The most recent U.S. federal budget (FY2024) totaled roughly $6.8 trillion, allocated across major categories like Social Security, healthcare, defense, education, infrastructure, and welfare programs [1] [2]. To understand which income classes (low-, middle-, or high-income households) benefit most from this spending, we must consider both direct benefits (e.g. government salaries, direct transfers like Social Security or Medicaid, and subsidies) and indirect benefits (e.g. government procurement that boosts corporate profits, stockholder returns, and jobs in various industries). This report breaks down the key spending categories, estimating how their benefits are distributed across income groups, and then provides a cumulative overall summary. These estimates combine data and reasoned assumptions based on program targeting, occupational wages, and shareholder demographics, especially where direct data is unavailable.
Defense and National Security
Defense spending (about 13% of FY2024 outlays [1]) includes the Department of Defense and related national security expenditures. It primarily consists of personnel costs and procurement of goods and services (equipment, operations, contracts). Defense is unique as a public good (national security) that indirectly benefits all citizens, but its economic benefits flow mainly to those employed by or contracting with the defense sector:
- Direct benefits (salaries & benefits): Roughly 40% of defense spending goes to compensation of military and civilian employees [3]. This includes pay for ~2.1 million uniformed and civilian defense workers [4]. These salaries mainly support middle-income households – for example, enlisted service members and junior officers (often from working-class backgrounds) earn middle-class incomes in the range of ~$30k–$80k, lifting many from lower-income status into a middle-income lifestyle. Civilian defense employees (engineers, technicians, administrators) also typically earn middle-class or upper-middle-class salaries. Thus, the payroll portion of defense directly bolsters middle-class income. A small share of personnel spending reaches low-income households, for instance via junior enlisted personnel from poor backgrounds (though military pay and housing benefits generally move them into lower-middle income ranges). Very little of defense payroll goes to the very rich (only a handful of top generals or senior executives have salaries that might qualify as high-income, and those are few).
- Indirect benefits (contracts, profits, jobs): About 60% of defense spending is for procurement of goods and services [3] – e.g. weapons, vehicles, tech, operations – which flows to private defense contractors. This spending supports industry jobs (e.g. manufacturing and R&D positions) and generates corporate profits. The jobs created at defense contractors tend to be middle-income: factory and construction workers, technicians, and mid-level professionals often earn moderate incomes (e.g. the median U.S. construction worker salary is ~$45,300 [5]). Highly skilled defense engineers and managers may earn upper-middle incomes. On the other hand, profits from defense contracts accrue to company owners and shareholders, who are disproportionately high-income. Major defense firms like Lockheed Martin derive the majority of their revenue from federal contracts (around 70%+ of Lockheed’s revenue comes from the U.S. government [6]), and the wealthiest 10% of households own 93% of U.S. stock market wealth [7]. This means that the gains from defense contracting (dividends, stock price increases) largely benefit high-income investors. Thus, the procurement portion indirectly funnels income to both middle-class workers (wages) and wealthy shareholders (returns on capital).
