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United States budget and finances

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Federal budget and finances
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State debt
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Glossary of budget terms
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Federal lawmakers and public officials are elected or appointed in large part to manage the nation's complex finances. This includes generating revenues, money coming to the federal government from various sources, and approving expenditures, the money spent on governmental functions and servicing the nation's debt. The federal budget is complex and fluid because it is developed on the basis of anticipated revenues and planned expenditures, both of which may change over the course of the fiscal year. If revenues do not keep pace with spending, the federal government generally can raise taxes, cut spending, or allow the shortfall to stand, which creates a deficit. Budgetary and financial decisions also have a profound impact on other public policy initiatives, as lawmakers necessarily prioritize spending on certain policies, thereby deprioritizing spending on others.
HIGHLIGHTS
  • In 2016, the federal government collected approximately $3.3 trillion in revenues. This amounted to $10,072 per capita. The plurality of federal revenues came in the form of individual income taxes, which accounted for 47.3 percent of total federal government revenues.
  • In 2016, the federal government spent approximately $3.9 trillion. The largest single portion of that amount was dedicated to Social Security, which accounted for 23.8 percent of total federal spending.
  • The federal deficit in 2016 totaled approximately $584 billion, meaning that spending outpaced revenues.

    • Background

    Terms and definitions

    The following are key terms and definitions related to the federal budget:[1]

    1. Appropriation: "a law that authorizes the expenditure of funds for a given purpose"
    2. Authorization: a law that "gives a government agency the legal authority to fund and operate its programs"
    3. Continuing resolution: a law that "extends funding for federal agencies–typically at the same rate that they had been previously funded–into a new fiscal year until new appropriations bills become law"
    4. Debt: money owed by the federal government (generally, "the total of all past federal budget deficits, minus what the federal government has repaid")
    5. Deficit: the amount by which government spending exceeds government revenues
    6. Discretionary spending: spending that is authorized by Congress via appropriations bills; discretionary spending is one of two general categories of federal spending, the other being mandatory spending
    7. Mandatory spending: spending that occurs on the basis of existing laws and programs (e.g., Social Security)
    8. Surplus: the amount by which government revenues exceed government spending

    Budget process

    Note: The text below describes the general budget process. Congress may adopt a budget by other means, such as continuing resolutions or omnibus bills. These methods are described below.

    President Barack Obama attends a budget meeting on January 24, 2009

    In February of each year, the president submits to Congress a proposed budget for the coming fiscal year, which begins on October 1 and ends on September 30 of the following year. The president's proposed budget takes into account requests from federal agencies. Budget committees in the United States House of Representatives and the United States Senate then convene to draft and approve their own budget resolutions, which set "overall annual spending limits for federal agencies, but [do not] set specific spending amounts for particular programs." Each chamber approves its budget resolution. A joint conference committee then convenes to reconcile the differences between the two budget resolutions.[2][3][4]

    Appropriations committees in the House and Senate draft and approve appropriations bills, which determine the "precise levels of budget authority, or allowed spending, for all discretionary programs." The appropriations committees delegate this task to 12 subcommittees, which are responsible for drafting appropriations bills for specific areas of the federal government (e.g., defense spending, energy spending, etc.). Once the appropriations committees approve the various appropriations bills, the bills must be approved by the full chamber (i.e., the full House must vote to approve the appropriation bills recommended by the House appropriations committee: the same is true for the Senate).[2][3][4]

    Once the House and Senate approve their versions of the appropriations bills, a joint conference committee must be convened to reconcile the differences between the two sets of bills. The House and Senate must vote again on the reconciled versions of the bills. If each chamber approves the appropriations bills, the bills are then sent to the president, who must sign the bills before they become law. The president may veto appropriations bills; if the president vetoes an appropriations bill, it returns to Congress, which can override the veto by a two-thirds majority vote.[2][3][4]

    Continuing resolutions and omnibus bills

    If a new budget has not been adopted before the beginning of the fiscal year, Congress may pass a continuing resolution, which extends funding for federal agencies and programs (usually at current levels) until a new budget is approved. If Congress is unable to approve either a budget or a continuing resolution, a government shutdown may occur.[5]

    If Congress is unable to pass all appropriations bills that typically comprise the federal budget, it may instead pass an omnibus budget bill, which is single funding bill that incorporates multiple spending areas.[2][3][4]

    Revenues

    In 2016, the federal government collected approximately $3.3 trillion in revenues. The largest single portion of that amount came in the form of individual income taxes, which accounted for 47.3 percent of total federal government revenues in 2016.[6]

    Federal revenues, 1995 to 2016

    The table below breaks down federal government revenues by source for every year from 1995 to 2016. Figures are rendered in billions of dollars; for example, $3,000 translates to $3,000,000,000,000, or $3 trillion. Figures in the columns labeled "Revenues per capita" have not been abbreviated.

