Jan 09, 2024

Question of the Day: What are the top three expenses the government paid for with our tax dollars in the most recent tax year?

It's important to first understand how much a common starting salary pays in taxes. But then where does it go?

Answer: Health Insurance, Social Security, Defense

A pie chart showing the largest categories of U.S. government spending.

Questions:

  • Are you surprised by the top 3 categories the Federal government spends taxpayer money on? Explain.
  • How would you adjust the spending allocation across these categories (if at all)? Why?
  • What top three items do you think the government will spend tax dollars on in ten years? Why?

 

Click here for the ready-to-go slides for this Question of the Day that you can use in your classroom.

 

Behind the numbers (CBPP):

"In fiscal year 2023, the federal government is estimated to spend $6.3 trillion, amounting to 24.2 percent of the nation’s gross domestic product (GDP). Of that $6.3 trillion, over $4.8 trillion is estimated to be financed by federal revenues. The remaining amount will be financed by net borrowing.

As the chart below shows, three major areas of spending make up the majority of the budget:

  • Social Security: In 2023, 21 percent of the budget, or $1.4 trillion, will be paid for Social Security, which will provide monthly retirement benefits averaging $1,836 to 48.6 million retired workers. Social Security also expects to provide benefits to 2.7 million spouses and children of retired workers, 5.9 million surviving children and spouses of deceased workers, and 8.8 million disabled workers and their eligible dependents.
  • Health insurance: Four health insurance programs — Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and Affordable Care Act (ACA) marketplace health insurance subsidies — together account for 24 percent of the budget in 2023, or $1.5 trillion. One-half of this amount, or $828 billion, goes to Medicare, which provides health coverage to around 66 million people who are aged 65 and older or have disabilities. The rest of this category funds the federal costs of Medicaid, CHIP, and ACA subsidy and marketplace costs. (Both Medicaid and CHIP require states to pay some of their total costs.)

    In May 2023, Medicaid and CHIP provided health care or long-term care to about 94 million low-income children, parents, older adults, and people with disabilities. That is elevated from 71 million people prior to the pandemic due to a temporary pandemic-related coverage protection that expired in April 2023. Enrollment is projected to decline by about 15 million by October 2024, but projections are highly uncertain. In February 2023, 14.3 million of the 15.7 million people estimated to be enrolled in health insurance through ACA marketplaces received subsidies that lower their premiums and out-of-pocket costs, at an estimated cost of about $88 billion.

  • Defense: Another 13 percent of the budget, or $806 billion, will be paid for national defense activities. About 95 percent of the spending in this category reflects the underlying costs of the Defense Department, largely for operations and maintenance; military personnel; procurement of weapons; and research, development, testing, and evaluation."

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Taxes on the mind? Check out NGPF's Taxes unit page which is full of ideas to engage your students!

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Want to attend NGPF Professional Developments and earn Academy Credits on your own time? Check out NGPF On-Demand modules!

About the Author

Ryan Wood

Ryan grew up with and maintains a love for learning. He graduated from the University of Wisconsin-Green Bay with a degree in Business Administration and worked in sports marketing for a number of years. After living in Texas, Colorado, Tennessee, and Minnesota, the call of education eventually brought Ryan back to his home state of Wisconsin where he was a Business and Marketing teacher for three years. In his free time he likes to spend time with his wife and daughter, play basketball, read, and go fishing. Now with NGPF, Ryan is excited to help teachers lead the most important course their students will ever take.

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