In summary, middle-income Americans benefit most from defense spending via military/civil service pay and contractor employment, while high-income households capture a smaller share directly but a significant share indirectly through corporate profits and asset returns. Low-income households benefit least in monetary terms – they receive no direct defense payments and few are employed in the relatively skilled defense workforce, though they share equally in the non-monetary benefit of national security. The table below summarizes the estimated distribution for defense:
| Income Group | Approx. Share of Defense Benefits | Primary Benefit Channels |
|---|---|---|
| Low-Income | ~10% | Some enlisted personnel pay; minimal direct contracts; general security (non-monetary benefit) |
| Middle-Income | ~60% | Bulk of military/civilian salaries; contractor employee wages (engineering, manufacturing jobs) |
| High-Income | ~30% | Defense contractor profits; payments to shareholders; high-level executive salaries |
Social Security (Retirement and Disability)
Social Security is the federal government’s largest single program (about 21% of FY2024 spending, $1.5 trillion [1]). It provides monthly retirement, survivors, and disability benefits to over 66 million Americans. Social Security is a direct transfer payment financed by payroll taxes and is not means-tested (everyone who paid in and is eligible receives benefits), but its formula is progressive (lower-wage workers get a higher replacement rate of earnings). The distribution of Social Security benefits across income classes is as follows:
- Direct benefits: By design, Social Security covers all income groups in old age, but it constitutes a larger share of income for lower- and middle-income retirees. Many low-income seniors rely almost entirely on Social Security – for the bottom quintile of older adults, Social Security provides about 83% of total income [8]. However, considering the entire population (including younger people who are not receiving benefits), the middle class receives the largest share of Social Security dollars. This is because middle-income workers (e.g. lifetime median earners) both contribute to and later rely on Social Security heavily, and there are many such beneficiaries. Lower-income individuals (e.g. low-wage workers or disabled individuals) do receive substantial benefits, often getting more in benefits than they paid in, but some low-income households are young and not yet eligible, so in aggregate the bottom income group doesn’t receive the majority of Social Security outlays. High-income individuals receive Social Security too (even millionaires get a monthly check), but their benefits are capped by the program’s formula (maximum benefit in the ~$3,000/month range) and thus represent a smaller portion of total benefits.
- Indirect benefits: Social Security’s impacts beyond the direct checks are limited (it’s essentially a cash transfer program). There is some indirect economic benefit when beneficiaries spend their checks, which supports businesses. For example, Social Security payments get spent on groceries, housing, healthcare, etc., supporting jobs in those sectors. These indirect effects are diffuse across the economy. One could say indirectly Social Security spending benefits workers and owners in retail, healthcare, and other industries patronized by seniors. However, because Social Security is so broad-based, its indirect benefits don’t disproportionately favor any single income class – the money spent stimulates the overall economy, supporting employment across income levels (e.g. retail workers (often low- to middle-income) get jobs serving the needs of retirees, and company owners (higher income) gain revenue). In terms of who ultimately benefits from the economic activity generated, it roughly follows consumption patterns of retirees, which aren’t strongly skewed by income class.
Overall, middle-income households are the primary beneficiaries of Social Security, with low-income households also significantly benefiting (especially relative to any contributions they made). High-income households receive the smallest share of Social Security benefits in both relative and absolute terms – they are fewer in number among beneficiaries and each high-income person’s benefit is limited – and they are also less dependent on it. The table below summarizes the estimated benefit distribution:
| Income Group | Approx. Share of Social Security Benefits | Primary Benefit Channels |
|---|---|---|
| Low-Income | ~15–20% | Direct retirement/disability payments (often the main source of income for poor elderly) |
| Middle-Income | ~60–70% | Direct benefits to average earners (Social Security is a central retirement income for the broad middle class) |
| High-Income | ~10–20% | Direct benefits to high earners (capped); indirect economic stimulus benefiting businesses they own |
Healthcare (Medicare, Medicaid, etc.)
Federal healthcare spending (about 25% of federal outlays in FY2024 [1]) encompasses Medicare (health insurance for seniors and some disabled individuals), Medicaid (health coverage for low-income people, jointly funded with states), the Affordable Care Act (ACA) marketplace subsidies, veterans’ healthcare, and other health programs. These programs deliver in-kind benefits (medical services) rather than cash, but we can analyze who ultimately benefits from the government’s health spending:
- Medicare (elderly and disabled health insurance): Medicare (~$839 billion in 2024 mandatory outlays [9]) provides near-universal health coverage for Americans over 65. In terms of direct benefit, Medicare is valuable to all income groups of seniors – a middle-class retiree and a wealthy retiree get the same core coverage. However, lower- and middle-income seniors benefit most because they are less likely to afford care otherwise. High-income seniors do benefit in absolute dollar terms (they also receive Medicare-funded treatments), but they often have supplemental private plans and could more easily pay for care out-of-pocket if needed. Thus, middle-income seniors (and disabled individuals) likely receive the largest share of Medicare benefits, with low-income seniors also significant beneficiaries (and often having Medicare and Medicaid). High-income households receive a smaller share of Medicare’s benefits relative to others (there are fewer high-income individuals in the elderly population, and those who are may not consume markedly more Medicare services than others).
