Data is unbiased. Numbers are free from politics.
Americans deserve to be empowered with access to trusted data. To deliver on that goal, the Securities and Exchange Commission requires each publicly traded US company to submit an annual Form 10-K to disclose its performance. A 10-K has several components, including a comprehensive accounting of performance, financial condition, and risk factors. Using a 10-K, interested parties can judge how a business is doing.
Yet, while our federal, state, and local governments together comprise the largest financial entity in the world, the same in-depth analysis of the US government’s revenue, spending, and performance is not mandated. And it has millions of constituents: the American people. Like any investor in a business, Americans should be able to see how their government pays for itself, how their money is spent, and the outcomes delivered. From there, Americans can each judge the government’s performance and tradeoffs for themselves. They can use that judgment to drive their voting, advocacy of policy, and even their own civic participation. Only by having the facts can Americans make sound, data-driven choices for the future.
This document largely presents data from 2007 to 2017. In order to study government revenue, spending, and outcomes holistically, we must combine data from more than 90,000 government entities. Governments do not do this on their own. And, even if some arm of the government was charted to do so, much of the data governments publish is years behind.
Most complete data picture is 2017. 3 years old already!
As shareholders in our democracy, all of us have the responsibility to stay informed. This is one of the many documents USAFacts creates to help people do just that, and the one with the most financial data on how tax dollars are collected and spent.
Look at the metrics. Decide what you do and don’t like, given the outcomes. Here is some of the information in this 10-K that I found most interesting but, of course, everybody has their own areas of interest:
First and foremost, the lagging nature of government data itself is troubling. Elected representatives are making policy decisions designed to solve problems using data that is too old to properly inform current realities.
Report on Medicaid financial outlook was expected Oct 2019, but not published until April 9, 2020.
Aggregate state and local government financial data is three years old—even older in some cases. This means Americans won’t see the impact of policy changes implemented by federal, state, and local governments for at least another three and a half years. In this 10-K, readers will find instances where the most recent available data for comparison is from 2019, or 2009, or any year in between. Medicaid spending per person, corporate income tax details, the number of undocumented immigrants in the US, and nearly all state and local income statement data that we use in the 10-K have few recent numbers.
Federal, state, and local governments also have disconnected data systems, a problem laid bare by the inability to get accurate and consistent coronavirus reporting nationwide. There is no framework for governments to report metrics and outcomes. How, when, and what to report—it’s a bit of a free for all. It makes comparing data between sources, or even the same sources across different years, especially difficult. This 10-K can serve as a template for governments to share data in a consistent manner. Recent legislation like the Open Government Data Act and the GREAT Act, as well as steps toward creating a federal data strategy, are signs of progress.
But there’s still a long way to go.
Healthcare costs are growing faster than our population or general inflation. In 2017, they reached $3.5 trillion, a 19% increase per capita since 2007. Adjusted for inflation, the largest dollar increases were $323 billion for hospital expenditures (up 29% per capita), $156 billion for physician and clinical expenditures (up 19%), and $49 billion for prescription drugs (up 9%). Increasing health costs place burdens on both citizens and the government. Americans spend 23% of their post-tax income on healthcare, inclusive of insurance.
As healthcare costs grow, it’s important to remember that a significant portion of government spending is on healthcare. In fact, the government pays for 45% of all healthcare spending in the US. Medicare, government-sponsored insurance for people over 65, made up 10% of total government spending in 2017. Medicaid and CHIP, which cover both lower-income and disabled people, and children, respectively, accounted for 9% of the total. The government also spends on healthcare for veterans, and government employee and retiree health benefits.
Americans saved 13% of their post-tax income in 2017, up from 9% a decade prior. Americans are also holding more wealth in pensions, 401(k)s, and other savings. Private retirement plans reached $103,000 in average assets, a 25% increase since 2007 (adjusted for inflation). Pension contributions made by current state and local government employees grew 7% from just 2016 to 2017, while contributions by state and local government employers on behalf of their employees grew 11%.
The percentage of homeowning families fell from 68% to 64% between 2007 to 2017. Homeownership decreased more for the wealthy, down 5.3 percentage points among the top half of US earners and down 2.4 percentage points for the bottom half of earners. During that same time, mortgage debt decreased by an average of 26% per household (adjusted for inflation).
While homeownership decreased, so did the availability of affordable, government-subsidized housing, down 101,000 units (or 2%) from 2007. People wait more than two years to get into affordable housing and are staying in it an average of nine years.
