![]() " H.R.83-Consolidated and Further Continuing Appropriations Act, 2015."Ĭongressional Budget Office. " Historical Tables," Download "Table 1.1-Summary of Receipts, Outlays, and Surpluses or Deficits (-): 1789–2025." The remaining 29% wedge of the pie chart covers all other categories of federal government spending: international affairs science and technology natural resources and the environment transportation housing education income support for the poor community and regional development law enforcement and the judicial system and the administrative costs of running the government.Office of Management and Budget. These four categories-national defense, Social Security, healthcare, and interest payments-account for roughly 71% of all federal spending, as Figure 2 shows. (Source: Economic Report of the President, Tables B-2 and B-22, ) The share that the government has spent on national defense has generally declined, while the share it has spent on Social Security and on healthcare expenses (mainly Medicare and Medicaid) has increased. Federal Spending. Since 1960, total federal spending has ranged from about 18% to 22% of GDP, although it climbed above that level in 2009, but quickly dropped back down to that level by 2013. Interest payments are the final main category of government spending shown in the figure.įigure 1. Medicaid is also partially funded by state governments. Healthcare expenditures include both payments for senior citizens (Medicare), and payments for low-income Americans (Medicaid). In contrast, Social Security and healthcare have grown steadily as a percent of GDP. 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. The other lines in Figure 1 show the major federal spending categories: national defense, Social Security, health programs, and interest payments. 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 top line in Figure 1 shows the level of federal spending since 1960, expressed as a share of GDP. ![]() A more useful method of comparison is to examine government spending as a percent of GDP over time. ![]() Comparing spending over time in nominal dollars is misleading though, because it does not take into account inflation, growth in population, or growth in the real economy. GDP in 2009, making it by far the largest budget deficit relative to GDP since the mammoth borrowing used to finance World War II.įederal spending in nominal dollars (that is, dollars not adjusted for inflation) has grown by a multiple of more than 38 over the last four decades, from $92 billion in 1960 to $3.9 trillion in 2014. This deficit was about 10% of the size of the U.S. government experienced its largest budget deficit ever, as the federal government spent $1.4 trillion more than it collected in taxes. ![]() If government spending and taxes are equal, it is said to have a balanced budget. Conversely, when the government receives more money in taxes than it spends in a year, it runs a budget surplus. When the federal government spends more money than it receives in taxes in a given year, it runs a budget deficit. Government spending covers a range of services provided by the federal, state, and local governments. Describe the federal budget and identify deficit and surplus trends over the past five decades. ![]()
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