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trends in federal expenditures, 1960–2009

F ederal spending rose dramatically in 2009, whether measured in infla- tion-adjusted dollars ($3.5 trillion, as shown in figure 7) or as a share of the economy (24.7 percent, as shown in figure 8, which shows the same data expressed as a percentage of GDP). Federal outlays were higher as a percentage of GDP than any other year in the 1960–2009 period shown in the figures (and, in fact, higher than any year since the end of World War II). Much of the increase in spending was a result of the economic recession and government efforts to stimulate the economy, support the unemployed, assist beleaguered state and local governments, and bolster the troubled finan- cial, housing, and automotive sectors. While federal spending on children increased as a result of the recession and the American Recovery and Reinvestment Act, reaching a record 2.3 percent of GDP, other parts of the federal government increased even more rapidly. As a result, children received less than one-tenth (9.5 percent) of total outlays, or $334 billion out of $3.5 trillion.

How was the remaining 90 percent of the federal budget spent? Over a third (36 percent, or $1.26 trillion) was allocated to the elderly and disabled for the non-child portions of Social Se- curity, Medicare, and Medicaid (see figure 7). Other major items of spending in the federal bud- get include defense (19 percent, or $657 billion in 2009) and interest on the debt (5 percent, or $187 billion). In addition, because of response to the recession and troubled financial markets, a residual category encompassing all other spending was unusually large in 2009, $1.08 trillion or 31 percent of total outlays. This category includes all other government functions (e.g., the en- vironment, transportation, commerce, etc.) and encompasses spending under TARP; the non- child, non-elderly portions of ARRA; and extensions of unemployment benefits, which, while indirectly benefitting children, are not counted as direct spending on children in our analysis.13

Reductions in taxes are not included in the numbers above or in the discussion of broad trends in the federal budget below, because federal budget totals do not include tax expendi- tures. As already discussed, tax expenditures on children represented 8 percent of the total tax expenditure budget in 2009.

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