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Congressional Budget Office
December 3, 2013

The Distribution of
Federal Spending and Taxes in 2006

Molly Dahl, Microeconomic Studies Division
Kevin Perese, Tax Analysis Division
Overview
Extends prior CBO distributional analyses by including spending
Snapshot of a single year: calendar year 2006
Not a lifetime analysis

Household types
Elderly
Nonelderly with children
Nonelderly without children

Income groups among the nonelderly
Market income quintiles

CONGRESSIONAL BUDGET OFFICE
Federal Spending and Revenues, 2006

Federal
Spending

Federal
Revenues

$2.7
Trillion

$2.4
Trillion

CONGRESSIONAL BUDGET OFFICE
Allocated Federal Spending and Revenues, 2006
Analyzed the distribution of most federal spending (88 percent),
and virtually all federal taxes (98 percent) in calendar year 2006
Federal
Spending

Federal
Revenues

$2.3
Trillion

$2.4
Trillion

CONGRESSIONAL BUDGET OFFICE
Categories of Federal Spending, 2006
Cash and
Near-Cash
Transfers

Social Security

Cash Transfers
Social Security
Refundable Tax Credits
SSI
UI
TANF
Means-Tested Veterans’ Benefits
Black Lung Disability

$785
Billion

Near-cash Transfers
SNAP
Housing Assistance
Pell Grants
Child Nutrition Programs
WIC
LIHEAP

CONGRESSIONAL BUDGET OFFICE
Categories of Federal Spending, 2006
Cash and
Near-Cash
Transfers

Health Care
Transfers

$785
Billion

Social Security

Medicare

$481
Billion

Medicare
Medicaid and CHIP
Means-Tested Veterans’ Health Benefits

CONGRESSIONAL BUDGET OFFICE
Categories of Federal Spending, 2006
Cash and
Near-Cash
Transfers

Health Care
Transfers
Other
Goods and
Services

$785
Billion

Social Security

Medicare

$481
Billion

$1,080
Billion

National Defense

National Defense
Other HHS
Education
OPM
Transportation

Other Veterans Affairs
Agriculture
Justice
Energy
Other

CONGRESSIONAL BUDGET OFFICE
Categories of Federal Spending, 2006
Cash and
Near-Cash
Transfers

Health Care
Transfers
Other
Goods and
Services
Unallocated
Spending

$785
Billion

Social Security

$481
Billion

Medicare

$1,080
Billion

National Defense

Interest
On Debt

$312
Billion

Total Spending:
$2.7 Trillion
Interest on
Debt

CONGRESSIONAL BUDGET OFFICE
Spending on Cash and Near-Cash Transfers,
by Type of Household, 2006
(Billions of dollars)
500

400

Other

300

Social Security
200

100

0

Elderly

Nonelderly
With Children
CONGRESSIONAL BUDGET OFFICE

Nonelderly
Without Children
Spending on Health Care Transfers,
by Type of Household, 2006
(Billions of dollars)
500

400

300

200

Medicaid
and Other
Medicare

100

0

Elderly

Nonelderly
With Children
CONGRESSIONAL BUDGET OFFICE

Nonelderly
Without Children
Federal Taxes, by Type of Household, 2006
(Billions of dollars)
1,200

800

400

0

Elderly

Nonelderly
With Children

CONGRESSIONAL BUDGET OFFICE

Nonelderly
Without Children
Average Transfers, Taxes, and Transfers Minus Taxes,
by Type of Household, 2006
(Dollars per household)
30,000

20,000

Taxes
10,000

0

Transfers

Transfers
minus
Taxes

-10,000

-20,000

Elderly

Nonelderly with
Children

CONGRESSIONAL BUDGET OFFICE

Nonelderly without
Children
Federal Spending, 2006
Cash and
Near-Cash
Transfers

$785
Billion

Health Care
Transfers

$481
Billion

Other
Goods and
Services
Unallocated
Spending

$1,080
Billion

$312
Billion

CONGRESSIONAL BUDGET OFFICE

Total Spending:
$2.7 Trillion
Federal Spending on Other Goods and Services,
by Type of Household, 2006
(Billions of dollars)
600