- Medicaid and CHIP (low-income health programs): Medicaid (federal share ~$584 billion in 2024 [9]) is means-tested and targets low-income Americans by design. It covers over 90 million people (including low-income children, adults, many nursing home residents, and disabled individuals). The direct benefits overwhelmingly go to low-income households, since eligibility is based on having low income or impoverishing medical need. Virtually all Medicaid spending benefits low-income individuals – for example, a majority of Medicaid enrollees have income below or near the poverty line. Middle-income benefit only marginally (for instance, a middle-class person might qualify for Medicaid if they become impoverished by medical costs or if their income is just above poverty in expansion states, but generally Medicaid’s purpose is to assist the poor). High-income people are ineligible for Medicaid, so they receive none of its direct benefits.
- ACA Marketplace subsidies: The Affordable Care Act provides sliding-scale premium tax credits for private insurance to people with low or moderate incomes (up to ~400% of poverty). These subsidies (about $111 billion in 2024 [9] for the refundable credit) mainly help low- and lower-middle-income families who don’t get employer coverage – for example, a family of four earning $50,000 qualifies for a subsidy, whereas a high-income family does not. So this component again skews toward low/middle-income beneficiaries.
- Veterans’ health care: The VA health system (about $128 billion discretionary in 2024 [9]) provides medical services to eligible veterans. Many veterans using the VA are disabled, elderly, or low-income (VA care is free or low-cost for those with service-connected disabilities or low incomes, while higher-income veterans may face copays or use other insurance). Thus, veterans’ health benefits primarily assist low- and middle-income veterans rather than wealthy individuals.
- Indirect benefits (healthcare sector impacts): Government health spending ultimately pays doctors, nurses, hospitals, drug companies, and medical device firms for services and products. This creates significant income for the healthcare industry. For example, Medicare and Medicaid payments become revenue for hospitals and pharmaceutical companies. The distribution here is twofold: medical professionals and health workers (middle to high incomes) earn wages from treating government-funded patients, and shareholders of healthcare companies (high-income) gain profits. Many physicians and specialists are in the top income tiers, so a portion of Medicare/Medicaid spending effectively flows to high-income professionals. Hospital support staff, home health aides, nurses, etc., range from low- to middle-income wages, so they also benefit. Pharmaceutical and insurance companies see increased profits from government-funded coverage (e.g. Medicare Part D drug coverage boosts pharma sales), enriching their mostly high-income investors. In short, the indirect economic benefits of federal health programs span the income spectrum: they create jobs (often middle-class) and profits (largely accruing to the wealthy) in the healthcare sector.
Taking these pieces together, healthcare spending has a bifurcated benefit pattern: Low-income households benefit enormously from Medicaid and subsidies, as well as from Medicare if they are elderly poor. Middle-income households benefit from Medicare (most typical seniors are middle-class) and from employment in the healthcare field. High-income households benefit less from direct health transfers (since they rarely qualify for means-tested programs and Medicare is a smaller share of their economic resources), but they do capture a notable indirect share via provider incomes and corporate profits. The overall distribution skews toward the lower end due to Medicaid’s targeting. We estimate the distribution of direct benefits of health programs roughly as: a majority to low- and middle-income groups, and a smaller portion to the high-income group. The table below summarizes:
| Income Group | Approx. Share of Healthcare Benefits (direct program benefits) | Primary Benefit Channels |
|---|---|---|
| Low-Income | ~40%+ (dominant in Medicaid, large in Medicare) | Medicaid insurance coverage; ACA insurance subsidies; Medicare for low-income seniors; VA care for low-income vets |
| Middle-Income | ~50% (significant in Medicare and some ACA subsidies) | Medicare for average retirees; some ACA subsidies for moderate-income families; healthcare employment income (nurses, technicians) |
| High-Income | <10% direct (but additional indirect benefits) | Medicare for affluent seniors (limited share); Indirectly: incomes of physicians and medical executives; pharmaceutical and insurer profits (stockholder gains) |
Education
Federal education spending (about $268 billion in FY2024, ~4% of the budget [2]) includes K-12 and higher education programs such as Title I grants for low-income school districts, special education funding, Pell Grants for college students, and other educational services. Education spending tends to be oriented toward promoting equity and access, so it disproportionately aids lower-income populations in many cases:
- K-12 Education (Title I and others): Federal K-12 funds (e.g. Title I) are explicitly targeted to low-income areas and disadvantaged students. Title I provides additional resources to schools with high percentages of children from low-income families. This means low-income children (and by extension their families) receive the primary benefit – in the form of smaller class sizes, extra tutoring, or improved school resources. Middle-income and high-income communities get much less federal K-12 funding per student. Thus, the direct benefit of federal K-12 dollars is concentrated among low-income households (improving educational services for their children). The teachers and staff hired with these funds earn salaries (often middle-class incomes), which is an indirect benefit to those educators (typically not high-income jobs, more middle-class).
