Fiscal Year 2011 Budget Revenue:
For the Fiscal Year
2011 Budget, the U.S. Federal government planned to take in $2.6 trillion in revenue. Income taxes contributed 45%, social security taxes were 34%, corporate taxes were only 12%, and the remaining 9% was to come from excise taxes. Unfortunately, revenue only came in at $2.303 trillion. (Source: U.S. Office of Management and Budget, FY 2013 Budget
FY 2011 Budget Spending:
Spending was estimated at $3.8 trillion. Over half went towards Mandatory programs
, such as Social Security, Medicare and Military Retirement programs. These expenditures were mandated by law, and cannot be changed without an act from Congress. As it turned out, spending was only $3.603 trillion.
Congress Blocks FY 2011 Budget:
The deadline to approve the FY 2011 budget was September 30, 2010. Normally, Congress would have debated the budget all year, and routinely passed it by the deadline to keep the government running smoothly. However, 2010 was not a normal year. The mid-term elections occurred, and a hot topic was the Federal budget deficit and debt
, which was nearing 100% of GDP.
Despite economic growth of 3% in 2010, and a reduction in unemployment from its height of 10.2%, voters expressed their dissatisfaction by electing a Republican majority in the House of Representatives. As a result, the budget wasn't approved by its deadline.
The government functioned, anyway, but a new crisis emerged in the spring of 2011. As the budget debate raged, a series of stop-gap funding bills in March and April 2011 were approved to keep government services going. As part of the March budget debate, the Republican members of Congress proposed $61 billion in budget cuts
. These cuts were from the discretionary budget, and included reducing funds for child nutrition, programs to help pay for college tuition, and funding to improve food safety. Research from the Economic Policy Institute said the cuts would have cost 800,000 jobs.
FY 2011 Budget Approved:
Finally, on April 14 Congress approved a budget with $38 billion in cuts
. There was $20 billion cut from discretionary programs, targeting health, labor and education. The remaining $17.8 billion was cut from mandatory programs. However, a study by the Congressional Budget Office found that actual spending would only be reduced by $352 million. That's because of Defense Department increases
, and the fact that many of the proposed cuts were in programs that probably wouldn't have used all their budget anyway.
FY 2011 Mandatory Spending:
Mandatory spending was budgeted at $2.2 trillion, or 56% of the U.S. Federal budget. Only $2.073 trillion was spent, including: Social Security ($725 billion), and Medicare ($480 billion), Medicaid ($275 billion). Proposals enacted under the Economic Stimulus Act
actually added $38 billion to the budget, as banks repaid TARP funds.
The remainder, $631 billion was spent on all other mandatory programs, which includes Food Stamps, Unemployment Compensation, Child Nutrition and Tax Credits, Supplemental Security for the Disabled and Student Loans. (Source: U.S. Office of Management and Budget, FY 2013 Budget Summary Table S-5)
FY 2011 Discretionary Spending:
Around 40% of spending, or $1.3 trillion, went toward Discretionary programs
which the President and Congress usually negotiate each year. Half of the Discretionary budget, or $838 billion, went toward military spending. Non-security spending was $462 billion. The largest departments were: Health and Human Services ($78.5 billion), Education ($68.3 billion), Housing and Urban Development ($37.1 billion), Justice ($26.9 billion) and Agriculture ($21.5 billion). (Source: OMB, FY 2013, Summary Tables
Military Budget Just Kept Going Up:
Total security spending requested for FY 2011 was $895 billion, although only $838 billion was spent. This was less than the $850 billion in the FY 2010 military budget
, but more than the $782 billion for FY 2009
Security spending is in layers. First is the Department of Defense Base Budget, which was $528.3 billion, slightly less than the $530.1 billion spent in FY 2010. It included $159.4 billion in contingency funds to support initiatives in Afghanistan, Pakistan and Iraq. The budget expanded benefits for 9 million retired military personnel and veterans with disabilities. It allowed for improved care for wounded service members, especially those with mental health needs. Traumatic head injuries had become much more widespread, as improved field medical procedures allowed doctors to save many soldiers who had died from head wounds in previous wars. The budget reduced waste by 17% by ending or curbing several programs, including the C-17 aircraft and Joint Strike Fighter Alternate Engine programs. (Source: Source: OMB, FY 2012 Budget, Table S-3 "Actual FY 2010 Spending")
Budget Deficit Second Largest in History:
The worst effect of the FY 2011 budget was its $1.299 trillion deficit. This followed a $1.294 trillion deficit in FY 2010, and a $1.413 trillion deficit in FY 2009. To see all budget deficits, go to Federal Budget Deficits
Deficit spending stimulated the economy, which was still needed in FY 2011. It was critical after a recession, when businesses were operating below capacity, and needed new customers. Deficit spending should focus on stimulating consumer spending and creating jobs.
However, deficit spending has been ongoing since 2002. The deficits during and after the recession helped to create a (at that time) $15 trillion debt. As it continues, deficit spending puts downward pressure on the dollar's value. A lower dollar raises the cost of exports, and that increased the likelihood of inflation.
As the debt to GDP ratio approached 100%, investors became concerned that the U.S. might default. Or, they expected the U.S. to raise taxes in the future to get the revenue needed to pay down its debt. This anticipation of taxes in the future can drag down economic growth today.
In addition, interest payments to finance the debt add to each year's deficit. In FY 2011, interest payments were $230 billion. (Article updated February 11,2012)
Compare to Other U.S. Federal Budgets