How the federal government of the United States spends tax payer money has changed dramatically since 1960.  The priorities of the federal government have shifted from national defense and interstate development to providing a social safety net.

At the dawn of the 60s, national defense was 52% of our expenses. Social security and Medicare and Health were relatively small.  A relatively new category of spending called "income security" which is in which the federal government provides a "social safety net" to the poor and jobless, had grown to 8% by 1960.

By 2007 how things had changed:

Net interest payments had dropped to only 2% of the budget (they were 7% in 1960).  But now Medicare and social security have taken over. Health has grown to being 11% on its own.   Income security had grown to 14%.

In 2007, the United States spent $392 billion on Medicare, $586 billion on Social Security, $367 billion on "income security". That is a total of $1.35 trillion on those programs (national defense was, by contrast, $527 billion in 2007).

Social Insurance taxes (Medicare and Social Security) were only $884 billion in 2007 meaning that even before taking "income security" spending into account that the US federal government was spending more on these programs than was bringing in.  The remainder is coming out of individual and corporate taxes.

Below are the specifics including sources of income.

Source: MSN Encarta.

Other trends that have changed is that corporations no longer pay as much income tax as they once did. Part of the reason for that is the recognition that when you tax a company, you are simply taxing individuals since companies pass on those taxes in the form of higher prices which, in turn, make US companies less competitive in a global market.