Staying 2.5 yrs longer than in 2007.
The Supplemental Nutrition Assistance Program (SNAP), often referred to as “food stamps,” accounts for 1% of the government’s expenses. SNAP recipients peaked in 2013 and have decreased each year since, with monthly benefits amounting to $130 per person in 2019.
Despite poverty rates being slightly lower in 2017 than in 2007, the cost of SNAP is up 109%; that’s faster than population growth during that same period (up 8%) or the growth of people in poverty (up 6%). This is partly due to the 2009 American Recovery and Reinvestment Act, which eased eligibility requirements while increasing allotment. These changes are still in place today.
The average undergraduate tuition, fees, room, and board rates charged for full-time students at two- and four-year colleges, before any financial aid, was $23,600 in 2017. This is an average increase of 25% from 2007 to 2017, (adjusting for inflation). Higher education is also driving up costs for the government. After Social Security, Medicare, Medicaid, and aid to veterans—programs with spending largely driven by the increasing elderly population and health care costs—aid to students is the fifth biggest driver of transfer payments to individuals.
From 2007 to 2017, federal expenditures for aid to students increased by $61 billion (up 222%).
This is staggering.
Over this same time, Federal Direct Student Loan expenditures increased by $21 billion, or 468%, while recipients were up 485%. Pell Grants increased by $14 billion (91%), with a 39% increase in total recipients.
State and local governments invest heavily in the stock market, primarily funds held by retirement, workers compensation, and trusts. In 2017, earnings on these investments reached $458 billion,
That’s 420%!
accounting for over 20% of state and local government revenue. Stock market drops during an economic downturn would significantly impact these governments.
The two larger revenue sources for state and local governments, sales taxes and property taxes, respectively, made up 25% and 23% of their revenue. However, taxes vary widely by state. Sales taxes are driven by consumption of taxable goods, but also by changing sales tax rates, which increased notably in seven states and decreased in three from 2012 to 2017. Meanwhile, property taxes, driven by home values, also vary based on tax rates across local governments. The nominal residential property tax rate increased in the largest city in 36 states while decreasing in the largest city in 11 states during this time.
In 2017, 60.1% of the population older than 16 was working, a decrease from 63% a decade prior. This decrease was not uniform for all groups, though. Employment fell 3.2 percentage points for white populations, 2.8 points for Asian populations, 2.2 points for Hispanic populations, and 0.8 points for African American populations. However, a smaller proportion of African Americans were employed overall compared to other races.
The percent of people older than 65 who were working during this time grew from 15% to 19%.
64% increase in total employed seniors.
Over the decade, several fields added at least 1 million occupations each, including food preparation and serving; personal care and service; healthcare; technical, business and financial operations; management; and computing and mathematical fields. Production, plus office and administrative support fields, lost more than 1 million jobs each.
While I found the data above interesting, it doesn’t exist in a vacuum. Administrations can plan for programs and future allocation of dollars, but global events like the COVID-19 pandemic can cause those plans to be shelved. The nation cannot yet see the scope of the novel coronavirus pandemic; all we know is that it will be monumental.
When and how the nation will bounce back is unclear, but governments are working on three areas to ensure that happens as quickly as is feasible. The first is focusing on getting people healthy.
US had 634,005 confirmed COVID-19 cases by April 16.
And as stated above, healthcare costs were already increasing faster than the US population or inflation.
The government is also supporting people in these times of need. With the CARES Act, qualifying single US taxpayers without kids will receive an average $1,176 in coronavirus stimulus funds; that aid increases for people with children. With so many Americans putting savings into the presently volatile stock market, it remains to be seen if more government support is needed.
Finally, the government is focused on a plan for restarting the economy successfully. The CARES Act allocates $350 billion for eligible small businesses to maintain payrolls through at least June 2020. In 2019, small businesses employed 47.5% of the private-sector workforce.
The coronavirus is also reshaping other events that were already nationally significant. The 2020 Census, currently underway, is the first to be conducted online with follow up from census takers in the field. The Census Bureau suspended field operations, and any delays in the 2020 Census are unknown. Census data is fundamental to government understanding and the state of our nation.
The country is facing a confluence of risk factors largely unseen in most of our lifetimes. While so much is unknown, people can take learnings from historical data like that presented here and move into the future with cold, hard facts. At USAFacts, we believe that by participating as a shareholder in democracy, each American can move us to a more perfect union.
Sincerely,
Steve Ballmer