Lesson Objectives:- Public and private bureaucracies
- The expanding government bureaucracy
- The rise of spending
- A detailed look at federal spending
A Bureaucracy is a large organization that is structured hierarchically to carry out specific functions.
Bureaucracy is not unique to the government. There are bureaucracies at play in corporations, universities, and other private institutions as well.
There are major differences between public bureaucracies and private ones. Private corporations have a CEO while government organizations may have the president as the Chief Administrator. Government organizations are beholden to Congress for staffing and funding. Another major difference is that corporations are for-profit and the government is not.
The State Department, War Department, and Treasury Department, along with the Department of Justice were the departments of the government in the late 1700s. Since then, the government has grown quite a bit.
From having about 30 employees, the government has grown to about 2.5 million and that excludes the 1.4 million in the military.
Since the late 1700s, government trajectory has been on an upward course, employing more and more people every administration until Reagan took office. He cut back on government employment and revenue sharing, which is the transfer of huge sums of money to the state and local governments. After Reagan, the upward course resumed, but not at the rate that it had been.
In 1929, spending was at about 11% of the nation's gross domestic product (GDP). By 2015, it had risen to about 35% of GDP. What recently drove government spending up was the Great Recession that started in 2007.
To combat the recession, the government increased spending. With the fall of federal revenues, the federal deficit increased. At $1,400 billion, the deficit peaked in 2010. Since then, the nation has slowly recovered and the deficit fell to $475 billion in 2016.
Benefits for the elderly like Social Security and Medicare come to more than 40% of the federal budget. Programs for the poor as in Medicaid and SNAP come to about 20%.
We spend about 20% on Military defense and veterans' benefits. In interest payments on our debt, we spend about 6.5%. The rest of our federal budget is split up into many different categories like foreign aid.
As for where the money comes from, personal income tax accounts for about 40% of our total income. Social Security trust funds add another 20%. Then, we borrow about 14%.