Government
spending at all levels accounts for 40% of US GDP. This needs to be reduced to
30% by growing GDP, eliminating waste, automation and privatizing current government
functions.
FY Federal
State Local
Total
2018 $4.11T
$1.84T
$1.98T $7.23T
2019 $4.45T
$1.91T $2.06T $7.68T
2020 $4.75T
$1.99T $2.15T $8.14T
2021 $4.95T
$2.07T $2.24T $8.51T
US Federal Budget Breakdown - The Budget Components and Impact on the US
Economy, by Kimberly Amadeo, 12/31/19.
Revenue - The federal government estimated that it would receive $3.645 trillion in revenue in fiscal year (FY) 2020. Most of the revenue is in the form of taxes, paid by taxpayers, either through income or payroll taxes. The forecast for each type of revenue is as follows:
Spending - The government expects to spend $4.746 trillion in 2020. Almost 60% of that pays for mandated benefits such as Social Security, Medicare, and Medicaid—the mandatory spending category.
Mandatory Spending - The budget estimated that mandatory spending would be $2.841 trillion in FY 2020. This category includes entitlement programs such as Social Security, Medicare, and Medicaid, unemployment compensation, and others.
Discretionary Spending - The discretionary budget for 2020 is $1.426 trillion. More than half goes toward military spending, including the Department of Veterans Affairs and other defense-related departments. The rest must pay for all other domestic programs. The largest of these programs are Health and Human Services, Education, and Housing and Urban Development.
Military Spending - Military spending was included in the budget, under discretionary spending. The biggest expense for the military was the Department of Defense base budget, forecasted for $576 billion.
Revenue - The federal government estimated that it would receive $3.645 trillion in revenue in fiscal year (FY) 2020. Most of the revenue is in the form of taxes, paid by taxpayers, either through income or payroll taxes. The forecast for each type of revenue is as follows:
Spending - The government expects to spend $4.746 trillion in 2020. Almost 60% of that pays for mandated benefits such as Social Security, Medicare, and Medicaid—the mandatory spending category.
Mandatory Spending - The budget estimated that mandatory spending would be $2.841 trillion in FY 2020. This category includes entitlement programs such as Social Security, Medicare, and Medicaid, unemployment compensation, and others.
Discretionary Spending - The discretionary budget for 2020 is $1.426 trillion. More than half goes toward military spending, including the Department of Veterans Affairs and other defense-related departments. The rest must pay for all other domestic programs. The largest of these programs are Health and Human Services, Education, and Housing and Urban Development.
Military Spending - Military spending was included in the budget, under discretionary spending. The biggest expense for the military was the Department of Defense base budget, forecasted for $576 billion.
The Deficit - The budget deficit is estimated at $1.101 trillion (the difference between $3.645 trillion in revenue and $4.746 trillion in spending). This difference in budgeting and revenue is added to the existing national debt.
How the Deficit Contributes to the National Debt - Each year, the deficit adds to the U.S. debt. To raise funds to cover the deficit, the government issues securities such as Treasury notes, which are purchased by many investors. Japan and China are two countries whose governments have purchased large amounts of U.S. debt, in a manner of speaking 'owning' the U.S. debt.
An anticipated budget deficit can slow economic growth. It influences rising interest rates, as investors demand more return. Eventually, investors may become hesitant to purchase Treasury notes because they fear the U.S. government may not be able to repay the debt.
Budget Process - Congress created the budget process in 1974. The process is supposed to follow four steps:
Key Takeaways - President Trump’s budget for FY 2020 totals $4.746 trillion, eclipsing all other previous budgets.
On March 11, 2019,
President Donald Trump released his budget request for fiscal year 2020.
Under his proposal, the federal budget would be a record $4.746 trillion.
The U.S. government estimates it will receive $3.645 trillion in
revenue. That creates a $1.101 trillion deficit for October 1, 2019,
through September 30, 2020.
Government spending is
broken down into three categories: Mandatory, listed at $2.841 trillion;
Discretionary spending, forecasted to be $1.426 trillion; and interest on
the national debt, $479 billion. Each category of spending has different
subcategories that require funding.
Income taxes contribute $1.824 trillion or 50% of total
receipts. Social Security, Medicare, and other payroll taxes add
$1.295 trillion or 36%. Corporate taxes supply $255 billion or 7%. Excise
taxes and tariffs contribute $157 billion or 4%. Earnings from the Federal Reserve's holdings
add $49 billion or 2%. Those are interest payments on the U.S. Treasury debt
the Fed acquired through quantitative easing. Estate taxes and other
miscellaneous revenue supply the remaining 2%.