- Higher Education (Pell Grants and student aid): Pell Grants are the cornerstone federal grants for college, and they are means-tested. Almost all Pell grant recipients come from the bottom half of the income distribution [10] – predominantly low- and lower-middle income families. These grants (up to ~$7,000 per student per year) directly benefit low-income students by enabling college attendance with reduced debt. Middle-income students may receive smaller Pell awards or none if their family income is above the cutoff. High-income students are not eligible for Pell. There are also federal work-study and some campus-based aid programs targeting lower-income students. Federal student loans are available to all incomes, but loans must be repaid (so not a net benefit unless subsidized). Any loan interest subsidies (like certain borrowers having interest paid by the government while in school) again mostly help those with financial need. Overall, federal higher education spending heavily favors low- and middle-income students.
- Indirect benefits: Investing in education can have broad indirect benefits by increasing human capital and future earnings (which can lift low-income individuals into higher income brackets). In the near term, education funding creates jobs for teachers, aides, and administrators. Most of these education jobs put workers in the middle-income bracket (teachers’ salaries vary, but often range from ~$40k–$70k). So, part of the federal education budget indirectly supports middle-class employment in the education sector. There’s little indirect profit to high-income investors here because public education is not a for-profit enterprise (except for textbook or education technology vendors – a relatively small part of spending, some of whose profits would go to shareholders).
Given the targeting of education funds, low-income households are the clear principal beneficiaries of federal education spending (through enriched K-12 schooling in poor communities and college grants for low-income students). Middle-income households benefit to a lesser extent, perhaps through some grants for middle-class college students and general public school improvements, as well as through employment of educators. High-income households benefit minimally (their schools rely more on local funding and their children rarely receive federal aid for college). The table below summarizes this distribution:
| Income Group | Approx. Share of Education Benefits | Primary Benefit Channels |
|---|---|---|
| Low-Income | High (estimated ~50%) | Title I and Head Start for poor children; Pell Grants and college aid for low-income students; improved educational opportunities leading to higher future incomes |
| Middle-Income | Moderate (estimated ~40%) | Some K-12 support (e.g. special education benefits many families); partial Pell or other aid for moderate-income students; jobs for teachers and staff (middle-class salaries) |
| High-Income | Low (estimated ~10%) | Minimal direct aid (most high-income families pay full college tuition and use well-funded local schools); indirect benefit of a well-educated workforce in society |
Infrastructure and Transportation
Federal infrastructure spending (covering transportation networks like highways, bridges, transit, plus water projects, broadband, etc.) is a smaller portion of the budget on an annual basis (though bolstered by recent one-time legislation). Infrastructure is generally a public good that indirectly benefits the entire economy and population by improving productivity, safety, and connectivity. However, the direct economic benefits (jobs and contracts to build and maintain infrastructure) flow to certain groups:
- Direct benefits (contracts and grants): Federal infrastructure funds typically go to state and local governments or private contractors to build projects. For example, federal highway grants pay for road construction done by private construction firms. Workers employed on infrastructure projects receive wages – these are largely blue-collar and skilled trades jobs (construction laborers, equipment operators, civil engineers). These jobs tend to pay middle-income wages (as noted, median construction wages are in the mid-$40k range [5], and skilled trades or engineers earn more, often middle to upper-middle incomes). So, a significant share of infrastructure dollars turns into middle-class income via construction and engineering employment. Some portion of these jobs may go to lower-income individuals (e.g. local hiring in economically depressed areas, or entry-level laborers), but on average the pay scales in infrastructure work elevate most workers into at least the middle-income bracket.
