Each year, the President and Congress create the Federal Budget. This spends your hard-earned tax dollars. Find out where your money goes, why the government overspends each year, and how this impacts the economy and you.
The federal Government will take in $2.38 trillion for FY2010. The individual taxpayer -- you -- provides the bulk of this. Here's how:
- Income taxes contribute 43%.
- Social security taxes are 37%.
- Corporate taxes are only 13%.
- Excise taxes and other make up the remaining 7%.
For
FY 2010, budget spending is estimated at $3.55 trillion. Over half of the budget must go towards
Mandatory programs, such as Social Security, Medicare and Military Retirement programs. These expenditures are mandated by law, and cannot be changed. Around 40% of spending goes towards
Discretionary programs which the President and Congress negotiate the amount each year. Half of the Discretionary budget is
Military allocations. The remaining 4.6% of spending goes towards interest payments on the national debt.
Discretionary spending is that part of the U.S. Federal Budget that is negotiated between the President and Congress each year as part of the
budget process. Discretionary spending in FY 2010 will be $1.37 trillion, or 38% of total spending. The
OMB has budgeted more than half ($673 billion) on Security spending.
On average, the U.S. spends a little over 20% of its budget on security. This is about what it spends on Social Security, more than it spends on Medicare and Medicaid combined, and more than it spends on all other government programs combined.
Mandatory Spending at $2 trillion in FY 2010, is 57% of the U.S. Federal Budget. The largest mandatory spending programs are Social Security and Medicare. By FY 2012, these programs will eat up two-thirds of the budget, severely limiting
fiscal policy, and creating a relentless drag on economic growth. By 2040, the Social Security Fund will be depleted and income will be insufficient to pay benefits promised to, and earned by, retirees.
The Federal budget process starts with the Executive Office of Management and Budget (OMB), who must prepare the budget for the President before he submits it to Congress by the first Monday in February. Find out the schedule the budget follows before it is finalized in July.
The budget deficit is when the government spends more than it receives in revenue. In FY 2010 the deficit is projected to be $1.17 trillion, the difference between $3.55 trillion in spending and $2.38 trillion in revenue. This will be less than the FY 2009 deficit of $1.75 trillion, the difference between $3.94 trillion in spending and $2.18 trillion in revenue.
Each year, the deficit adds to the National Debt, already over $11 trillion. This will put downward pressure on the dollar, eventually causing inflation.
When the dollar is strong relative to other currencies, it makes imports cheap, reducing inflation. It also makes exports expensive, slowing economic growth. Find out why the dollar changes value, and what it means.