400

200

0

Allocated Allocated
by
by
Share
Share
of
of
Population Market
Income

Elderly

Nonelderly with
Children
CONGRESSIONAL BUDGET OFFICE

Nonelderly
without Children
Average Spending Minus Taxes,
by Type of Household, 2006
(Dollars per household)
30,000

20,000

Transfers plus Other G&S
(by Share of Population)
minus Taxes
Transfers plus Other G&S
(by Share of Market Income)
minus Taxes

10,000

0

Transfers
minus Taxes

-10,000

-20,000

Elderly

Nonelderly with
Children

CONGRESSIONAL BUDGET OFFICE

Nonelderly
without Children
Spending and Revenues Allocated to
Nonelderly Households

Federal
Spending

Federal
Revenues

$1.5
Trillion

$2.7
Trillion

$2
Trillion

CONGRESSIONAL BUDGET OFFICE

$2.4
Trillion
Spending on Nonelderly Households

$1.5 Trillion

Cash and
Near-Cash

Health
Care

Other Goods and Services

$375
Billion

$175
Billion

$920
Billion

CONGRESSIONAL BUDGET OFFICE
Spending on Cash and Near-Cash Transfers
for Nonelderly Households

Cash and
Near-Cash
Transfers

By Income
Group

$375 Billion

Lowest
Quintile

CONGRESSIONAL BUDGET OFFICE
Spending on Cash and Near-Cash Transfers
for Nonelderly Households, by Income Group and Transfer
(Billions of dollars)
200

NearCash
Transfers

100

Other
Cash
Transfers

Social
Security
0

Lowest
Quintile

Middle
Quintile
CONGRESSIONAL BUDGET OFFICE

Highest
Quintile
Spending on Health Care Transfers
for Nonelderly Households

Health
Care
Transfers

By Income
Group

$175
Billion

Lowest
Quintile

CONGRESSIONAL BUDGET OFFICE
Spending on Health Care Transfers
for Nonelderly Households, by Income Group and Transfer
(Billions of dollars)
100

Medicaid
and
Other

Medicare

0

Lowest
Quintile

Middle
Quintile
CONGRESSIONAL BUDGET OFFICE

Highest
Quintile
Spending on Transfers
for Nonelderly Households, by Income Group
(Billions of dollars)
300

200

100

0

Lowest
Quintile

Middle
Quintile
CONGRESSIONAL BUDGET OFFICE

Highest
Quintile
Taxes Paid by Nonelderly Households

$2 Trillion

Highest Quintile

CONGRESSIONAL BUDGET OFFICE
Average Market Income Plus Transfers Minus Taxes
for Nonelderly Households
(Dollars per household)
300,000

DOWN 27%

250,000

200,000

150,000

100,000

DOWN 14%
50,000

0

UP 101%

Lowest
Quintile

Middle
Quintile

CONGRESSIONAL BUDGET OFFICE

Highest
Quintile
Federal Spending on Other Goods and Services
for Nonelderly Households
Other
Goods and
Services

Allocated
by Share of
Population

$920 Billion

Lowest
Quintile

Allocated
by Share of
Market
Income

CONGRESSIONAL BUDGET OFFICE
Average Spending Minus Taxes for Nonelderly Households
(Dollars per household)
25,000

0

Transfers plus Other G&S
(by Share of Market Income)
minus Taxes

-25,000

Transfers plus Other G&S
(by Share of Population)
minus Taxes

-50,000

Transfers
minus Taxes
-75,000

Lowest
Quintile

Middle
Quintile
CONGRESSIONAL BUDGET OFFICE

Highest
Quintile
Recap

Extends prior CBO distributional analyses by including spending
More spending on elderly households than taxes paid by those
households in 2006; the opposite was true for nonelderly
households
Among the nonelderly, more spending on lower income
households than taxes paid by those households in 2006;
the opposite was true for higher income households

