President Obama's $3.8 trillion budget for Fiscal Year 2013 will have the lowest deficit since the record of $1.4 trillion set in FY 2009. Most people assume the record deficits of the last five years were mostly the result of stimulus spending needed to boost the economy out of recession. This is only partly true. There were three other factors, and two of them had nothing to do with the 2008 financial crisis.
What It Means to You
A second factor was a reduction in Federal tax revenues due to slow economic growth. The government's income dropped from $2.6 trillion at its height in FY 2007 to $2.1 trillion in FY 2009. Revenues still hadn't recovered by the FY 2012 budget, reaching only $2.469 trillion.
The third factor was increased military spending. Since the 9/11 attacks, the War on Terror and subsequent overseas operations added $1.452 trillion to deficit spending. This spending is in addition to the Defense Department's annual base budget.
The fourth factor is increased mandatory spending to pay out Social Security, Medicare and other benefits. These payments are mandated by Federal law, and has totaled more than $2.3 trillion a year since FY 2011.
Where Does Your $3.8 Trillion Go?
- FY 2013 Budget Breakdown
- Discretionary Spending
- Military Spending
- Mandatory Spending
- Where Does the Money Come From?
- Compare U.S. Budget Deficits
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