Periodically, when you listen toCNN you may hear termslike federal spending, the federalbudget, etc, but you maynot know the dollar breakdownthey are referring to. If you comparethe fiscal year 2008 federal budgetwith the 1983 and 1968 budgets, you candetermine exactly where your tax dollarsgo now vs then. For example, in 1968the Vietnam War was at its height, andin 1983 the country was in the middle ofPresident Reagan's defense buildup.
You will notice in the Table how thecountry's priorities have changed overthe past 40 years. For instance, youwill see that direct payments to individualsare double their budget sharein 1968, while the defense spendingshare of the budget is less than at theheight of the Vietnam War. So where isyour $2.9 trillion in tax dollars goingto go? Examine the Table and noticethe following items:
•Defense spending, which accountedfor nearly half of the federal budgetin 1968, now accounts for a quarter ofthe 2008 budget.
•Social Security, Medicare, andMedicaid payments, which comprisedabout 17% of the budget in 1968, nowaccount for more than 40% of the federalbudget. In other words, these itemsas a percentage of the budget have morethan doubled in the past 40 years.
•Those line items that made up essentially0% of the budget in 1968,now account for nearly 7% of the federalbudget.
•Interest on debt, as a percentage ofthe federal budget, has increased bynearly 50% in the past 40 years.
So when you sit down with your accountantto file your taxes, at least nowyou know where your money is going.
Thomas R. Kosky and his partner, Harris L.Kerker, are principals of the Asset Planning,Group, Inc, in Miami, Fla. Mr. Kosky welcomesquestions or comments at 800-953-5508 or ProfessorKosky@aol.com.