Wednesday, January 4, 2023

Us Government Spending By Year

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Senate Passes $17tn Funding Bill To Avert Us Government Shutdown

BREAKING: Rand Paul Introduces Federal Budget That Would Balance Budget In 5 Years

Bill includes $45bn in military aid to Ukraine after lawmakers reached agreement on a final series of votes

The US Senate on Thursday passed a $1.7tn government spending bill, sending it to the House to approve and send to Joe Biden for his signature, averting a partial government shutdown.

The legislation provides funding through 30 September 2023, for the US military and an array of non-military programs.

The legislation provides Ukraine with $44.9bn in wartime aid and bans the use of Chinese-owned social media app TikTok on federal government devices.

Progress on the bill slowed after the conservative Republican Mike Lee introduced an amendment meant to slow immigration. That prompted Democrats to put forward a competing amendment that would boost funding for law enforcement agencies on the border. Both amendments failed, which allowed lawmakers to move forward.

The massive bill includes about $772.5bn for non-defense programs and $858bn for defense. Lawmakers raced to get it approved, many anxious to complete the task before a deep freeze could leave them stranded in Washington for the holidays. Many also wanted to lock in funding before a new Republican-controlled House makes it harder to find compromise.

On Wednesday night, senators heard from the Ukrainian president Volodymyr Zelenskiy, about the importance of US aid for the war with Russia.

The funding measure includes emergency assistance to Ukraine and Nato allies above Joe Bidens request.

History Of Government Spending

Government spending in early-industrialised countries grew remarkably during the last century

The visualization shows the evolution of government expenditure as a share of national income, for a selection of countries over the last century. The source of the data is Mauro et al. .1

The long-run series in this dataset cover mainly, but not exclusively OECD countries. Non-OECD countries with available long-run data include Russia, India, Argentina, Brazil, Peru and Colombia.

The above-mentioned long-run series are complemented in this dataset by comparable recent estimates for most countries in the world. You can plot other countries in this visualization by selecting Add country but bear in mind that the series for most non-OECD countries are much shorter.

If we focus on early-industrialized countries, we can see that there are four broad periods in this chart. In the first period, until the First World War, spending was generally low. In the US, for example, total government expenditure accounted for less than 2% of national income until 1916. These low levels of public spending were just enough for governments to be concerned with basic functions, such as maintaining order and enforcing property rights.

In the third period, between 1945-1980, public spending grew particularly fast. As we show in more detail later, this was the result of growth in social spending and was largely made possible by historical increases in government revenues over the same period.

Tracking The Federal Deficit: December 2018

The Congressional Budget Office reported that the federal government generated an $11 billion deficit in December, the third month of Fiscal Year 2019, for a total deficit of $317 billion so far this fiscal year. If not for timing shifts of certain payments, the deficit in December would have been roughly $32 billion, according to CBO. Decembers deficit is 52 percent lower than the deficit recorded a year earlier in December 2017. Total revenues so far in Fiscal Year 2019 increased by 0.1 percent , while spending increased by 9.4 percent , compared to the same period last year.

Analysis of Notable Trends in December 2018: Revenue from customs duties spiked by 83 percent from October-December 2018, relative to the same period in 2017, due to the administrations imposition of new tariffs. Conversely, corporate income tax revenue declined by 15 percent from October-December 2018 relative to the same period in 2017. This dip mainly reflects the reduction of corporate tax rates enacted in the Tax Cuts and Jobs Act of 2017. On the spending side, interest payments on the federal debt in December 2018 rose by 47 percent relative to December 2017.

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Why The Deficit Is Less Than The Increase In The Debt

There’s an important difference between the deficit and debt. The deficit has been less than the increase in debt for years because Congress borrows from the Social Security Trust Fund surplus. The surplus emerged back in the 1980s when there were more people working than there were retirees. As such, payroll tax contributions were greater than Social Security spending, allowing the fund to invest the extra revenue in special Treasury bonds. Congress spent some of the surplus so it wouldn’t have to issue as many new Treasury bonds.

Total Outlays In Recent Budget Submissions

President

The budget year runs from October 1 to September 30 the following year and is submitted by the President to Congress prior to October for the following year. In this way the budget of 2013 is submitted before the end of September 2012. This means that the budget of 2001 was submitted by Bill Clinton and was in force during most of George W. Bush’s first year in office. The budget submitted by George W. Bush in his last year in office was the budget of 2009, which was in force through most of Barack Obama’s first year in office.

The President’s budget also contains revenue and spending projections for the current fiscal year, the coming fiscal years, as well as several future fiscal years. In recent years, the President’s budget contained projections five years into the future. The Congressional Budget Office issues a “Budget and Economic Outlook” each January and an analysis of the President’s budget each March. CBO also issues an updated budget and economic outlook in August.

Actual budget data for prior years is available from the Congressional Budget Office see the “Historical Budget Data” links on the main page of “The Budget and Economic Outlook”. and from the Office of Management and Budget .