CONGRESSIONAL BUDGET OFFICE

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The Distribution of Federal Spending and Taxes in 2006

  • 1. Congressional Budget Office December 3, 2013 The Distribution of Federal Spending and Taxes in 2006 Molly Dahl, Microeconomic Studies Division Kevin Perese, Tax Analysis Division
  • 2. Overview Extends prior CBO distributional analyses by including spending Snapshot of a single year: calendar year 2006 Not a lifetime analysis Household types Elderly Nonelderly with children Nonelderly without children Income groups among the nonelderly Market income quintiles CONGRESSIONAL BUDGET OFFICE
  • 3. Federal Spending and Revenues, 2006 Federal Spending Federal Revenues $2.7 Trillion $2.4 Trillion CONGRESSIONAL BUDGET OFFICE
  • 4. Allocated Federal Spending and Revenues, 2006 Analyzed the distribution of most federal spending (88 percent), and virtually all federal taxes (98 percent) in calendar year 2006 Federal Spending Federal Revenues $2.3 Trillion $2.4 Trillion CONGRESSIONAL BUDGET OFFICE
  • 5. Categories of Federal Spending, 2006 Cash and Near-Cash Transfers Social Security Cash Transfers Social Security Refundable Tax Credits SSI UI TANF Means-Tested Veterans’ Benefits Black Lung Disability $785 Billion Near-cash Transfers SNAP Housing Assistance Pell Grants Child Nutrition Programs WIC LIHEAP CONGRESSIONAL BUDGET OFFICE
  • 6. Categories of Federal Spending, 2006 Cash and Near-Cash Transfers Health Care Transfers $785 Billion Social Security Medicare $481 Billion Medicare Medicaid and CHIP Means-Tested Veterans’ Health Benefits CONGRESSIONAL BUDGET OFFICE
  • 7. Categories of Federal Spending, 2006 Cash and Near-Cash Transfers Health Care Transfers Other Goods and Services $785 Billion Social Security Medicare $481 Billion $1,080 Billion National Defense National Defense Other HHS Education OPM Transportation Other Veterans Affairs Agriculture Justice Energy Other CONGRESSIONAL BUDGET OFFICE
  • 8. Categories of Federal Spending, 2006 Cash and Near-Cash Transfers Health Care Transfers Other Goods and Services Unallocated Spending $785 Billion Social Security $481 Billion Medicare $1,080 Billion National Defense Interest On Debt $312 Billion Total Spending: $2.7 Trillion Interest on Debt CONGRESSIONAL BUDGET OFFICE
  • 9. Spending on Cash and Near-Cash Transfers, by Type of Household, 2006 (Billions of dollars) 500 400 Other 300 Social Security 200 100 0 Elderly Nonelderly With Children CONGRESSIONAL BUDGET OFFICE Nonelderly Without Children
  • 10. Spending on Health Care Transfers, by Type of Household, 2006 (Billions of dollars) 500 400 300 200 Medicaid and Other Medicare 100 0 Elderly Nonelderly With Children CONGRESSIONAL BUDGET OFFICE Nonelderly Without Children
  • 11. Federal Taxes, by Type of Household, 2006 (Billions of dollars) 1,200 800 400 0 Elderly Nonelderly With Children CONGRESSIONAL BUDGET OFFICE Nonelderly Without Children
  • 12. Average Transfers, Taxes, and Transfers Minus Taxes, by Type of Household, 2006 (Dollars per household) 30,000 20,000 Taxes 10,000 0 Transfers Transfers minus Taxes -10,000 -20,000 Elderly Nonelderly with Children CONGRESSIONAL BUDGET OFFICE Nonelderly without Children
  • 13. Federal Spending, 2006 Cash and Near-Cash Transfers $785 Billion Health Care Transfers $481 Billion Other Goods and Services Unallocated Spending $1,080 Billion $312 Billion CONGRESSIONAL BUDGET OFFICE Total Spending: $2.7 Trillion
