Budget Process: a study of swollen spending

February 17, 2011

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[1], the federal government spent $3.5 trillion[2], 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.[3]

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[4] = $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.

Defense Discretionary

National Defense = $689.1 billion, 19.7%

Non-Defense Discretionary

Transportation = $90 billion, 2.5%

Education, Training, Employment, Social Services = $89 billion, 2.5%

Income Security[5] = $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[6]= $19.0 billion, 0.6%)

National Resources, Environment = $37 billion, 1.1%

Science, Space, Technology = $31 billion, 0.9%

Other[7] = $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 [8] $15.9 billion – less than one percent (0.5%) of the total budget.


[1] 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.

 

[2] All numbers, with noted exceptions, are from Congressional Budget Office 2011-2021 Budget & Economic Outlook.

[3] Due to rounding and other factors, such as offsetting receipts, numbers may not equal exactly total federal spending or 100 percent.

[4] 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.

[5] 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.

[6] President’s FY2012 budget, Department of State FY2010 actuals.

[7] Includes non-mandatory Agriculture, Medicare, Social Security, Energy and Commerce and Housing Credit spending.

[8] Taxpayers for Common Sense 2010 Earmark Total

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2 Responses to Budget Process: a study of swollen spending

  1. Scott says:

    How do we get things on a national ballot things that need to change, ie. TERM LIMITS, ENDING DEFINED BENEFIT PROGRAMS FOR GOVERNMENT EMPLOYEES, SENATORS, CONGRESS AND THE REPEAL OF SENATE AND CONGRESS EXEMPT FROM CRIMINAL PROSECUTION? Things need to change quickly!

  2. Paul Erdos says:

    The Budget Process infographic contains errors: The Discretionary chart on the right indicates that non-defense discretionary spending is 47% of the 39% of all discretionary spending in the budget and that defense discretionary spending is 53% of the 39% of all discretionary spending. However, in your data below you indicate that Non-Defense Discretionary spending was $610.9 billion while Defense Discretionary spending was $520.4 billion, an inverse relationship from that of the percentages. Defense discretionary spending cannot be a larger % than Non-defense discretionary spending and yet be a smaller total in actual $. I haven’t checked all your work but given the error I found you probably need to reconcile all the percentages with the $ numbers & double check your sources to insure that something wasn’t copied wrong from them as well. Given that data accuracy is the basis for establishing one’s reputation in your field, I know you will want to double-check your work. Best of luck

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