- Federal Budget Overview
- Discretionary Spending
- Taxes and other Federal Revenues
- President’s Budget Requests (back to 1996)
The Budget divides all spending into two broad categories:
Almost one-third of federal spending is called “discretionary spending,” because the amount of spending flows from annual funding decisions by Congress’ Appropriations Committees (and that is roughly divided between defense and non-defense programs).
Roughly two-thirds of the budget is called “mandatory spending,” because the amount of outlays flow from legal obligations of the federal government established in law.
Most mandatory spending is comprised of “entitlement programs” — where eligibility rules and benefit formulas determine annual outlays.
The largest entitlement programs are:
- Social Security: $984 billion – 24% of the Budget
Old-Age, Survivors, and Disability Insurance.
- Medicare: $583 billion – 14% of the Budget
(Gross Outlays of $707 b minus $124 b from premiums and other offsetting receipts)
Medicare is national health insurance administered by the federal government for people 65 and over and disabled Americans. It is financed by payroll taxes, general tax revenues, premiums and copayments. The above number is total Medicare outlays.
- Medicaid: $383 billion – 9% of the Budget
Medicaid, financed jointly by the federal and state governments, is administered by the states. It is the major health program for low-income Americans. A large portion of Medicaid pays for long-term care for low-income elderly.
Other Major Mandatory Spending Programs
|Federal Civilian Retirement (including annuitants’ health care)||$102 billion|
|Veterans Benefits||$100 billion|
|Compensation, Pensions, and Life Insurance ($83 billion)Other (primarily education subsidies) ($17 billion)|
|Note: Veterans Health Care is not an entitlement; funding levels are appropriated annually in the Mil.Con.-VA bill.|
|Earned Income Tax Credit (EITC) and Child Tax Credit||$87 billion|
|Note: Although these are “tax credits,” this amount — $87 billion — is considered “spending” because taxpayers are receiving “refunds” larger than their tax liabilities. These are also known as “refundable tax credits.”|
|Food Stamps (now known as “SNAP”)||$69 billion|
|Highway and Public Transit Programs||$55 billion|
|Federal funding for Highways and Public Transit is a budgetary oddity since the spending authority is considered to be “mandatory spending” because it is provided in multiyear highway authorizing legislation; however, the outlays are considered to be “discretionary” since they are controlled by the Appropriations Committee.|
|Military Retirement||$54 billion|
|Affordable Care Act (ACA) Subsidies ACA Background||$54 billion|
|Supplemental Security Income (SSI)||$51 billion|
|Temporary Assistance for Needy Families (TANF), Child Support Enforcement, Child Care Entitlement||$32 billion|
|Unemployment Compensation||$30 billion|
|Child Nutrition||$24 billion|
|Agriculture Programs||$17 billion|
|Children’s Health Insurance Program (CHIP)||$16 billion|