- Profits and ownership: Construction and engineering firms profit from infrastructure contracts. The owners or shareholders of these firms (which can range from local contractors to large corporations) are often higher-income individuals or investors. Thus, like with defense, a slice of infrastructure spending ends up as profit for business owners, which benefits the high-income class (since business ownership and capital income is concentrated among the wealthy). For example, a large bridge project might generate profits for the construction company’s owners or for shareholders of a materials supplier – these gains accrue to wealthier stakeholders.
- Indirect public benefits: Once built, infrastructure benefits all users – for instance, a highway can be used by rich and poor alike. Indirectly, businesses (often owned by high-income individuals) benefit from efficient transport to ship goods, and workers of all incomes benefit from improved commuting routes. These broad benefits are hard to quantify by income class – one could argue everyone gains proportionally to their use. High-income individuals might use infrastructure differently (e.g. by conducting more business that relies on it), whereas low-income individuals might gain access to jobs via public transit. For the purposes of this analysis, these societal benefits are acknowledged but not assigned to one income group; instead, we focus on who gains economically from the spending itself.
In summary, middle-income households likely receive the greatest direct boost from infrastructure spending through well-paying jobs in construction and engineering. High-income individuals capture a portion of the benefits through business profits and ownership of firms involved in infrastructure development. Low-income households benefit somewhat less directly – they may get some of the jobs (though often requiring skills) and certainly benefit from the resulting services (like transit), but as an income group they receive a smaller share of the direct wage and profit flow. The distribution can be summarized as follows:
| Income Group | Approx. Share of Infrastructure Benefits | Primary Benefit Channels |
|---|---|---|
| Low-Income | ~10–15% | Some construction jobs for lower-skilled workers; improved access to transportation (indirect quality-of-life benefit) |
| Middle-Income | ~60% | Majority of construction and engineering jobs (good wages); manufacturing of materials (factory jobs) |
| High-Income | ~25–30% | Profits for contractors and suppliers; asset gains for investors in infrastructure firms; enhanced business productivity |
Welfare and Income Security Programs
“Welfare” here refers to means-tested safety net programs (aside from Medicaid, which we covered under healthcare). These include programs like Supplemental Nutrition Assistance (SNAP/food stamps), Temporary Assistance for Needy Families (TANF cash aid), Supplemental Security Income (SSI) for the disabled poor, housing assistance (Section 8 vouchers, public housing), Earned Income Tax Credit (EITC) and Child Tax Credit (refundable portion), and Unemployment Insurance (UI). These programs collectively account for a significant share of federal spending (hundreds of billions per year, though less than the major entitlements). By their nature, most of these are targeted to help low-income individuals, either those in poverty or those facing temporary income loss:
- Direct benefits: Virtually all means-tested transfer payments flow to low-income households. Programs like SNAP and TANF have strict income eligibility (often below 130% of poverty for SNAP, and far below poverty for TANF). For example, SNAP provided food assistance to about 41 million low-income individuals in 2022, with average benefits of a few hundred dollars per month, and the vast majority of SNAP households are under or near the poverty line [11]. These benefits directly boost the consumption and living standards of low-income families – making up a significant portion of their resources. SSI gives cash to low-income elderly or disabled people with little other income. Housing subsidies similarly go almost exclusively to poor or working-poor families (there are long waiting lists of low-income families for housing vouchers). The refundable EITC and Child Tax Credit are slightly different: they benefit low- and lower-middle-income working families (those with earnings but still in the lower half of the income distribution). EITC, for instance, is targeted at working families with children and provides the largest credits to those with income in the lower quartiles (phasing out before reaching middle-class income levels). Unemployment Insurance (UI) is an important part of income security too – it’s not means-tested (it’s based on prior employment), but it effectively provides temporary support largely to middle-income earners who lose jobs (since higher-income workers get a capped benefit that replaces only a fraction of high salaries, and very low-income or part-time workers often don’t qualify or get small amounts). During recessions, UI can be substantial, and many recipients might be considered middle-class breadwinners who are temporarily without income.
