Government Spending During the COVID-19 Pandemic

According to spending data from the statement of disbursements, the US government spent $5,797,607,628 in 2021. Following this record year of spending, the government expenditures have dropped 84% to $943,649,701.45 just a year later. This significant reduction in spending can be attributed to the need to recover our economy after the demanding expenses from the COVID-19 Pandemic. Using pre-pandemic spending data from the year of 2019 to the peak of COVID-19 spending in 2021, I have identified three programs in which the government has spent the greatest difference on. In other words, I intended to find out which spending categories have been invested in the most during the period of COVID. Within this period, the government shifted its focus to spending on government contributions, official expenses of members, and benefits and compensation, while massively underfunding tech services. Investments in these three categories are mostly due to the financial compensation of the US population after the pandemic caused the economy to go into freefall. More importantly, with the growing death toll from the pandemic, investment in healthcare was a necessity.

Government Health Contributions

This is a very broad category in the context of government spending and can be used to invest in a wide variety of sectors such as infrastructure, education, healthcare, etc. During the pandemic, and heavily invested in the medical industry for vaccine research, overwhelmed hospitals, and healthcare workers working overtime. Between 2019 and 2021, there was a 16% increase in government contributions, mostly centered around investments in healthcare. This includes the CARES Act where over 100 billion was invested in hospitals across the country and Operation Warp Speed which invested billions more in the development and distribution of vaccines. The government was forced to push out these acts at the height of the pandemic when hospitals across the country were getting overwhelmed and vaccine production was lagging. Overall, these contributions were critical in flattening the curve for COVID-19 deaths in the US, but surprisingly this spending only ate up a fraction of the COVID-19 spending spree.

Benefits and Compensation

Based on the statement of disbursement data there was a 383% increase in benefit and compensation spending from 2019 to 2021, which dwarfs the spending on healthcare and the government had never spent near this much prior to the pandemic. Along with a growing health crisis, the government also had to provide economic relief for struggling businesses and workers. Investments in compensation for businesses and workers included a variety of relief payments. The IRS granted millions of US citizens three rounds of relief payments, federal taxes were waived for unemployed Americans, and small businesses were granted loans. With unemployment rates soaring and small businesses shutting down all over the country, the government needed to use the majority of its budget to steady the economy.

Official Expenses of Members

Lastly, the government had to invest in their own house members, who were also struggling during the pandemic. There was a small increase of 6.25% in official expenses of members. The work environment drastically changed during quarantine, meaning people working for the government had to work remotely, and in the midst of the chaos from the pandemic, house members had to work overtime to keep the country running. This may have led to more investment in the working population for the government.

Post COVID-19 Spending

As our economy begins to stabilize and the threat of COVID diminishes, government spending is returning back to normal pre-pandemic patterns. According to the 2023 1st quarter statement of disbursements, government spending is trending up 12% compared to the 1st quarter of the previous year. After the unprecedented times we faced, the government spending patterns we witnessed during the height of the pandemic may never be replicated again. Specifically, heavy investment in benefits and compensation consumed the majority of the government’s budget during the pandemic. Due to the state of our economy, it was a necessity that the government invest, but in the past, they have done little to invest in small businesses, healthcare, and house member expenses. With this being said, I will be interested to see where government spending is focused on in the future, especially as we continue to recover from the pandemic.