The federal budget is vast. But when boiled down, it consists of just five basic spending activities: compensating federal workers, purchasing goods and services, giving aid to state governments, transferring wealth through subsidy and benefit programs, and paying interest on the federal debt.
Among the key findings:
The federal government spent $3.9 trillion in 2013, according to the Bureau of Economic Analysis (BEA). Transfers were the largest spending activity at $1.98 trillion, followed by purchases at $571 billion, aid to the states at $510 billion, interest at $414 billion, and compensation at $407 billion.
And the graph below illustrates the following finding about “spreading the wealth”:
Transfers are the largest and fastest-growing activity. Since 2000, transfers have grown at an annual average rate of 6.7 percent, which compares to purchases at 6.0 percent, compensation at 5.5 percent, and aid to the states at 5.0 percent. Total federal spending grew at 5.5 percent during this period, while the consumer price index grew at just 2.4 percent.