- Indirect benefits: When low-income individuals receive benefits like SNAP or housing vouchers, they spend that money on goods and services, which in turn benefits businesses and their employees. For example, SNAP dollars are used at grocery stores – this supports the retail grocery industry. One could say corporate retailers and their shareholders indirectly benefit from SNAP (indeed, major grocery chains have revenue boosted by food stamp usage). Those profits would go to investors (high-income) and some of the spending goes to pay the wages of grocery store workers (often low- to moderate-income jobs). Similarly, housing vouchers paid to landlords become income for property owners (who might be middle-income small landlords or large real estate companies – the latter implying wealthy investors). So, there is an argument that indirectly, safety net spending feeds into the broader economy, supporting jobs that are often held by middle or lower-income workers and profits that accrue to higher-income owners. Another indirect aspect is that by improving the stability and health of low-income families (through nutrition, shelter, etc.), these programs can have long-term societal benefits like reduced crime or better labor force participation, which benefit everyone broadly.
Given the intentional targeting, the direct benefits of welfare programs skew almost entirely to the low-income population. Middle-income households receive a smaller share, mainly through programs like UI (which isn’t strictly need-based but serves those who fall into temporary low income due to job loss) and possibly the tail end of phase-outs of credits. High-income households receive essentially none of the direct welfare benefits – their incomes simply disqualify them. The indirect effects, as noted, provide some benefit to businesses and the overall economy (thus touching middle and high-income groups), but those are secondary. The distribution roughly looks like this:
| Income Group | Approx. Share of Welfare Benefits | Primary Benefit Channels |
|---|---|---|
| Low-Income | Largest share (≈80%+) | Direct cash/food/housing assistance (SNAP, TANF, SSI, housing) to poor families; refundable tax credits to working poor |
| Middle-Income | Small-moderate share (≈15–20%) | Unemployment benefits for laid-off workers (many formerly middle-income); some refundable credits to lower-middle workers; indirect boost from consumer spending of benefits |
| High-Income | ~0% direct (negligible) | No direct welfare benefits (income too high); Indirectly: increased consumer spending supports businesses and profits (benefitting owners/investors) |
Other Federal Spending
Beyond the major categories above, the federal budget includes many other programs and services – e.g. law enforcement and justice, homeland security (non-defense), science and research (NASA, NSF), agriculture subsidies, environmental protection, foreign aid, and general government administration. A few notes on these:
- Federal worker salaries: Across all agencies, the federal government employs about 3.8 million workers (civilian and military) [4]. We’ve covered defense and education employees; others include law enforcement agents, park rangers, IRS staff, etc. The compensation for these jobs is a direct benefit to those employees, who are largely middle-income. In fact, about 45% of all discretionary (annually appropriated) spending goes to federal employee salaries and benefits [12] (military and civilian). So, a significant slice of “other” spending is still middle-class income for the public workforce. High-income individuals make up only a small fraction of the federal workforce (most federal salaries are modest relative to the private sector). Low-income individuals are more likely to be recipients of services rather than employees in these categories.
- Public goods and services: Spending on things like national parks, air traffic control, police and firefighting grants, etc., provides services that everyone can use. The benefit of a national park or a safe food supply (FDA) isn’t monetized per person, but it’s a universal benefit. If one attempted to allocate these, one might allocate equally per capita (which in dollar terms is worth more to a poorer person relative to their income). In practice, usage can vary – for instance, national parks might be visited more by middle-class families than by the very poor or the ultra-rich. But overall, these are broadly distributed benefits.
