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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 FY18

> 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.

FY18 Budget Blueprint Released

On March 16, 2018 the Trump administration issued a Budget Blueprint outlining proposed changes to "discretionary" spending for Fiscal Year 2018. The following table shows the major changes to Budget Authority in excess of $2 billion per agency.

AgencyFY18 Change
in $ billion
Agriculture-4.7
Defense+52.4
Education-9.2
Health and
Human Services
-12.6
Homeland
Security
+2.8
HUD-6.2
Justice-4.0
Labor-2.5
State and Intl Aid-10.9
Veterans+4.4
EPA-2.6

Because usgovernmentspending spending data is based on Historical Table 3.2, it shows spending by function rather than by agency. Until Table 3.2 is published in the final version of the FY18 budget we cannot exactly predict how the Table 3.2 numbers will change at the subfunction level.

But we have applied the Budget Blueprint budget authority changes into the budgeted FY18 outlays by guessing the application of agency level changes to subfunction changes to give a rough feeling of what the Trump changes look like. You can check out what is going on here or here.

The numbers will change when the final FY18 federal budget numbers come out.

Spend links

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