It's estimated that each
taxpayer works until late April each year to pay for all federal revenue
collected. This day is known as Tax Freedom Day, in which taxpayers
finally work for themselves after having worked for four months to pay taxes.
Interest on the U.S.
debt is forecast to be $479 billion. Interest on the approximate
$23 trillion debt is the fastest-growing federal expense, expected to
double by 2028.
The remaining $1.4
trillion pays for everything else. This is called discretionary spending.
The U.S. Congress changes this amount
each year, using the president's budget as a starting point.
The U.S. Treasury must pay
the interest to avoid a U.S. debt default. A debt default by the U.S.
has unknown consequences since it has never happened before.
Social Security was
expected to be the biggest expense at $1.102 trillion, followed by Medicare at
$679 billion, then Medicaid at $418 billion. Social Security costs are
currently 100% covered by payroll
taxes and
interest on investments. Until 2010, there was more coming into the Social Security Trust Fund than being paid out.
Thanks to its investments, the Trust Fund is still running a
surplus. However, the Trust Fund’s Board estimates that this surplus will be
depleted by 2032. Social Security revenue, from payroll taxes and interest
earned, will cover only 77% of the benefits promised to retirees.
Medicare is already
underfunded because taxes withheld for the program don't pay for all benefits.
This creates reliance on general tax dollars to pay for a portion of it.
Medicaid is
100% funded by the general fund, also known as "America's
Checkbook", which is an account that is used to finance daily activities
and long-term operations of the government.
There is an emergency fund
of $200.1 billion held in reserve. Most of this fund goes to Overseas
Contingency Operations to pay for wars or continuing military actions. A
growing portion of the discretionary budget is set aside for disaster relief
such as hurricane and wildfire relief.
Overseas Contingency
Operations are estimated to cost approximately $165 billion, which pays
for the war on terror costs triggered by the 9/11
attacks. These include ongoing costs from the wars in Iraq and
Afghanistan.
Military spending included
$212.9 billion for defense-related departments. These include Homeland Security,
the State Department, and Veterans Affairs. Included in the funding for
defense-related spending is an emergency fund of about $26 billion. All
military costs combine to create a total forecast of U.S. spending on defense
of $750 billion.
Each president and their
administration is credited (or blamed) with increases in national debt due to
the budgets their administration proposes. However, the approval of the budget
is delegated to Congress; this means that it is not the president alone who bears the burden
of deficit creation and national debt generation—other elected officials do so
as well.
Deficit spending is not necessary,
since the recovery of the economy from the Great Recession. Government
officials could work instead to create a budget surplus to reduce the national
debt burden. This is not happening, and may not ever happen. Politicians and
law-makers would have to reduce spending on popular programs, which would lower
their popularity with voters. Politicians who support decreased spending on
entitlement programs generally have to find other lines of work.
The Executive
Office of Management and Budget prepares the budget. The president submits it to Congress on or before the first
Monday in February. Congress responds with spending appropriation bills that go
to the president by June 30. The president has 10 days to reply
Congress has only followed
the budget process twice since creating the FY 2010 budget. Since that time,
the process and deadlines within it have been ignored, due to political
disagreements, posturing, and government inefficiencies.
The hard deadline for
budget approval is September 30. If Congress doesn't approve it by
then, the government can shut down. It did just that in 2013, January
2018, and in December 2018. To avoid shutdowns, Congress usually passes
continuing resolutions. These resolutions keep
the government running at spending levels from the last budget. If the
government does shut down, it signals a complete breakdown in the budget creation
process.
Budget expenditures are
expected to cover three main categories: 1. Mandatory expenditures, such as
Social Security, Medicare, and the Supplemental Nutrition Assistance Program.
This will take 60% of the budget.
2. Payment on the interest of U.S. debt and 3. Discretionary
spending, such as military programs, infrastructure, education, and the like.
For FY 2020, budget expenditures
considerably exceed federal revenues by a deficit of $1.101 trillion. Most of these
revenues come from taxes and earnings from quantitative easing. The federal
budget deficit is expected to grow every year and add considerably to the U.S.
debt.
Norb
Leahy, Dunwoody GA Tea Party Leader
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