    Federal revenues, 1995 to 2016 (in billions of dollars)
    Year Income taxes Payroll taxes Corporate income taxes Excise taxes Estate and gift taxes Other Total Per capita
    2016 $1,546 $1,115 $299 $95 $19 $191 $3,268 $10,072.14
    2015 $1,541 $1,065 $344 $98 $19 $103 $3,250 $10,111.11
    2014 $1,395 $1,024 $321 $93 $19 $170 $3,022 $9,474.54
    2013 $1,316 $948 $274 $84 $19 $134 $2,775 $8,770.10
    2012 $1,132 $845 $242 $79 $14 $137 $2,450 $7,800.00
    2011 $1,092 $819 $181 $72 $7 $132 $2,304 $7,389.67
    2010 $899 $865 $191 $67 $19 $122 $2,163 $6,971.22
    2009 $915 $891 $138 $63 $24 $75 $2,105 $6,856.53
    2008 $1,146 $900 $304 $67 $29 $78 $2,524 $8,292.41
    2007 $1,164 $870 $370 $65 $26 $74 $2,568 $8,515.16
    2006 $1,044 $838 $354 $74 $28 $69 $2,407 $8,060.80
    2005 $927 $794 $278 $73 $25 $56 $2,154 $7,281.75
    2004 $809 $733 $189 $70 $25 $54 $1,880 $6,415.72
    2003 $794 $713 $132 $68 $22 $54 $1,782 $6,138.95
    2002 $858 $701 $148 $67 $27 $53 $1,853 $6,438.76
    2001 $994 $694 $151 $66 $28 $57 $1,991 $6,984.32
    2000 $1,005 $653 $207 $69 $29 $63 $2,025 $7,177.18
    1999 $880 $612 $185 $70 $28 $53 $1,828 $6,701.73
    1998 $829 $572 $189 $58 $24 $51 $1,722 $6,369.62
    1997 $738 $539 $182 $57 $20 $43 $1,579 $5,898.18
    1996 $656 $509 $172 $54 $17 $44 $1,453 $5,479.47
    1995 $590 $485 $157 $58 $15 $48 $1,352 $5,144.52
    Source: Congressional Budget Office, "Historical Budget Data," June 2017

    Federal revenues as percentages, 1995 to 2016

    The table below details sources of federal government revenue as percentages of total revenue for every year from 1995 to 2016. During that period, individual income taxes always made up the largest single portion of federal government revenues.

    Federal revenues, 1995 to 2016
    Year Income taxes Payroll taxes Corporate income taxes Excise taxes Estate and gift taxes Other
    2016 47.31% 34.12% 9.17% 2.91% 0.65% 5.84%
    2015 47.41% 32.78% 10.58% 3.02% 3.02% 3.18%
    2014 46.16% 33.87% 10.61% 3.09% 0.64% 5.63%
    2013 47.44% 34.15% 9.86% 3.03% 0.68% 4.84%
    2012 46.21% 34.50% 9.89% 3.23% 0.57% 5.60%
    2011 47.38% 35.55% 7.86% 3.14% 0.32% 5.74%
    2010 41.55% 39.99% 8.85% 3.09% 0.87% 5.65%
    2009 43.48% 42.32% 6.57% 2.97% 1.12% 3.54%
    2008 45.39% 35.67% 12.06% 2.67% 1.14% 3.07%
    2007 45.31% 33.86% 14.42% 2.54% 1.01% 2.86%
    2006 43.37% 34.81% 14.70% 3.07% 1.16% 2.88%
    2005 43.05% 36.87% 12.92% 3.39% 1.15% 2.60%
    2004 43.03% 39.01% 10.07% 3.72% 1.32% 2.86%
    2003 44.53% 40.00% 7.39% 3.79% 1.23% 3.05%
    2002 46.32% 37.82% 7.99% 3.62% 1.43% 2.83%
    2001 49.94% 34.86% 7.59% 3.32% 1.43% 2.87%
    2000 49.60% 32.24% 10.24% 3.40% 1.43% 3.10%
    1999 48.13% 33.48% 10.11% 3.85% 1.52% 2.91%
    1998 48.13% 33.21% 10.96% 3.35% 1.40% 2.96%
    1997 46.70% 34.16% 11.54% 3.60% 1.25% 2.74%
    1996 45.17% 35.06% 11.82% 3.72% 1.18% 3.04%
    1995 43.66% 35.84% 11.61% 4.25% 1.09% 3.54%
    Source: Congressional Budget Office, "Historical Budget Data," June 2017

