In 2019, government spending across federal, state, and local governments reached almost $6.7 trillion. And spending rose even higher during the first two years of the COVID-19 pandemic, as the government tried to keep the economy running.
Spending by federal, state, and local governments has more than doubled since 1980. Consumer spending rose by 16% from 1984, the earliest year of government data available.
But a simple comparison between the two can be misleading. The government’s budget serves a different purpose than a consumer budget.
For example, housing is an essential expenditure for most people. About 33% of an individual budget goes to housing. But while the government supports housing through spending, it was 1% of the 2019 budget.
On the opposite end of the budget scale, the US spent 14% of its budget on defense. Consumer spending on home security is small enough to not register as a category in government data.
Further, breaking down both government and consumer budgets can make it easier to see how and why they differ.
Government spending by the dollar
USAFacts recategorized several government programs and functions to align them with four constitutional missions based on the preamble to the Constitution:
Establish justice and ensure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty.
In 2019, the largest portion of government spending was in the “secure the blessings of liberty” category. This includes spending on programs such as Social Security, Medicare, and financial aid for higher education. More than half of the budget, 54 cents for every dollar, goes to programs in this category. The category also includes interest payments on existing government debt.
The government spends 23 cents for every dollar on programs in the “promote the general welfare” category. This includes spending in areas such as transportation, NASA, science research, public health, programs for the disadvantaged, and the postal service.
“Provide for the common defense” spending makes up 14 cents of every dollar of government spending. This includes funding for national defense, veteran support, foreign affairs, immigration, and border security.
Government spending in the “establish justice and ensure domestic tranquility” category is seven cents for every dollar in the budget. Some of the highest-funded programs that fall under this category include Child and Social Services, law enforcement and corrections, the justice system, and fire protection.
Three cents of every dollar of spending funds general government functions. Some of these expenses include governmental human resources, fiscal management, office space, and some salaries of government employees.
In 2019, the average US consumer spent a majority of their money on housing. For every dollar spent, 33 cents went towards housing costs. Consumer spending on transportation followed with 17 cents of each dollar spent on this category. Transportation costs may include car payments, public transit fees, gasoline, and parking, to name a few.
Consumers spent an average of 13 cents for every dollar on food in 2019 followed by personal insurance and pensions. An average of 11 cents for every dollar was spent on this category.
Consumers spent the least amount of their money, about one cent each per dollar, on miscellaneous products, personal care products, alcoholic beverages, and tobacco products.
How do consumer spending and government spending compare?
While consumers spent an average of 33 cents per dollar on housing costs and 17 cents per dollar on transportation, the federal government spent one cent per dollar on housing assistance and four cents on transportation.
American consumers spent an average of two cents per every dollar on education. The US government spent an average of 15 cents per dollar on education.