  • 14. Federal Spending on Other Goods and Services, by Type of Household, 2006 (Billions of dollars) 600 400 200 0 Allocated Allocated by by Share Share of of Population Market Income Elderly Nonelderly with Children CONGRESSIONAL BUDGET OFFICE Nonelderly without Children
  • 15. Average Spending Minus Taxes, by Type of Household, 2006 (Dollars per household) 30,000 20,000 Transfers plus Other G&S (by Share of Population) minus Taxes Transfers plus Other G&S (by Share of Market Income) minus Taxes 10,000 0 Transfers minus Taxes -10,000 -20,000 Elderly Nonelderly with Children CONGRESSIONAL BUDGET OFFICE Nonelderly without Children
  • 16. Spending and Revenues Allocated to Nonelderly Households Federal Spending Federal Revenues $1.5 Trillion $2.7 Trillion $2 Trillion CONGRESSIONAL BUDGET OFFICE $2.4 Trillion
  • 17. Spending on Nonelderly Households $1.5 Trillion Cash and Near-Cash Health Care Other Goods and Services $375 Billion $175 Billion $920 Billion CONGRESSIONAL BUDGET OFFICE
  • 18. Spending on Cash and Near-Cash Transfers for Nonelderly Households Cash and Near-Cash Transfers By Income Group $375 Billion Lowest Quintile CONGRESSIONAL BUDGET OFFICE
  • 19. Spending on Cash and Near-Cash Transfers for Nonelderly Households, by Income Group and Transfer (Billions of dollars) 200 NearCash Transfers 100 Other Cash Transfers Social Security 0 Lowest Quintile Middle Quintile CONGRESSIONAL BUDGET OFFICE Highest Quintile
  • 20. Spending on Health Care Transfers for Nonelderly Households Health Care Transfers By Income Group $175 Billion Lowest Quintile CONGRESSIONAL BUDGET OFFICE
  • 21. Spending on Health Care Transfers for Nonelderly Households, by Income Group and Transfer (Billions of dollars) 100 Medicaid and Other Medicare 0 Lowest Quintile Middle Quintile CONGRESSIONAL BUDGET OFFICE Highest Quintile
  • 22. Spending on Transfers for Nonelderly Households, by Income Group (Billions of dollars) 300 200 100 0 Lowest Quintile Middle Quintile CONGRESSIONAL BUDGET OFFICE Highest Quintile
  • 23. Taxes Paid by Nonelderly Households $2 Trillion Highest Quintile CONGRESSIONAL BUDGET OFFICE
  • 24. Average Market Income Plus Transfers Minus Taxes for Nonelderly Households (Dollars per household) 300,000 DOWN 27% 250,000 200,000 150,000 100,000 DOWN 14% 50,000 0 UP 101% Lowest Quintile Middle Quintile CONGRESSIONAL BUDGET OFFICE Highest Quintile
  • 25. Federal Spending on Other Goods and Services for Nonelderly Households Other Goods and Services Allocated by Share of Population $920 Billion Lowest Quintile Allocated by Share of Market Income CONGRESSIONAL BUDGET OFFICE
  • 26. Average Spending Minus Taxes for Nonelderly Households (Dollars per household) 25,000 0 Transfers plus Other G&S (by Share of Market Income) minus Taxes -25,000 Transfers plus Other G&S (by Share of Population) minus Taxes -50,000 Transfers minus Taxes -75,000 Lowest Quintile Middle Quintile CONGRESSIONAL BUDGET OFFICE Highest Quintile
  • 27. Recap Extends prior CBO distributional analyses by including spending More spending on elderly households than taxes paid by those households in 2006; the opposite was true for nonelderly households Among the nonelderly, more spending on lower income households than taxes paid by those households in 2006; the opposite was true for higher income households CONGRESSIONAL BUDGET OFFICE