Spending for 2004 Was Up 5 Percent
Entitlements Account for Almost Half

By Christopher Lee
Washington Post Staff Write
Thursday, January 5, 2006

We're nearing federal budget season again, when President Bush will propose his fiscal year 2007 spending plan and Congress will dispose of it as it sees fit.

But the final numbers have only just come in for fiscal year 2004, detailed in the efficiently named "Consolidated Federal Funds Report for Fiscal Year 2004." Perusing the 110-page document, released last week by the U.S. Census Bureau, a number of fun facts emerge.

Overall, the federal government spent $2.2 trillion in 2004, an increase of 5 percent from 2003. The growth was slower than the 6 percent to 8 percent increases seen over the past several years, officials say. (Inflation during fiscal 2004 was about 2.32 percent.)

Nearly half of the 2004 spending -- more than $1 trillion -- was on Social Security, Medicare and Medicaid, popular entitlement programs whose costs are growing annually.

Medicare, in particular, is about to get a lot more expensive. On Jan. 1, the federal health insurance program for the elderly began to cover some prescription drug costs for as many as 41 million eligible participants. The government expects to spend about $724 billion on the benefit over the next 10 years.

Other costs loom, too. The leading edge of the baby-boom generation turns 60 this year. At 62, some of them will decide to start collecting their Social Security benefits, fueling big increases in the cost of that very popular but fiscally uncertain program.

Entitlement programs are not the only areas of federal spending, of course -- just the ones public officials tend to talk about the most. The government in 2004 also laid out $226 billion for salaries and wages, $360 billion for procurement contracts, and $229 billion in guaranteed or insured loans.

Some states captured a lot more federal dollars than others.

In fact, five states received one-third of all federal funds in 2004. They were California, New York, Texas, Florida and Pennsylvania. That's not surprising. All five are big, populous states, so it stands to reason that a lot of federal money would flow in their direction.

More interesting is how states fared in per capita federal spending -- the amount of federal money spent per person. The national average was $7,223 per person.

The top five states were Alaska ($12,885), Virginia ($12,150), Maryland ($11,645), New Mexico ($10,437) and Hawaii ($9,651). The bottom five were Nevada ($5,469), Minnesota ($5,644), Wisconsin ($5,728), Utah ($5,728) and Michigan ($5,981).

Virginia and Maryland can thank the presence of many federal agencies and programs for their prominent spots on the list. Per capita spending in Washington, D.C., was a whopping $67,982, but also unsurprising since it is the nation's capital and the seat of the federal government.

Similarly, the list of counties and municipalities that have the most federal spending per capita include two Virginia cities (Falls Church and Fairfax City) and one county (Arlington) in the top five. Their high rankings reflect the influence of the Defense Department. The Pentagon is in Arlington County, and the two cities are home to defense contractors who rake in hundreds of millions of dollars annually in federal money.

Some figures cannot be found in the report: spending on foreign aid, international affairs or interest payments on the national debt, which totaled about $200 billion in 2004. Nor does it list spending by the Central Intelligence Agency, the National Security Agency and the Defense Intelligence Agency because budgets for those agencies are classified.