Federal spending has increased over the last decade, which won't just affect millennials today but will carry an impact into their lives long into the future. Currently, the U.S. government is spending more than $4.4 trillion for this fiscal year (FY). Yes, you read that right, it is in trillions.
Federal spending trends over the last decade
Prior to the Great Recession that peaked in the late 2000s, the government kept spending below 20 percent of the gross domestic product (GDP). However, in subsequent years, spending began to swell, reaching close to 24 percent of the GDP. Much of this was related to bank bailouts and stimulus plans. Fast-forward to 2015 and Congress enacted a sequestration that reduced federal budget spending back to just over 20 percent.
Where the government budget is going
Many people wonder where the money goes. It's a good question. There are some mandatory expenditures due to previously passed legislation, and other expenses are split by Congress at their discretion. Here is a breakdown of FY 2019.
• Medicaid, Medicare and Social Security total $2.7 trillion.
• Food stamps, unemployment, child tax credits, student loans and other social programs total $656 billion. Included in this figure are retirement and disability programs for civil servants and the military.
• Congress uses its discretion to fund other budgets, which basically equates to all other government spending. That amount is currently $1.203 trillion. (Historically, the DoD has received a much higher percentage than it does now, but it's still pretty high)
• Emergency funding is $111.4 billion. This is separate from the annual budget where departments receive monies.
• Health and Human Services receive $69.5 billion.
Interest payments and the national debt
Interest payments in FY 2019 will cost $363 billion. This debt is growing rapidly and, over the next decade, is expected to more than double. It is a tab that must be paid out of the federal budget to avoid a U.S. debt default.
The amount of the payments will ultimately depend upon interest rates in 10 years. One thing is for sure: The interest payments will be very costly.
How federal spending is affecting millennials today and moving forward
It's amazing to think in the early 20th century, just a little more than 100 years ago, federal spending was less than 3 percent of the GDP and remained relatively low, excepting for the period of World War II when it swelled to almost 48 percent. What can millennials expect to see going forward?
• Social Security running out because of the number of baby boomers reaching retirement age, withdrawals are outpacing deposits.
• Increased student loan and debt percentages.
• Stagnant wages as inflation will undoubtedly continue to outpace salary increases.
• Later retirement age.
Based on the numbers, millennials will be paying the price for a long time to come. You can make a difference with Net Impact. If you're a student or young professional, you can have a voice to help to make a difference in society by coming up with long-term solutions to today's problems.
Up to Us is a program that focuses on ways millennials can raise awareness and take action to counter the potential negative effects short-sighted fiscal policies can have on their future. If you want to learn more about our leadership program for college students and find out how you can help create a fiscally sound future for our nation, visit our website at www.itsuptous.org.