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Tracking The Federal Deficit: June 2019

The Congressional Budget Office reported that the federal government generated an $8 billiondeficit inJune, theninth monthof Fiscal Year 2019, for a total deficit of$746 billionso far this fiscal year. If not for timing shifts of certain payments, Junes deficit would have been $57 billion, which is $28 billion larger than the adjusted deficit forJune 2018. Total revenues so far inFiscal Year 2019increased by3 percent , while spending increased by7 percent , compared to the same period last year.

Analysis of Notable Trends this Fiscal Year to Date: Individual and payroll taxes together rose by 3 percent , reflecting an expanding economy and a low unemployment rate. Furthermore, customs duties increased by 77 percent versus last year, primarily due to the imposition of new tariffs. On the spending side, Social Security expenditures increased by 6 percent compared to last year due to increases in the number of beneficiaries and the average benefit payment. Finally, net interest payments on the federal debt continued to rise, increasing by 16 percent versus last year due to higher interest rates and a larger federal debt burden.

Us Federal And State Budgets

Federal budgetary expenditures for the post-9/11 wars include many expenses far beyond direct Congressional war appropriations. The approximately $2.3 trillion in Congressional appropriations through Fiscal Year 2022 for Overseas Contingency Operations which include combat in the post-9/11 war zones as well as international assistance through the State Department and USAID are just the tip of an iceberg.

Other spending directly related to the War on Terror includes additions to the Pentagon base budget, about $900 billion through FY2022. And while the U.S. paid for past wars by raising taxes and selling war bonds, the current wars have been paid for almost entirely with borrowed money, on which interest has to be paid. Through FY2022, the U.S. government owes over $1 trillion in interest on these wars. Even if spending war spending ceased immediately, so that expenses for Overseas Contingency Operations and the Pentagons base budget went to zero, spending on interest would continue to accrue, reaching at least several trillion dollars in over the next few decades.

Totaling these expenses and Congressional requests through FY2022, the U.S. federal government has spent and obligated over $8 trillion on the post-9/11 wars.

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Tracking The Federal Deficit: May 2021

The Congressional Budget Office estimates that the federal government ran a deficit of $132 billion in May, the eighth month of fiscal year 2021. Mays deficit was the difference between $463 billion of revenue and $596 billion of spending. To note, May spending was impacted by May 1 falling on a weekend, shifting certain payments into April that are normally paid at the beginning of May. If not for these timing shifts, the May deficit would have been $192 billion.

So far this fiscal year, the federal government has run a cumulative deficit of $2.1 trillion, the difference between $2.6 trillion of revenue and $4.7 trillion of spending. This deficit is 10% greater than at the same point in FY2020when only three months of pandemic-related spending had occurredand 179% greater than at this point in FY2019.

Analysis of notable trends: The pandemic response continues to disrupt normal spending and revenue patterns. Individual income taxes are usually paid in April however, in both 2020 and 2021, the federal government pushed back Tax Day due to COVID-19. This year, individual income taxes were due on May 17, compared to July 15 in 2020. Additionally, this year, estimated quarterly tax payments were due in April, whereas they were due in July in 2020. These shifting dates must be taken into account when considering year-over-year deficit comparisons.

Total Us Government Spending

How The U.S. Tries To Control Inflation

Federal spending in nominal dollars has grown by a multiple of more than 38 over the last four decades, from $93.4 billion in 1960 to $3.9 trillion in 2014. Comparing spending over time in nominal dollars is misleading because it does not take into account inflation or growth in population and the real economy. A more useful method of comparison is to examine government spending as a percent of GDP over time.

The top line in Figure 1 shows the level of federal spending since 1960, expressed as a share of GDP. Despite a widespread sense among many Americans that the federal government has been growing steadily larger, the graph shows that federal spending has hovered in a range from 18% to 22% of GDP most of the time since 1960. The other lines in Figure 1 show the major federal spending categories: national defense, Social Security, health programs, and interest payments. From the graph, we see that national defense spending as a share of GDP has generally declined since the 1960s, although there were some upward bumps in the 1980s buildup under President Ronald Reagan and in the aftermath of the terrorist attacks on September 11, 2001. In contrast, Social Security and healthcare have grown steadily as a percent of GDP. Healthcare expenditures include both payments for senior citizens , and payments for low-income Americans . Medicaid is also partially funded by state governments. Interest payments are the final main category of government spending shown in the figure.

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Transportation Expenditures By Level Of Government And Mode From Own Funds Fiscal Year

Notes:

Numbers may not add to totals due to rounding.

Federal expenditures from own funds include direct expenditures only and exclude transfers to state and local governments. State and local expenditures from own funds include outlays of the state and local governments from all sources.

Federal expenditure on General support declined in 2017 and 2018 due to a drop in Transportation Security Administration funding of Transportation Security Support which decreased from $973.0 million in 2016 to $503.0 million in 2017 and $139.0 million in 2018.

Description:

KEY: R = revised.

U.S. Department of Transportation, Bureau of Transportation Statistics, Government Transportation Financial Statistics, available at as of Dec. 27, 2021.