    Spending

    In 2016, the federal government spent approximately $3.9 trillion. The largest single portion of that amount was dedicated to Social Security, which accounted for 23.8 percent of total federal spending in 2016. Taken together, Social Security, national defense, health, Medicare, and income security accounted for more than 80 percent of all federal spending. Consequently, and in the interest of clarity, only those five areas are broken out specifically in the table below. All other spending areas are categorized in the column labeled "Other."[7]

    Federal spending, 1995 to 2016

    The table below breaks down federal government spending by function for every year from 1995 to 2016. Figures for all columns except "Population" and "Spending per capita" are rendered in millions of dollars; for example, $3,000 translates to $3,000,000,000, or $3 billion. Figures in the columns labeled "Population" and "Spending per capita" have not been abbreviated.

    In 2015, the federal government spent a combined $3 trillion on national defense, Social Security, health, Medicare, and income security. This amounted to more than 80 percent of total federal expenditures. Consequently, and in the interest of clarity, only those five areas are broken out specifically in the table below. All other spending areas are categorized in the column labeled "Other."[7]

    Federal spending, 1995 to 2016 (in millions of dollars)
    Year Defense Social Security Health Medicare Income security Other Total Population Per capita spending
    2016 $593,372 $916,067 $511,317 $594,536 $514,139 $723,181 $3,852,612 324,459,463 $11873.94
    2015 $589,564 $887,753 $482,223 $546,202 $508,843 $673,707 $3,688,292 321,418,820 $11,475.03
    2014 $603,457 $850,533 $409,449 $511,688 $513,644 $617,343 $3,506,114 318,907,401 $10,994.14
    2013 $633,446 $813,551 $358,315 $497,826 $536,511 $614,998 $3,454,647 316,427,395 $10,917.66
    2012 $677,852 $773,290 $346,742 $471,793 $541,344 $725,930 $3,536,951 314,102,623 $11,260.49
    2011 $705,554 $730,811 $372,504 $485,653 $597,349 $711,185 $3,603,056 311,718,857 $11,558.67
    2010 $693,485 $706,737 $369,068 $451,636 $622,210 $613,943 $3,457,079 310,232,863 $11,143.50
    2009 $661,012 $682,963 $334,335 $430,093 $533,224 $876,050 $3,517,677 307,006,550 $11,457.99
    2008 $616,066 $617,027 $280,599 $390,758 $431,313 $646,781 $2,982,544 304,374,846 $9,798.92
    2007 $551,258 $586,153 $266,382 $375,407 $365,975 $583,511 $2,728,686 301,579,895 $9,047.97
    2006 $521,820 $548,549 $252,739 $329,868 $352,477 $649,597 $2,655,050 298,593,212 $8,891.86
    2005 $495,294 $523,305 $250,548 $298,638 $345,847 $558,325 $2,471,957 295,753,151 $8,358.18
    2004 $455,813 $495,548 $240,122 $269,360 $333,059 $498,939 $2,292,841 293,045,739 $7,824.17
    2003 $404,733 $474,680 $219,541 $249,433 $334,632 $476,880 $2,159,899 290,326,418 $7,439.55
    2002 $348,456 $455,980 $196,497 $230,855 $312,720 $466,386 $2,010,894 287,803,914 $6,987.03
    2001 $304,732 $432,958 $172,233 $217,384 $269,774 $465,765 $1,862,846 285,081,556 $6,534.43
    2000 $294,363 $409,423 $154,504 $197,113 $253,724 $479,823 $1,788,950 282,171,957 $6,339.93
    1999 $274,769 $390,037 $141,048 $190,447 $242,478 $463,063 $1,701,842 272,690,813 $6,240.92
    1998 $268,194 $379,215 $131,425 $192,822 $237,750 $443,052 $1,652,458 270,298,524 $6,113.46
    1997 $270,502 $365,251 $123,832 $190,016 $235,035 $416,480 $1,601,116 267,743,595 $5,980.03
    1996 $265,748 $349,671 $119,365 $174,225 $229,746 $421,729 $1,560,484 265,189,794 $5,884.40
    1995 $272,063 $335,846 $115,399 $159,855 $223,806 $408,773 $1,515,742 262,764,948 $5,768.43
    Source: Office of Management and Budget, "Historical Tables: Table 3.2–Outlays by Function and Subfunction: 1962-2021," accessed November 10, 2017

    Federal spending as percentages, 1995 to 2016

    The table below breaks down federal government spending by function for every year from 1995 to 2016. Figures for all columns except "Population" and "Spending per capita" are rendered in millions of dollars; for example, $3,000 translates to $3,000,000,000, or $3 billion. Figures in the columns labeled "Population" and "Spending per capita" have not been abbreviated.

