Federal outlays are estimated to reach $7.02 trillion in 2025, a 58% increase over 2019 federal spending. Six years’ worth of spending increases have happened since 2019, including pandemic emergency spending, the Inflation Reduction Act, the CARES Act, American Rescue Plan Act, among others. Although the states of emergency and the pandemic-related spending have subsided, federal spending has not returned to pre-emergency levels.
This is not a new phenomenon. The U.S. Federal government has increased spending throughout other crises and failed to return spending to previous levels. Spending reaching $7.02 trillion in 2025 is just one more instance of the ratchet effect.
- Total federal outlays increased 65% in 2024.
- Social Security spending increased 50%.
- Medicaid spending increased 51%.
- SNAP increased 70%.
- Net Interest payments increased 134%.
While these programs increased as a way to help Americans through the economic downturn during 2020 and 2021, the spending did not return to 2019 levels and instead continued growing.
Some of these increases can be attributed to inflation and rising costs of living, but not all. However, inflation on food has increased 30% since July 2019, while SNAP spending has increased 70%. Medicaid spending has increased 51% but inflation on medical care has increased 17% since 2019.
The rise in spending is due much more to program expansions and new spending items, rather than solely due to the inflation that most Americans feel is increasing their own budgets.
For example, Medicaid saw a 35.6% increase in enrollment between February 2020 and March 2023 during the pandemic, but has not returned to previous enrollment levels several years after the pandemic’s end. Beyond increased enrollment, improper payments may comprise one in four Medicaid dollars.
As for Social Security spending increases, cost-of-living adjustments and large populations aging into benefits have contributed to a 50% increase in spending from 2019 to 2024. The population 65 and over receiving Social Security benefits has increased 18%. While it is a blessing that Americans are living longer today than expected when the program originally formed, it is a cost that needs to be accounted for in the benefits formula.
Continuing to pay as much as $1.5 trillion and growing each year will force benefit cuts to Social Security if Congress does not roll back spending sooner.
Bottom Line
The federal government has grown accustomed to overspending regularly. When leaders are forced to confront the accumulated debt, their answer has been to increase the spending limit rather than make large cuts. Drawing back mandatory spending in Medicaid, Medicare, Social Security, and Income Security Programs will only happen when the government rightsizes these programs to those they were actually intended for.