Anya Bennett

For the year 2011, the United States government had expected to spend around 41% of Gross Domestic Product (GDP). Majority amount of this money was allocated to health care, education, pensions and programs related to welfare. The spending on health care is mainly split between the state governments and federal government, education spending is mainly allocated to local governments and pension spending is handled mainly by the Social Security program of the federal government. One of major reasons for the government hitting the debt ceiling this year has been the excess borrowing of the government in order to meet its obligations. Unlike the general people who can do debt consolidation to get out of debt, the government has no such way out. It is through rigorous political dialogue and fiscal measures that such debt problems can be combated.

How is the money spent?

To the normal everyday citizen, it may be surprising as where do all these allocated money go. Most people will be surprised to hear that just the budget for pension spending including Social Security and government employee pensions is about $1.0 trillion in a year which includes governments at all levels; federal, state and local. The other spending of governments include about $1.1 trillion a year on health care which are principally on Medicare and Medicaid and $0.9 trillion on all levels of education, mainly at the local government level. The defense budget of federal government is about $1.0 trillion which includes the Departments of Defense, State and Veteran Affairs. The spending of government on welfare programs is about $0.6 trillion. If all other spending is clubbed together, then the total amount will be around $1.5 trillion which includes interest on the national debt.

How the spending is distributed?

When it comes to allocation of funds in the budget the federal government is accountable for half of the spending in the United States. The remainder of the amount is split equally between the state and the local governments. The budget of federal government aims to spend a total amount of $3.8 trillion in the financial year 2011 out of which around $0.5 trillion is transferred to the local and state governments. Some reliable finance analysts have estimated by a method of guessing that the state governments would spend an amount of about $1.3 trillion in the financial year 2011 and the local governments are expected to spend around $1.6 trillion in the financial year 2011.

What are the categories in which money is being spent?

The total amount of government spending in the United States for the financial year 2011 is expected to be around $6.2 trillion which includes spending by federal, state and local governments. The total spending features five major functions. In terms of percentage of the total spending, health care has taken up 18% share; pensions have taken up a 16% share, defense a 16% share and education a 14% share. Welfare in the fifth largest function and takes a total of 11% share. All other functions when put together including payment on debt interest take up 25% of spending. The details of spending by the three levels of government are expounded below.

* Spending by federal government - For the financial year 2011, federal spending is budgeted at an amount of $3.8 trillion and includes four major functions. These are defense which includes foreign policy, veterans and foreign aid which consists of 25% of the budget, healthcare which primarily consists of Medicare and Medicaid and takes a 23% share of spending, pensions which mainly consists of spending on Social Security and takes 21% of share and lastly welfare which consists of 13% of spending. All other type of spending which also includes the interest on national debt accounts for 18% of federal spending.

* Spending by state government - According to the guesses of financial experts, the spending by state governments will amount to a total of $1.3 trillion in the financial year 2011 and will feature five major functions. The allocation of the spending is as follows; health care spending gets a share of 31% of spending, education gets 18%, welfare has 12%, state government pensions get a 12% and transportation takes a 9% share of state spending. Apart from this all other spending take 20% share of state government spending.

* Spending by local government - Spending by the local government is approximated at $1.7 trillion in the financial year 2011 and has two major functions. 39% of local spending is taken up by education that is K-12 schools and a police protection, fire and justice system takes 11% of spending. These two are followed by transportation and health care both at 8% each. All other programs have a total allocation of funds of 35% total which are taken up by each category at less than 7% of local government spending.

In regard to the discussion on the subject of budget allocation and fiscal deficit of the federal and state governments, here is an evaluation of the debt situation in California.

How much in debt is California?

California has been subjected to annual budget meltdowns quite a number of times which includes a shortfall of $ 20 billion. But the question remains what is the total debt of the state of California. In a not so pleasing surprise for the residents of California, the truth is that the total debt of California is at least $265 billion. When you sort the debts of California it can be categorized into budget deferrals, required reimbursements and related debts all of which now account to be at $40 billion. The major reasons for such debts were budget gimmicks which were aimed to achieve a balanced budget for one year by borrowing from local government, required repayments to public schools and other such one-time actions. As highlighted by Governor Jerry Brown in his budget proposal, most of the solutions to the budget deficit over the past three years in California were either temporary or failed due to faulty assumptions and court decisions.

Thus the federal debt crisis is to hit California hard with the state already being beaten by debt. it is expected that the combative measures can ease the burden to some extent at least.