- Subsidies and industry support: The government also spends on or subsidizes certain industries (agriculture is a prime example, through farm price supports and crop insurance). Agricultural subsidies often go to large farm operations – meaning the benefits accrue to farm owners and agribusinesses, which can include very wealthy individuals or corporations. For example, a substantial share of commodity payments go to the largest (often high-revenue) farms [13]. So, some corporate subsidies and contracts in energy, agriculture, and commerce effectively benefit high-income stakeholders. These are a relatively small portion of the budget but noteworthy for being less progressive.
In aggregate, the “other” discretionary and mandatory spending not covered in earlier categories tends to either provide broad public goods or specific subsidies. Where it’s broad public goods, all income classes benefit roughly equally as users. Where it’s specific subsidies (like farm aid or business credits), high-income owners tend to be the winners. And where it’s operational spending (agency budgets), it’s largely middle-class salaries as discussed.
Cumulative Summary: Which Income Groups Benefit Most Overall?
Bringing all categories together, we can form a cumulative view of who benefits from federal expenditures:
- Low-Income Households: They receive outsized direct support relative to their income, primarily through means-tested programs. Medicaid, SNAP, housing aid, and poverty-targeted programs flow almost entirely to this group, substantially supplementing their resources. Low-income individuals also benefit from universal programs (Social Security, Medicare) in cases where they qualify (e.g. low-income seniors). In dollar terms, a significant share of federal spending is intentionally directed toward the poor – this is the redistributive function of the budget. Estimates from similar analyses suggest that the bottom 20% of households receive far more in government benefits than they pay in taxes [14] [13]. However, low-income households benefit less from categories like defense and infrastructure in direct terms (since they are less likely to hold the jobs or capital that those expenditures generate). Overall, considering all spending, low-income Americans likely receive a somewhat smaller absolute share of total dollars than the middle class (because huge programs like Social Security and Medicare are not targeted by income), but they receive the largest benefits relative to their own incomes and their share is larger than their share of taxes paid (a net fiscal transfer to them). Roughly, one could estimate perhaps 30%+ of total federal benefit dollars accrue to the lowest-income group (even though this group earns far less than 30% of national income). The federal budget strongly boosts the living standards of the poor.
- Middle-Income Households: The middle class (roughly the middle 60% of the income distribution) arguably receives the greatest share of federal spending benefits in absolute terms. This is because major universal or broad-based programs serve them: Social Security and Medicare primarily support middle-class seniors, public education and infrastructure serve a broad middle-class population, and many federal and contractor jobs are held by middle-class workers. The typical American family benefits from public schools, drives on federal highways, and will draw Social Security and Medicare in retirement – all significant value. Middle-income workers also benefit from things like Unemployment Insurance during downturns and the indirect economic stability provided by government activity. It’s estimated that the middle three quintiles together receive well over half of all government benefits and services in dollar terms. For example, middle-income households rely on government transfers for around 25% of their income on average [15] (through Social Security, Medicare, etc.), illustrating their stake in these programs. In summary, the middle class gets a broad spectrum of benefits – from paychecks earned via government-funded jobs to entitlement checks and public services. We estimate on the order of 50–60% of total federal spending benefits accrue to middle-income groups. This group also pays a substantial share of taxes, but on the spending side, they are central beneficiaries of the social insurance programs.
