The Federal Budget
Key Facts - The Government spends most of your money on a few major programs. In fiscal year 2009:
Interest on National Debt (8.5%) - The Government collects most of its revenues from a few main sources:
Budget History Facts:
Types of Spending:
The Budget Process:
Budget Calendar:
Budget Information Sources:
- Social Security: 20%
- Defense: 20%
- Medicare: 12.5%
- Medicaid: 7%
Interest on National Debt (8.5%) - The Government collects most of its revenues from a few main sources:
- Income Taxes: 43%
- Social Security Receipts: 42%
- Source: Office of Management and Budget
- * Because all of the revenues do not cover the costs of all spending, the Government borrows money to finance this deficit. The total it has borrowed over the years, but not repaid, is the national debt.
Budget History Facts:
- In its first 150 years, the Government sometimes generated budget deficits (for instance, to finance a war) but later ran surpluses and repaid much of the debt that had accumulated.
- In 2001, the federal budget surplus was $184 billion. Budget deficits had grown more frequent in the last half-century, and they soared during the 1980s. At the end of fiscal year 1977 the deficit was $706 billion. By the end of fiscal year 1997 it was $5.38 trillion -- almost 8 times as much as it had been 20 years earlier.
- In its first three years, the Government spent a total of about $4 million. By 1800, total annual spending amounted to less than $11 million. Almost two centuries later the total has climbed to $521 billion.
- Federal spending climbed during the 1930s from $4 billion in 1931 to over $8 billion in 1936. WWII increased that number to over $91 billion by 1944.
Types of Spending:
- Discretionary (35% of all Federal Spending) - This is the money the President and Congress must decide to spend each year. It includes money for such programs as the FBI, the Coast Guard, housing, education, space exploration, highway construction, defense, and foreign aid.
- Mandatory (65% of all Federal Spending) - This is the money that the Federal Government appends automatically - unless the President and Congress change the laws that govern it. It includes entitlements - such as Social Security, Medicare, and Food Stamps - through which individuals receive benefits because they meet some criteria of eligibility (e.g. age, income). It also includes interest on the national debt, which the Government pays to individuals and institutions that buy saving bonds and other US securities. Despite its name, however, mandatory spending is not fixed in stone. The President and Congress can change the laws that govern entitlements or taxes, but they must take explicit action to do so.
The Budget Process:
- The President's Budget is sent to Congress in early February. This proposal is his/her plan for the next fiscal year, beginning October 1. This plan, however, only becomes official after Congress passes, and the President signs spending bills and legislation creating new taxes and entitlements.
- After receiving the President's budget, Congress examines it in detail. Scores of committees and subcommittees hold hearings on proposals under their jurisdiction. The House and Senate Armed Services Committees, for instance, would hold hearings on the President's defense plan. If the President's plan contains proposals that affect Federal revenues, the House Ways and Means and Senate Finance committees would hold hearings. The President, the Budget Director, the Cabinet, and others work with Congress as it accepts some proposals, rejects others, and changes still others.
- Each year Congress must pass and the President must sign, 13 appropriation bills that include all of the discretionary spending. The President and Congress do not have to enact new laws governing entitlements or taxes. If they do not, the Government will pay the benefits for Social Security and other programs and collect the taxes required by laws in place.
Budget Calendar:
- No later than the 1st Monday in February President transmits the budget, including a sequester preview report. Six weeks later Congressional committees report budget estimates to Budget Committee.
- April 15th - Action to be completed on congressional budget resolution.
- May 15th - House consideration of annual appropriations bills may begin.
- June 15th - Action to be completed on reconciliation.
- June 30th - Action on appropriations to be completed by House.
- July 15th - President transmits Mid-Session Review of the budget.
- August 20th - OMB updates the sequester preview.
- October 1st - Fiscal year begins.
- 15 days after the end of a session of Congress OMB issues final sequester report, and the President issues a sequester order, if necessary.
Budget Information Sources:
"Government 101: The Budget." Project Vote Smart - American Government, Elections, Candidates and Voting. Project Vote Smart, n.d. Web. 14 July 2015. <http://votesmart.org/education/budget#.VaVxR65Viko>.