News & Articles

The federal budget is huge, complicated, and confusing. The news media often use big   numbers without explanation, context, or perspective. In this time of alternative facts it is important to have reliable information on taxes and government spending.   In this series of articles I will present facts about the federal budget, spending. taxes, and deficits. I will talk about the different parts of the budget, where the money comes from and how it is spent. These facts are verifiable from many sources. People disagree about the size of government, importance of specific programs, or the priorities set by the budget, but the basic numbers are not in dispute.        

I mostly use data from the National Priorities Project (NPP). This non-partisan organization provides easy to understand information and graphics. They are not the only source of good information, but they provide a good framework for understanding the numbers and the budget process. Below is a link to the NPP and other reputable sources.   To a large degree the basic numbers, and priorities, of the federal budget have been similar for Democratic and Republican administrations. Many programs, especially military spending, Social Security and Medicare, have had mostly bi-partisan support. That is, UNTIL the current administration! More on this is future articles.  

There are three basic parts to total federal spending: mandatory spending, discretionary spending, and interest on the debt.

Mandatory spending in 2016 was $2.63 trillion or 65% of the total. Discretionary spending was $1.15 trillion for 28%, and interest on the debt was $283 billion and was 6% of the total.  

Total Federal Spending in 2016 was $4.1 trillion. . Social Security was 33% of total spending. Medicare and other healthcare spending was 27%. The Pentagon got 16%. Federal spending for education only amounted to 3% of the total. International affairs, that is diplomacy, was only 1%.   A large part of total federal spending does go to people. Social Security and Medicare are the the biggest federal expenditures. But Social Security is a trust fund and paid for with payroll taxes. Medicare is mostly paid for by payroll taxes (62%). We have all spent a lifetime contributing to these social insurance programs.

Mandatory spending includes all payments that must be paid by law. Social Security and Medicare payments must be made. Other dedicated funds include veterans benefits, food stamps, and highway construction from federal gas taxes. These are dedicated funds, separate from the discretionary budget process discussed below.   Social Security, Medicare and other mandatory payments are called “entitlements” because the payments are based on a person's eligibility and not how much money was appropriated by Congress. Congress does not control this with annual budgets. Grandma can't be stiffed on her Social Security or a disabled veteran on his benefits because Congress failed to pass an annual appropriation.  

Discretionary spending is the “budget” that is debated in Congress each year. This is the part of total federal spending that is primarily paid by income taxes. The president requests this budget and Congress must approve and appropriate the monies. If Congress fails to act none of these monies can be spent. Spending levels can change for various programs.   Discretionary funding pays for most federal government activities such a courts, federal offices, law enforcement, educational assistance, agricultural subsidies, consumer protection, environmental protection, international affairs, some veterans benefits, transportation, scientific research and other social programs.  

This is where Congress decides our spending priorities. They decide, for example, whether to spend more on education, tax breaks, cancer research, space exploration, housing assistance, diplomacy or bombs. Historically bombs have been the big winner.  

Pentagon spending is the largest category in the discretionary budget at 54%. This percentage has remained basically constant for decades with some fluctuation. Military spending has largely been bi-partisan. In contrast Veteran Affairs and Education each get 6%. Diplomacy and international affairs get only 3%. The much maligned “welfare” to assist low income families gets1%.  

Another big category of spending has been health care. This gets complicated as these expenditures don't neatly fit the above categories and includes both mandatory and discretionary spending. For example the Department of Defense spends about 10% of its budget on healthcare. A Congressional Budget Office estimate in 2015 said the federal government spent $980 billion on health care across all programs and budgets. In addition various tax breaks for health care cost $260 billion.  

Bottom line: It is not true that most of your tax dollars go for welfare queens and foreign aid. Part 2 will discuss taxes and deficits.  

Sources of analysis and data on taxes, budgets, and spending National Priorities Project, www.nationalpriorities.org Citizens for Tax Justice, www.ctj.org Center for Defense Information, www.pogo.org/straus/issues/defense-budget Center on Budget and Policy Priorities, www.cbpp.org Taxpayers for Common Sense www.taxpayer.net/issues/budget-tax Tax Policy Center www.taxpolicycenter.org