Real US Income and Expenditures
By Rick Adamson, November 2025
The way we present income and expenditures in the US can be misleading, particularly in how we treat payroll taxes and related spending. A more accurate approach would be to offset (net) these items against each other.
Consider this: should payroll tax collections, which are earmarked for specific purposes, be recorded as income or should they be reported net of the associated disbursements (Social Security and Medicare)? Note that interest expense is reported net of interest income, which is normal.
If we apply this net method using the figures from the 2024 budget provided [here], we arrive at the following results:
Income, net of payroll taxes-$3.2 Trillion
$ in Billions
‘Expenditures, net of Social Security and Medicare Payroll Taxes-$5.1 T
$ in Billions
Every dollar spent by the government allocates about 34%—or roughly $1.74 trillion annually—to various welfare programs, which include Medicaid among others. Over the past five years, Medicaid expenditures have surged by 50% and are on track to hit $1 trillion annually by 2025.
If we include Social Security and Medicare costs, which exceed payroll tax collections (13% of spending), welfare expenditures amount to about 50% of total spending.
In 2024, our deficit spending reached $1.8 trillion, meaning this substantial welfare expenditure is effectively funded by borrowed money.
Adding to the concern, it's been highlighted that around 70% of anti-poverty funding fails to reach those it is intended to help; instead, it tends to benefit those who provide services to the poor, as noted by Bob Woodson. More information can be found [here].
Currently, over half of US households benefit from some form of welfare, whether it’s free school lunches or aid equating to an annual salary of up to $40,000+.
This situation starkly contrasts with the narratives often presented in the media, which focus on Social Security and Medicare as financial burdens on the country. In reality, these programs are largely self-sustaining. Any difficulties that arise are mainly due to inflation and the fact that payroll taxes haven't increased in years—a situation that can indeed be addressed.
It’s difficult to see how this current trajectory is sustainable.
We need to explore alternative solutions.
Here is one:
Separate the government accounting system into funds-
√ General
-Income (Individual and Corporate Income taxes along with Excise Taxes-including Tariffs)
-Expenditures (General Government, Defense, Interest and Other)
√ Social Security, Medicaid and Unemployment
-Income (Payroll and Unemployment Taxes)
-Expenditures (Social Security, Medicaid and Unemployment Expenses)
√ Welfare
-Income (A New Welfare Tax)
-Expenditures (All Other “Entitlements”-Medicaid, SNAP, etc.)
We could codify a new tax to pay for welfare (initially split off from the income tax).
Total expenditures would be limited to 15 percent of GDP. The taxes (income) and costs for each fund would be limited to a percentage of GDP, and a balanced budget for each fund would be mandatory over a rolling three-period.
Consolidate fund administration under the appropriate department (reduce from 8 to 2).
The day-to-day administration of the Welfare fund would be handled by the states. Each Welfare recipient would be assigned a counselor who would help the recipient develop a plan, if appropriate, to remove themselves from welfare and, in the meantime, ensure that the recipient receives all of the appropriate and available support services.
See what you think. Any new ideas?
And That’s that!
Further Reading:
Welfare [here]
Poverty [here]
Web:
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