The Details Of The $17 Trillion Spending Bill

This is a big document. Like, over 4,000 pages big. That might sound a bit OTT but keep in mind that its designed to cover all of the operating expenses for the Federal government, all the way through to September.

As a result, it needs to cover a lot of ground.

On top of the regular expenditure items, like making sure Park Rangers get paid and keeping the coffee stocked at the FBI headquarters, there are a large number of new or one-off funding arrangements included in the bill, such as:

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Tracking The Federal Deficit: September 2021

The federal deficit for September 2021 was $59 billion, approximately $65 billion less than the deficit for September 2020. This deficit was the difference between revenues of $460 billion and spending of $519 billion. Although individual and corporate tax payments in September typically produce a large surplus, COVID-19 relief spending eclipsed them and led to a September deficit for the second year in a row.

Revenues increased by $87 billion in relation to the same month last year. The increase was mostly caused by a 23% rise in income and payroll taxes and a 71% increase in corporate income tax receipts.

Spending rose $22 billion year-over-year. Notably, spending by the Department of Education was 107% higher than in September 2020. An upward revision of $95 billion to the departments estimated net subsidy costs of loans and loan guarantees was driven partially by pandemic-related causesincluding the extension of pauses on the payment of loan principal and interest and the collection of loans in defaultand partially by re-estimates of how much the federal government would be repaid on its outstanding portfolio. Spending on refundable tax credits increased $21 billion year-over-year primarily due to the monthly advanced Child Tax Credit payments authorized by the American Rescue Plan earlier this year.

Tracking The Federal Deficit: July 2020

Federal Spending: Where Does the Money Go

The Congressional Budget Office estimates that the federal government ran a deficit of $61 billion in July, the tenth month of fiscal year 2020. Although this Julys deficit was actually smaller than last Julys $120 billion deficit, the change does not represent an improved fiscal condition but a mere timing shift. The deadline for non-withheld individual and corporate income taxes, normally in April, was delayed until July of this year, causing an unusual spike in July revenue . Even this influx of taxes was overcome by monthly outlays that, at $624 billion, were 68% greater than last Julys. The cumulative budget deficit for FY2020 now stands at $2.8 trillion, more than triple the deficit at this point last year.

Analysis of notable trends: Stepping back from monthly fluctuations caused by the change in filing deadlines, total revenue so far this fiscal year is down 1% from this point last year. Revenues through this March had actually been 6% higher than through the same point last fiscal year, as higher individual and corporate earnings led to greater individual and corporate income tax receipts. Then the pandemic hit. From April through July, revenues are 10% lower than over same months last year, a combination of economic damage and legislation that gave individuals and corporations greater tax deductions.

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Fiscal Year 2021 In Review

The federal government ran a deficit of $2.8 trillion in fiscal year 2021, the difference between $4.0 trillion in revenues and $6.8 trillion in spending. This deficit was 12% lower than in fiscal year 2020, due to revenue increases outpacing expenditure growth. The FY2021 deficit, however, was almost three times that of FY2019 , as federal COVID-19 relief spending has continued to drive outlays to record highs. This years deficit amounted to approximately 13% of GDP, the second largest deficit as a share of the economy since 1945. Revenues tallied 18% of GDP, while spending rose to 30% of GDP.

Receipts totaled $4.0 trillion in FY2021an 18% year-over-year increasereflecting the general strength of the economy during the initial stages of the pandemic recovery. Individual income and payroll tax revenues together rose 15%, due to a combination of higher wages, increased employment, and payroll taxes that had been deferred by most employers from 2020 to 2021 per the CARES Act of March 2020. Corporate tax revenues increased by 75% in part due to higher corporate profits, and unemployment insurance receipts increased by 31% as states replenished their unemployment insurance trust funds.

  • $363 billion in refundable tax credits, including economic impact payments and advanced Child Tax Credit payments
  • $94 billion in COVID-19 relief for state and local governments
  • $63 billion for Medicaid, largely due to pandemic relief
  • $25 billion in net interest on the public debt
  • Government Budget Balance As A Sectoral Component

    Economist explained in July 2012 that government fiscal balance is one of three major financial sectoral balances in the U.S. economy, the others being the foreign financial sector and the private financial sector. The sum of the surpluses or deficits across these three sectors must be zero by definition. Since the foreign and private sectors are in surplus, the government sector must be in deficit.

    Wolf argued that the sudden shift in the private sector from deficit to surplus due to the global economic conditions forced the government balance into deficit, writing: “The financial balance of the private sector shifted towards surplus by the almost unbelievable cumulative total of 11.2 percent of gross domestic product between the third quarter of 2007 and the second quarter of 2009, which was when the financial deficit of US government reached its peak…No fiscal policy changes explain the collapse into massive fiscal deficit between 2007 and 2009, because there was none of any importance. The collapse is explained by the massive shift of the private sector from financial deficit into surplus or, in other words, from boom to bust.”

    Economist Paul Krugman also explained in December 2011 the causes of the sizable shift from private sector deficit to surplus: “This huge move into surplus reflects the end of the housing bubble, a sharp rise in household saving, and a slump in business investment due to lack of customers.”

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