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May 31, 2016

These Federal Agencies Spend More Than Most States' Entire GDPs


U.S. government agencies spend a lot of money. How much money, you ask? Depending on the agency, more than the gross domestic product of most states.

It’s fairly common to compare states’ gross domestic products (GDP) to those of other countries. For example, with a GDP of $2.45 trillion in 2015, California’s economy was larger than all but five countries: the United Kingdom, Germany, Japan, China, and, of course, the United States, according to the World Bank.

But U.S. taxpayers aren’t responsible for the GDPs of other countries; they are on the hook for federal agency budgets. And a comparison of those budgets to state GDPs can help people get their arms around just how big some federal agencies are—and they’re getting bigger.

Let’s start with the biggest federal agency: the Department of Health and Human Services (HHS), which covers Medicare, Medicaid, Obamacare subsidies, welfare benefits, and other items. According to HHS, its 2016 budget was $1.02 trillion. That’s more money than the GDP of 47 states. The three states whose 2015 GDPs exceeded the HHS budget were California ($2.45 trillion), Texas ($1.65 trillion), and New York ($1.46 trillion).

The 2015 Department of Defense budget, at $560 billion, was a little more than half of the HHS budget. That’s more than the GDPs of 42 states. Besides the three states listed above, add Florida ($893 billion), Illinois ($772 billion), Pennsylvania ($684 billion), Ohio ($599 billion), and New Jersey ($579 billion).

Of course, this is just the Department of Defense budget. More money is spent on defense-related items, it’s just located in other parts of the federal budget.

And then there’s the Department of Veterans Affairs. At $164 billion in 2015—and climbing rapidly—its budget is bigger than the GDPs of 22 states.

Now, these agencies and many others do a lot of good. They’re paying for health care, welfare, and defending the nation, among other things. We need in one form or another many of the services they provide.

But when a federal agency’s budget is almost the size of New York’s whole economy—e.g., all the economic activity in that state—we have created a financially unsustainable monster.

The only way to rein in the cost of the federal government is to rein in its size. The current president has only grown Washington; now it’s time to scale it back.



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