federal Outlays and Federal Receipts. Usually, the Feds borrow a lot more than the official Deficit.

Like below, in $ billion:

YearGross
Debt
Debt
Increase
Federal
Deficit
Other
Borrow
2000562924-236259
20057905551318232
20101352916531294359
20111476412351300-64
20121605112871087200
201316719669680-11
2014177951075485590
201518120326438-113
2016195371417587830

We have provided the difference between the Debt increase and the Deficit for each year under "Other Borrowings" on the Spending Details page. To Recap:

Other Borrowings = (Increase in Federal Debt) - (Official Deficit)

Spend links

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