Budget Process: a study of swollen spending
If you’ve ever visited Bankrupting America before, you know the government has a history of spending beyond its means (and if you haven’t…well…it does). But where exactly do all those trillions go? Sure we spend a lot on defense, but is it the largest item in the budget? Sure we need to address earmarks, but how much do we save if we eliminate them? Click the image below for an infographic answering all your burning budget questions.
FEDERAL BUDGET BREAKDOWN:
How Washington Really Spends Your Money
Our nation is at a critical crossroads: the federal government’s spending, deficits, and debt are at dangerous levels – and absent real reform – the already dire fiscal situation is projected to get far worse.
Every Americans’ future will be affected by Washington’s budget choices, so we at Public Notice want to ensure our readers have a solid understanding of the federal budget basics. Last week, we launched our “Federal Budget Breakdown” series with a tutorial on the federal budget process. This week, we’ll break down the budget’s key spending components.
In Fiscal Year 2010, the federal government spent $3.5 trillion, and collected $2.1 trillion in revenues. Thus, the amount of government overspending (or the “deficit”) for the year was about $1.4 trillion. But where, exactly, did all that money go? The fact sheet below shows the key components of federal spending in FY 2010. We bet many of you will be surprised…
Total Federal Spending in FY 2010 = $3.5 trillion
Total spending is broken down into categories and subcategories, each showing spending for FY 2010 and its percentage of the total budget.
Major Spending Categories:
Mandatory Spending = $1.9 trillion, 55.3%
Discretionary Spending = $1.3 trillion, 39.0%
Interest Payments on the National Debt = $196.9 billion, 5.7%
Mandatory spending is the spending simply running on “auto-pilot” that has been obligated by previously passed laws. Thus, unlike discretionary spending, it is not subject to annual review; to change mandatory spending levels, Congress must change the laws outlining these programs (often through the “budget reconciliation” process). Below are the key components of mandatory spending.
Social Security = $700.7 billion, 20.0%
Medicare = $520.4 billion, 15.1%
Income Security = $437.8 billion, 12.7%
Medicaid, Other Health = $290.0 billion, 8.3%
Federal Civilian and Military Retirement = $138.9 billion, 4.0%
Other = $86.1 billion, 2.5%
Discretionary spending is the spending Congress sets annually in the appropriations process. Congress can cut or increase this funding each year however it sees fit. As defense spending consumes such a large portion, discretionary spending is often talked about as two distinct categories: “defense discretionary,” and “non-defense discretionary.” Below are the key components of discretionary spending.
National Defense = $689.1 billion, 19.7%
Transportation = $90 billion, 2.5%
Income Security = $66 billion, 1.9%
Health = $58 billion, 1.7%
Veterans Benefits & Services = $53 billion, 1.5%
Administration of Justice = $52 billion, 1.5%
International Affairs = $45.9. billion, 1.3% (Foreign Aid= $19.0 billion, 0.6%)
National Resources, Environment = $37 billion, 1.1%
Science, Space, Technology = $31 billion, 0.9%
Other = $30 billion, 0.9%
Community/Regional Development = $21 billion, 0.6%
General Government = $19 billion, 0.5%
Note: “Earmarks,” (often called “pork-barrel spending”) are scattered throughout discretionary spending categories. While reducing or eliminating earmarks is a good first step, it only would make a tiny dent in solving our budget crisis. Earmarks cost about  $15.9 billion – less than one percent (0.5%) of the total budget.
 FY 2010, which runs from October 1, 2009 – September 30, 2010, is the latest year for which there are final budget numbers; FY 2011 is ongoing.
 All numbers, with noted exceptions, are from Congressional Budget Office 2011-2021 Budget & Economic Outlook.
 Due to rounding and other factors, such as offsetting receipts, numbers may not equal exactly total federal spending or 100 percent.
 The “Income Security” budget function consists of programs that provide assistance to low-income persons, and benefits to certain retirees, persons with disabilities, and the unemployed. It includes both mandatory and discretionary spending. The largest mandatory programs in this function include unemployment insurance, trade adjustment assistance income support, food stamps, Temporary Assistance to Needy Families, foster care, and Supplemental Security Income. Federal and other retirement and disability programs comprise approximately one third of the funds in this function.
 The “Income Security” budget function consists of programs that provide assistance to low-income persons, and benefits to certain retirees, persons with disabilities, and the unemployed. It includes both mandatory and discretionary spending. The largest discretionary programs in this function are housing assistance programs.
 President’s FY2012 budget, Department of State FY2010 actuals.
 Includes non-mandatory Agriculture, Medicare, Social Security, Energy and Commerce and Housing Credit spending.