Government spending

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Government spending or government expenditure consists of government purchases, which can be financed by seigniorage (the creation of money for government funding, at a heavy price of high inflation and other possibly devastating consequences), taxes, or government borrowing. It is considered to be one of the major components of gross domestic product.

John Maynard Keynes was one of the first economists to advocate government deficit spending as part of a fiscal policy to cure an economic contraction. In Keynesian economics, increased government spending is thought to raise aggregate demand and increase consumption.

[edit] United States

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Main article: United States federal budget

As of September 2004 the U.S. Congressional Budget Office reported that federal government spending for 2004 was projected to be $2.293 trillion, or slightly less than 20% of the GDP. Of that, $159 billion was for net interest, $486 billion for defense, $492 billion for Social Security, $473 billion for Medicare and Medicaid, $191 billion for various welfare programs, $136 billion for "retirement and disability" benefits, and $64 billion was projected to be spent elsewhere.

There are two types of government spending — discretionary and mandatory. Discretionary spending, which accounts for roughly one-third of all Federal spending, includes money for things like the Army, FBI, the Coast Guard, and highway projects. Congress explicitly determines how much to spend (or not spend) on these programs on an annual basis. Mandatory spending accounts for two-thirds of all government spending. This kind of spending is authorized by permanent laws. It includes "entitlements" like Social Security, Medicare, and Food Stamps — programs through which individuals receive benefits based on their age, income, or other criteria. Spending levels in these areas are dictated by the number of people who sign up for these benefits, rather than by Congress.^{[citation needed]}

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From the US Treasury Financial Statements for the year ended September 30, 2004

The Department of Agriculture ...

Expenditures: $84.1 billion

The Department of Defense ...

Expenditures: $672.1 billion

The Department of Education operates ...

Expenditures: $63.9 billion

The Department of Health & Human Services ...

Expenditures: $583.9 billion

The Department of Justice ...

Expenditures: $35.4 billion

The Office of Personnel Management ...

Expenditures: $22.3 billion

The Social Security Administration (SSA) manages the United States' social insurance program, consisting of retirement, disability, and survivors benefits.