Government Spending by Function: A New Presentation

The new tables are simpler, with only a single column for each year, compared with multiple columns for each year for different types of expenditures in the previously published format.

Fourth, government consumption expenditures and gross investment, a component of GDP, is now presented in table 3.15. Quarterly estimates for the three levels of government are shown in NIPA tables 1.1 and 3.7.

Data Availability The estimates beginning with 1952 for the new NIPA tables 3.15, 3.16, 3.17 are available from BEA's Web site at www.bea.doc.gov; click on "GDP and related data" and look under "Annual Only NIPA Tables." They are also available from STAT-USA's Web site at www.stat-usa.gov.

Shares of government spending by function

In 1998, the largest shares of total government consumption expenditures and gross investment spending were for education, at 28.6 percent, and for national defense, at 22.8 percent (chart 1). National defense accounts for 64.7 percent of Federal Government spending, and education accounts for 43.6 percent of State and local government spending.

The average annual rates of growth of total government spending have generally decelerated since the 1970's (table A). Federal Government spending decelerated in the 1980's, despite a pickup in national defense spending that turned down in the 1990's. State and local government spending grew faster on average than Federal Government spending in the 1990's.

In 1998, the largest shares of government current expenditures were income security (23.4 percent) and health (17.9 percent) (chart 2). Current expenditures for income security are large because they include transfer payments, such as those for social security. Current expenditures for health are large because they include Federal transfer payments for medicare and State-and-local transfer payments for medicaid.

In 1998, education (16.5 percent), general public service (16.1 percent), and national defense (11.9 percent) also accounted for sizable shares of current expenditures. Current expenditures for general public service includes net interest paid and sizable unallocable expenditures for State and local governments.

Comparison of Classifications of Government Functions The classifications that are used in the new NIPA functions are designed to be comparable with the functions used in the international classifications of the functions of government (COFOG). However, the NIPA's have no function for environmental protection because not enough detail existed in the previous NIPA subfunctions. Some of the activities included in environmental protection, such as waste management and waste water management, are included in the NIPA housing and community services function. The new NIPA functions are also related to those that are used by the Office of Management and Budget (OMB) to prepare the Federal budget and those that are used by the Bureau of the Census to prepare State and local government finance reports. The OMB currently classifies budget data into 20 functions that are roughly assigned to the 9 NIPA functions for government. Of the 20 budget functions, 17 cover broad areas of national need. The remaining three functions--net interest, undistributed offsetting receipts, and allowances--are included to ensure full coverage of the Federal budget. The OMB functions give added visibility to major programs, such as Medicare and social security, by making them functions that are distinct from the health and income security functions. The NIPA function for health includes Medicare, and the NIPA function for income security includes social security. Over 70 OMB subfunctions allow finer relationships to be made to the 25 NIPA subfunctions. The Census Bureau presents expenditures in Government Finances and in the Census of Governments in 12 function groups and 39 subgroups that are based on nearly 70 major functions of government. The NIPA estimates for the Federal Government and for State and local governments are based on data from both these sources .(1) 1. NIPA table 3.18B shows the relation of Federal Government current expenditures in the NIPA's to budget outlays, and NIPA 3.19 shows the relation of State and local government current expenditures to total expenditures in Government Finances; these tables were published most recently on pages 67 and 68 of the April 2000 Survey. See also "Updated Summary NIPA Methodologies," Survey 78 (September 1998): 14-35; and Government Transactions, Methodology Paper No. 5 (1988), which can be found at www.bea.doc.gov  under "Bureau-wide" and then under "Methodologies." NIPA COFOG OMB      Census Bureau General public service General public service General Government  plus International affairs  plus Net interest  plus Allowances Government administration  plus Interest on general debt  plus General expenditures not elsewhere classified National defense Defense National defense National defense and international relations Public order and safety Public order and safety Administration of justice Public safety Economic affairs Economic affairs Agriculture  plus Energy  plus Natural resources and environment  plus Transportation  Commerce and housing credit  General science, space and technology Transportation  plus Utility expenditures  plus Liquor store expenditures (1) Environmental protection (2) (3) Housing and community services Housing and community amenities Community and regional development Environmental and housing Health Health Health  plus Medicine  plus Veterans benefits and services (4) Recreation and culture Recreation, culture, and religion (5) (3) Education Education Education, training, employment, and social services Education services Income security Social protection Income security  plus Social security  plus Undistributed offsetting receipts Social services and income maintenance  plus Insurance trust expenditure 1. Contained largely in the housing and community services function and economic affairs function. 2. Contained largely in the natural resources and environment function and community and regional development function. 3. Contained largely in the environment and housing function. 4. Contained largely in the social services and income maintenance function. 5. Contained largely in the natural resources and environment function.