250 PART ThRee • InsTITuTIons oF AmeRIcAn GoveRnmenT
employment actually fell, in large part because of the elimination of revenue sharing, a
program through which the federal government transferred large sums to state and local
governments. While government employment picked up later in Reagan’s administra-
tion, it never resumed the constant upward course characteristic of the 1960s and 1970s.
In short, Reagan’s “conservative revolution” had a genuine impact on the trajectory of
government.The Federal Budget
In 1929, spending by all levels of government was equivalent to only about 11 percent of
the nation’s gross domestic product. For fiscal year 2013, it was about 38 percent. One
factor driving the rate of government spending recently has been the Great Recession
that began in December 2007. Increased spending enacted in an attempt to combat the
recession—plus a fall in federal revenues—dramatically increased the size of the federal
budget deficit. How much of a problem is the deficit? We examine that topic in the At
Issue feature on page 253.social spending. Studies repeatedly show that most Americans have a very inac-
curate idea of how the federal budget is spent. Figure 11–2 on the facing page can
help. This pie chart demonstrates that more than a third of all federal spending goes to
two programs that benefit older Americans—Social Security and Medicare. Additional
social programs, many aimed at low-income individuals and families, push the total
amount of social spending past the 50 percent mark. In effect, the federal government
spends much more on the poor than many people realize. Medicaid, a joint federal-
state program that provides health-care services, is the largest of these programs. (CHIP
is the Children’s Health Insurance Program, and SNAP is the Supplementary Nutrition
Assistance Program, previously known as food stamps.) In contrast, traditional cash wel-
fare—Temporary Assistance for Needy Families (TANF)—accounts for only 0.5 percent of
the budget ($17 billion) and is buried in the “Miscellaneous low-income and disability
support” slice.defense and All the Rest. Military defense and veterans’ benefits are nearly a quarter
of the whole. Interest payments on the national debt are 6 percent. Education, transpor-
tation, law enforcement, and other functions amount to only 17 percent of the budget.
Foreign aid, which is included in the “Everything else” slice, is 1.5 percent, or $57 billion.
This is a substantial sum, but it is much smaller than many people imagine.The oRGAnIzATIon
oF The FedeRAl BuReAucRAcy
Within the federal bureaucracy are a number of different types of government agencies
and organizations. Figure 11–3 on page 252 outlines the several bodies within the execu-
tive branch, as well as the separate organizations that provide services to Congress, to the
courts, and directly to the president. The executive branch, which employs most of the
government’s staff, has four major types of structures. They are (1) cabinet departments,
(2) independent executive agencies, (3) independent regulatory agencies, and (4) govern-
ment corporations. Each has a distinctive relationship to the president, and some have
unusual internal structures, overall goals, and grants of power.LO2: Describe the various types
of agencies and organizations that
make up the federal executive
branch.
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