    In 2015, the federal government spent a combined $3 trillion on national defense, Social Security, health, Medicare, and income security. This amounted to more than 80 percent of total federal expenditures. Since 1995, those five areas have always accounted for a majority of federal spending. Consequently, only those five areas are broken out specifically in the table below. All other spending areas are categorized in the column labeled "Other."

    Federal spending, 1995 to 2016
    Year Defense Social Security Health Medicare Income security Other
    2016 15.40% 23.78% 13.27% 15.43% 13.35% 18.77%
    2015 15.98% 24.07% 13.07% 14.81% 13.80% 18.27%
    2014 17.21% 24.26% 11.68% 14.59% 14.65% 17.61%
    2013 18.34% 23.55% 10.37% 14.41% 15.53% 17.80%
    2012 19.16% 21.86% 9.80% 13.34% 15.31% 20.52%
    2011 19.58% 20.28% 10.34% 13.48% 16.58% 19.74%
    2010 20.06% 20.44% 10.68% 13.06% 18.00% 17.76%
    2009 18.79% 19.42% 9.50% 12.23% 15.16% 24.90%
    2008 20.66% 20.69% 9.41% 13.10% 14.46% 21.69%
    2007 20.20% 21.48% 9.76% 13.76% 13.41% 21.38%
    2006 19.65% 20.66% 9.52% 12.42% 13.28% 24.47%
    2005 20.04% 21.17% 10.14% 12.08% 13.99% 22.59%
    2004 19.88% 21.61% 10.47% 11.75% 14.53% 21.76%
    2003 18.74% 21.98% 10.16% 11.55% 15.49% 22.08%
    2002 17.33% 22.68% 9.77% 11.48% 15.55% 23.19%
    2001 16.36% 23.24% 9.25% 11.67% 14.48% 25.00%
    2000 16.45% 22.89% 8.64% 11.02% 14.18% 26.82%
    1999 16.15% 22.92% 8.29% 11.19% 14.25% 27.21%
    1998 16.23% 22.95% 7.95% 11.67% 14.39% 26.81%
    1997 16.89% 22.81% 7.73% 11.87% 14.68% 26.01%
    1996 17.03% 22.41% 7.65% 11.16% 14.72% 27.03%
    1995 17.95% 22.16% 7.61% 10.55% 14.77% 26.97%
    Source: Office of Management and Budget, "Historical Tables: Table 3.2–Outlays by Function and Subfunction: 1962-2021," accessed November 10, 2017


    Debt and deficits

    The national debt is the total of all money that the federal government owes to its creditors, which include individuals, governments, and other entities. The national debt is the sum total of the nation's deficits, which are defined as year-to-year shortfalls between government revenues and expenditures. Broadly speaking, the national debt is divided into two categories: debt held by the public and intragovernmental holdings. Debt held by the public is defined as "all federal debt held by individuals, corporations, state or local governments, Federal Reserve Banks, foreign governments, and other entities outside the United States Government." Intragovernmental holdings are "held by government trust funds, revolving funds, and special funds." Put more simply, intragovernmental debt is the "money that the government, as a whole, owes itself." A notable example of intragovernmental debt is the money the federal government owes to the Social Security Trust Fund. The bulk of the national debt—nearly three-fourths—is held by the public.[8][9][10]

    National debt, 1996-2017

    The table below details the national debt from every year from March 1996 to March 2017. In that time, the debt increased by roughly $14.7 trillion; this amounted to a 287.8 percent increase. Additionally, the national debt per capita increased by $41,868, a 216.9 percent increase. Note that these amounts do not account for inflation.[11]

