Where Does Your Tax Dollar Go?

The federal government spends most of its budget on just a few programs. In 2001, social security, defense, Medicare, Medicaid, and interest payments on the national debt accounted for three-quarters of all federal spending. The rest goes toward a wide variety of programs, such as education, transportation, health programs, veterans' benefits and other areas. 

About two-thirds of federal expenditures is considered mandatory spending; the government spends this money automatically unless the President and Congress change the laws that govern it. Mandatory spending goes toward such entitlement programs as social security and Medicare, and it also goes toward paying interest on the national debt. The rest of government spending is considered discretionary; each year the President and Congress must decide which programs this money will fund. Discretionary spending goes toward such diverse programs as defense, highway construction, the FBI, housing, foreign aid, space exploration, and other programs. 

U.S. federal government spending--this chart illustrates federal government spending in 2001, broken down by major categories. Social security benefits account for the largest percentage of federal spending (22.6%), followed by spending on national defense (16.2%).

How government spends taxes--this provides the skinny on where your tax dollar goes, on the federal, state, and local levels.

Changes in U.S. federal spending--this chart tracks changes in the categories of spending by the federal government since 1940. Beginning in the 1970s, spending on human services such as social security and Medicare has grown to the point where it now dwarfs federal spending in other areas. 

Social security programs in the U.S.--a listing of the various social security programs, matched with explanations of who pays, who administers, and who benefits from each. Every working American has a portion of his or her paycheck withheld to pay for these benefits, which account for the largest category of federal spending.