Former Treasury official Peter Fisher once said, once said:
“The federal government is basically a gigantic insurance company with a sideline business in national defense and homeland security.”
To that point …
According to a Pew recap of CBO data:
In fiscal year 2016, which ended this past Sept. 30, the federal government spent just under $4 trillion.
A about $2.7 trillion – more than two-thirds of the total – went for various kinds of social insurance (Social Security, Medicaid and Medicare, unemployment compensation, veterans benefits and the like).
Another $604 billion, or 15.3% of total spending, went for national defense.
Net interest payments on government debt was about $240 billion, or 6.1%.
Education aid and related social services were about $114 billion, or less than 3% of all federal spending.
Everything else – crop subsidies, space travel, highway repairs, national parks, foreign aid and much, much more – accounted for the remaining 6%.
A couple of things to think about …
– Extending Medicaid to 12 million people cost about $60 billion … more than half of the total education budget.
– Each 1% bump in interest rates costs about $200 billion annually on a $20 trillion debt …. “eventually” because it takes awhile for the debt to turn over.
Yep, a highly leverage insurance company with diminishing side businesses …