    National debt, March 1996 to March 2017
    Year Debt held by the public Intragovernmental holdings Total Per capita
    2017 $14,369,682,000,000 $5,476,738,000,000 $19,846,420,000,000 $61,167
    2016 $13,924,878,000,000 $5,340,061,000,000 $19,264,939,000,000 $59,595
    2015 $13,090,399,000,000 $5,061,657,000,000 $18,152,056,000,000 $56,475
    2014 $12,619,319,000,000 $4,981,908,000,000 $17,601,227,000,000 $55,192
    2013 $11,916,888,000,000 $4,854,491,000,000 $16,771,379,000,000 $53,002
    2012 $10,846,825,000,000 $4,735,254,000,000 $15,582,079,000,000 $49,608
    2011 $9,651,643,000,000 $4,618,471,000,000 $14,270,115,000,000 $45,779
    2010 $8,290,069,000,000 $4,483,054,000,000 $12,773,123,000,000 $41,173
    2009 $6,833,543,000,000 $4,293,398,000,000 $11,126,941,000,000 $36,243
    2008 $5,334,116,000,000 $4,103,479,000,000 $9,437,594,000,000 $31,006
    2007 $5,053,940,000,000 $3,795,725,000,000 $8,849,665,000,000 $29,344
    2006 $4,872,485,000,000 $3,498,672,000,000 $8,371,156,000,000 $28,035
    2005 $4,572,716,000,000 $3,204,223,000,000 $7,776,939,000,000 $26,295
    2004 $4,176,874,000,000 $2,954,194,000,000 $7,131,068,000,000 $24,334
    2003 $3,711,312,000,000 $2,749,464,000,000 $6,460,776,000,000 $22,253
    2002 $3,444,137,000,000 $2,561,895,000,000 $6,006,032,000,000 $20,868
    2001 $3,435,029,000,000 $2,338,711,000,000 $5,773,740,000,000 $20,253
    2000 N/A N/A $5,773,392,000,000 $20,461
    1999 N/A N/A $5,651,615,000,000 $20,725
    1998 N/A N/A $5,542,426,000,000 $20,505
    1997 N/A N/A $5,380,890,000,000 $20,097
    1996 N/A N/A $5,117,786,000,000 $19,299

    National deficits and surpluses, 1995-2016

    The table below details deficits and surpluses from every year from 1995 to 2016. A negative number indicates a deficit while a positive number indicates a surplus. Deficit and surplus amounts are rendered in millions of dollars (for example, $438,406 translates to $438.4 billion). Per capita numbers are also provided; these numbers have not been abbreviated.

    From 1995 to 2016, only the four-year period beginning in 1998 and ending in 2001 saw surpluses; all other years saw deficits.[12]

    National deficits and surpluses, 1995 to 2016
    Year Deficit or suplus amount (in millions of dollars) Deficit or surplus per capita
    2016 -584,651 -$1,801.92
    2015 -438,406 -$1,363.97
    2014 -484,627 -$1,519.65
    2013 -679,544 -$2,147.55
    2012 -1,086,963 -$3,460.53
    2011 -1,299,590 -$4,169.11
    2010 -1,294,373 -$4,172.26
    2009 -1,412,688 -$4,601.49
    2008 -458,553 -$1,506.54
    2007 -160,701 -$532.86
    2006 -248,181 -$831.17
    2005 -318,346 -$1,076.39
    2004 -412,727 -$1,408.40
    2003 -377,585 -$1,300.55
    2002 -157,758 -$548.14
    2001 128,236 $449.82
    2000 236,241 $837.22
    1999 125,610 $460.63
    1998 69,270 $256.27
    1997 -21,884 -$81.73
    1996 -107,431 -$405.11
    1995 -163,952 -$623.95

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    See also

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    External links

    Footnotes

    1. ↑ National Priorities Project, "Federal Budget Glossary," accessed May 11, 2016
    2. ↑ 2.0 2.1 2.2 2.3 National Priorities Project, "Budget Process," accessed May 11, 2016
    3. ↑ 3.0 3.1 3.2 3.3 The Washington Post, "A guide to the federal budget process," accessed May 11, 2016
    4. ↑ 4.0 4.1 4.2 4.3 Center on Budget and Policy Priorities, "Policy Basics: Introduction to the Federal Budget Process," updated February 17, 2016
    5. ↑ Congressional Budget Office, "The Effects of the Partial Shutdown Ending in January 2019," accessed November 22, 2019
    6. ↑ Congressional Budget Office, "Historical Budget Data," June 2017
    7. ↑ 7.0 7.1 Office of Management and Budget, "Historical Tables: Table 3.2–Outlays by Function and Subfunction: 1962-2021," accessed November 10, 2017
    8. ↑ NPR, "National Debt For Beginners," February 4, 2009
    9. ↑ Investopedia, "Federal Debt," accessed May 12, 2016
    10. ↑ TreasuryDirect.gov, "Frequently Asked Questions about the Public Debt," accessed May 12, 2016
    11. ↑ TreasuryDirect.gov, "Monthly Statement of the Public Debt and Downloadable Files," accessed November 10, 2017
      Note: The information presented in this table was gleaned from individual monthly reports; these can be accessed from the site linked above.
    12. ↑ Office of Management and Budget, "Historical Tables: Table 1.1–Summary of Receipts, Outlays, and Surpluses or Deficits (-): 1789-2021," accessed November 10, 2017
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