The War was financed by borrowing and taxing. The federal debt rose from $43.0 billion in 1940 to $258.7 billion in 1945. In 1946, it stood at $269.4 billion. By 1947, it was down to $258.3 billion. Individual income-tax receipts rose from $1.0 billion in 1940 to $19.0 billion in 1945. By 1946, they had fallen to $18.7 billion. In 1947, however, they rose to $19.3 billion. When the War began, interest rates were at all-time lows. Support provided by the Federal Reserve kept them low. As a result, in 1945 the Treasury borrowed money at an average rate of only 1.94 percent, much lower than the 4.2 percent it paid at the end of World War I. Excise taxes were raised, and special taxes that continued to be collected for decades were taxed on luxury goods, which made income tax more progressive. While taxes had covered 33 percent of World War I government spending, in World War II they covered 46 percent. The war also provided immediate benefits to the U.S. economy because it led to a substantial increase in exports and in the federal government itself.
The issue of defense of the country should be priority for every government. It is very good that American government created such strong army with the most modern machines and system of defense. The US is currently spending close to $300 billion a year on military spending. In the Past-Cold war period; this represents a vast waste of public capital. U.S. spending on its military rose from $6 million in 1940 to almost $17 billion by 1941. By 1945, the last year of the War, it had risen to $73.5 million out of a GNP of $211.9 million.
In reality, defense spending is the one area of government that has endured deep cuts in recent years. The marginal benefits of defense spending are not readily apparent to voters; consequently, the military presents an easy target during budget cutting sessions. Nevertheless, the fact remains that a bureaucratic structure resembling a military-industrial complex remained in place. The war strengthened the ties between industry and the military. Military spending was higher than before the war, and the government was committed to research and development of new weaponry. The low profits of military contractors signified only that the government had the upper hand in its relations with defense contractors. The spending of military then became known as one of the main reason why the federal government grew substantially after World War II.
Welfare is defined as a program where one could obtain money if there was no income or not enough income to meet the standards of living. In the early days, welfare resembled the English system. Social governments were responsible for helping the poor, but the colonies and the later states then started helping the local government provide aid. The first federal welfare program, began after the Revolutionary War, they provided pensions to war veterans. During the Civil War these pensions were expanded to cover soldier’s widows and orphans. In the early 1900’s, primary responsibility for providing welfare benefits shifted from local to state governments. During these years, states enacted programs to aid dependent children and the elderly.
The government program today provides money, medical care, food, housing, and other things that people need in order to survive. There are four major programs that contribute to the welfare system. These programs are Medicaid, Aid to families with dependant Children, Social Security, or Supplemental Security, or the food stamps program. This system determined the income level for every household and how many individuals lived there. If the level of income was below what was the determined necessary income level, the welfare system provided benefits for that household. For instance, a household that has four people living there, and they required $900.00 to live every month, and the family could only earn up to $500.00 a month, welfare would give the family the $400.00 benefit. If the family had no income, welfare gave the full $900.00 a month to that family.
In conclusion, the Federal Government grew tremendously basically after 1954. There were years that were affected, but the outcome became greatly appreciated through out history.
