Fiscal Year 2012 Budget Revenue:
For the
Fiscal Year 2012 Budget, the U.S. Federal government received $2.469 trillion in revenue. Income taxes contributed 47.2%, Social Security and Medicare taxes were 31.4%, corporate taxes were only 9.6%, and the remaining 11.8% was to come from excise taxes, estate taxes and other miscellaneous sources. Here's the actual breakdown of tax amounts:
- Income - $1.165 trillion.
- Social Security and Medicare payroll taxes - $775 billion.
- Corporate - $237 billion.
- All other - $292 billion.
FY 2012 Budget Spending:
Spending came in at $3.793 trillion, more than the
$3.7 trillion originally budgeted. Over half went towards
Mandatory programs, such as Social Security, Medicare and Military Retirement programs. These expenditures are mandated by law, and cannot be changed without an act from Congress. A whopping $225 billion, or 5.9% of spending, was budgeted for interest payments on the
national debt.
FY 2012 Mandatory Spending:
Mandatory spending was budgeted at $2.252 trillion, or 56% of the U.S. Federal budget. It included Social Security ($773 billion), and Medicare and Medicaid ($733 billion combined). Proposals enacted under the
Economic Stimulus Act added $35 billion.(Source: U.S. Office of Management and Budget,
FY 2013 Budget Summary Table S-5)
FY 2012 Discretionary Spending:
Just over a third of spending, or $1.319 trillion, went toward
Discretionary programs. This is significantly lower than in prior years, when around 40% of the budget was discretionary. That's important, because that's the only portion of the budget that the President and Congress can negotiate each year. Only a third of
that ($450 billion) was spent on all Federal government activities not related to defense. The largest non-security related departments were: Health and Human Services ($78.3 billion), Education ($67.4 billion), Housing and Urban Development ($38.2 billion), Justice ($26.8 billion), and Agriculture ($22 billion).
Military Budget Reduced:
Half of the Discretionary budget, or $868 billion, was approved for military spending. This was less than the $895 billion requested in the FY 2012 budget. However, it was more than the $838 billion spent in FY 2011, the $855 billion in FY 2010, and the $782 billion in FY 2009.
The Department of Defense Base Budget was $530.5 billion, a little more than the $528.3 billion spent in FY 2011. The budget focused on buying military equipment, including $2.2 billion in the nuclear weapons complex. It emphasized weapons research and cyber-security. Through some management and acquisition reforms, it planned to save $78 billion through 2016. Although that's a lot a money, it's still less than a 2% decrease in total security spending. (Source: OMB, FY 2012 Department of Defense Budget.
Other security-related departments included:
- Veterans Affairs - increased to $58.5 billion.
- State and other international programs, reduced to $43.7 billion.
- Homeland Security - reduced to $39.7 billion.
- National Nuclear Security Administration - $11 billion.
In addition, $129 billion was spent in contingency funds to support initiatives in Afghanistan and Pakistan. This was down from $159.4 billion in FY 2011 and $162.6 billion in FY 2010.(Source: U.S. Office of Management and Budget,
FY 2013 Budget Summary Table S-12)
Budget Deficit Second Largest in U.S. History:
One of the worst effects of the FY 2012 budget was its $1.327 trillion deficit. This was slightly more than the $1.299 trillion deficit in FY 2011 and the $1.293 trillion deficit in FY 2010. It was less than the $1.4 trillion deficit in FY 2009, the largest in U.S. history.
This deficit spending, which has been ongoing since 2002, created a $15 trillion debt. In the short term, deficit spending stimulates the economy. This is especially true if businesses are operating below capacity, and the spending focuses on activities that are efficient in creating jobs. To compare all U.S. budget deficits since the country began, see Federal Budget Deficit.
However, continued deficit spending puts downward pressure on the dollar's value. As the dollar declines, the price of imports increases, as does the risk of inflation. As the debt approaches 100% of GDP, it increases the expectation that this debt won't be paid until sometime in the distant future. This expectation of future taxes actually puts downward pressure on economic growth.
Budget Approval Process Complicated by Debt Ceiling Crisis:
The FY 2012 budget was approved in December 2011, just a few months past its September 30 deadline. However, the government almost came to grinding halt in July, as a
Republican majority in the House of Representatives threatened to "Just Say No to the
Debt Ceiling. At issue was their desire to restrain Obama's excessive
deficit spending, which threatened to increase the
debt to GDP ratio above 100%.
However, the Gang of Six created a spending compromise plan that evolved into a deficit reduction committee that was charged with finding $1.2 trillion in savings. It met unsuccessfully in November. The budget passed without the savings, which just proves the following point: Talk about budget-cutting is popular, but actually cutting the budget doesn't get any politician elected. (Article updated February 11,2012)
Compare to Other U.S. Federal Budgets