- High-Income Households: The top income group (top 20%, especially the top 5% or 1%) receives the smallest share of direct government transfers – programs are generally not aimed at the wealthy. A high-income person might get some Social Security (modest relative to their earnings), use Medicare (which is valuable but they could often afford alternatives), and they benefit from public goods (defense, infrastructure) equally as any citizen. In terms of direct dollar benefits, the wealthy are under-represented: for instance, only ~4% of top quintile income comes from government transfers [15], and the top quintile gets back only a fraction of what it contributes in taxes [14]. However, high-income individuals benefit greatly from indirect channels. They are often the owners of capital and businesses that receive government contracts or see increased demand from government stimulus. As detailed above, federal procurement and spending bolster corporate profits that feed into dividends and stock prices, predominantly benefiting wealthy investors [7]. High-income professionals (e.g. doctors, defense executives) can have lucrative careers serving government-funded sectors. Additionally, the overall stability and educated workforce fostered by government programs provide an environment in which businesses thrive – an indirect boon to high-income entrepreneurs and investors. In net terms, most studies find that the high-income group is a net contributor (paying more in taxes than they get in benefits), but they do get some share of benefits. We might estimate that 10–15% of total direct benefits of spending go to high-income households (mostly via universal programs like Social Security/Medicare and public goods), but if we include profits and indirect gains, their share would be somewhat higher. Still, overall, the wealthy benefit least in direct dollar-for-dollar terms, but they do capture significant economic gains from government activity indirectly.
The table below provides a cumulative overview of the distribution of benefits across income classes, aggregating all major spending categories:
| Income Class | Estimated Share of Total Federal Spending Benefits | Key Benefit Sources | Overall Impact |
|---|---|---|---|
| Low-Income | ~30% (largest relative to population share) | Means-tested programs (Medicaid, SNAP, housing, etc.); a portion of Social Security and Medicare; education grants; indirect job support via spending | Government greatly boosts low-income living standards; major net positive transfers to this group |
| Middle-Income | ~55–60% (largest absolute share) | Social Security & Medicare (core beneficiaries); wages from government and contractor jobs; broad use of public education, infrastructure, defense, etc. | Middle class benefits across nearly all programs, receiving significant support and services, often roughly in line with or exceeding taxes paid |
| High-Income | ~10–15% direct (higher if including indirect gains) | Some universal benefits (Social Security, Medicare, public goods); indirect: corporate profits, contracts, asset growth fueled by federal spending | High-income households receive the smallest direct support; they are net contributors fiscally, though they do gain indirectly through a thriving economy and government-linked business income |
Bottom line: Lower-income Americans are the primary direct beneficiaries of federal anti-poverty and welfare expenditures, the middle class is the primary beneficiary of the large social insurance and public service expenditures, and the wealthy benefit the least directly, though they indirectly benefit through government-facilitated economic activity. Overall, the federal budget has a progressive tilt on the spending side – directing more resources to those in need and providing broad services that support the middle class – while high earners see comparatively fewer direct benefits [15] [14]. That said, every income group derives important value from federal spending in some form, whether it’s a Social Security check, health coverage, a salary funded by a government project, driving on an interstate highway, or the profits from a government contract. The mix of direct and indirect benefits ensures that federal expenditures touch all Americans, even as the balance is intentionally weighted toward aiding low- and middle-income households.
References
- USAspending.gov (https://www.usaspending.gov/explorer).
- White House Budget Fact Sheet (https://www.whitehouse.gov/omb/budget/).
- Congressional Budget Office (https://www.cbo.gov/publication/55590).
- Office of Personnel Management (https://www.opm.gov/policy-data-oversight/data-analysis-documentation/federal-employment-reports/).
- U.S. Bureau of Labor Statistics (https://www.bls.gov/oes/).
- Lockheed Martin 2022 Annual Report (https://investors.lockheedmartin.com/financials/sec-filings).
- Federal Reserve Survey of Consumer Finances (https://www.federalreserve.gov/econres/scfindex.htm).
- Social Security Administration Income of the Aged Chartbook (https://www.ssa.gov/policy/docs/chartbooks/income_aged/).
- Congressional Research Service Health Care Programs (https://crsreports.congress.gov/).
- U.S. Department of Education Federal Student Aid Data (https://studentaid.gov/data-center).
- U.S. Department of Agriculture SNAP Data (https://www.fns.usda.gov/pd/supplemental-nutrition-assistance-program-snap).
- Government Accountability Office (https://www.gao.gov/).
- U.S. Department of Agriculture Farm Subsidies Data (https://www.usda.gov/).
- Tax Policy Center Distribution Tables (https://www.taxpolicycenter.org/).
- U.S. Census Bureau Current Population Survey (https://www.census.gov/programs-surveys/cps.html).