Federal Budget spending categories

A Speedy Summary of Spending in the US Federal Budget

Jul 6, 2014 • Economic Debates, Economic History, Government, Macroeconomic Measurement • 195 Views    No Comments

Right now, the Congress is supposedly debating the 2015 federal budget. Because the new fiscal year begins October 1, their deadline is September 30.

But not really.

1996 was the last time the House and Senate punctually approved all necessary appropriations bills. Instead, using an array of alternatives like continuing resolutions, the Congress has funded spending but not through a formally passed budget.

I’ve selected the following infographics from the Congressional Budget Office (CBO) to show why it is so tough for them to agree on the spending cuts that many of us believe are necessary.

First, what are the 4 big budget categories?

Federal budget categories

The biggest part of spending is mandatory. The law requires the Congress to spend those dollars–57% of the 2013 budget. And they do not even include the interest we have to pay on our debt and defense.

Federal Budget size of categories

Below, you can see where our mandatory spending goes. Health…Social Security…the Military…Doesn’t it make sense that no one touches so large a part of the budget?

Federal Budget Mandatory Spending

On the other hand, non-defense discretionary spending–a much smaller proportion of the budget–is easier to cut.

Federal Budget discretionary spending

And that takes us to a debt–all that we owe– that is growing because the deficit–the yearly budgetary shortfall–has not been substantially sliced.

Sort of like comparing your income to your mortgage to decide whether you have borrowed too much, we can compare our GDP to the national deficit and debt.

Federal Budget debt and deficit

Our bottom line: Told that they have cut spending, the Congress has achieved little success. Looking at the bigger budget picture, we can see that it is tough to cut spending because entitlements, defense, and interest on the debt compose most of the outlays.

 

Resources and more...The CBO has published a wealth of infographics about the budget and other topics while here, the NY Times tells about the Congressional effort to pass a spending bill on time. Note: This post was slightly edited after it appeared.

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