United States federal budget
Based on Wikipedia: United States federal budget
The Trillion-Dollar Document That Shapes American Life
Every year, the United States government spends more money than any other organization on Earth. In fiscal year 2022 alone, federal spending reached $6.3 trillion—a sum so vast that if you counted one dollar per second, it would take you nearly 200,000 years to reach it.
But here's what makes the federal budget truly fascinating: it's not just an accounting document. It's a battlefield where competing visions of America clash, where philosophical debates about the role of government get translated into cold, hard numbers, and where decisions made in committee rooms ripple out to affect the lives of 330 million people.
And almost every year, the government spends more than it collects. That gap—the deficit—gets added to the national debt, a running tab that the Congressional Budget Office (the nonpartisan agency that crunches these numbers) projects will grow from 99 percent of America's entire economic output in 2024 to a staggering 172 percent by 2054.
Where the Money Actually Goes
When people imagine federal spending, they often picture bureaucrats shuffling papers or politicians funding pet projects. The reality is far more personal.
The largest chunks of federal spending go directly to individuals—primarily the elderly and the sick. Medicare and Medicaid, the government health insurance programs for seniors and low-income Americans, consumed $1.339 trillion in 2022. Social Security, the retirement and disability program that sends monthly checks to roughly 70 million Americans, cost $1.2 trillion.
Defense spending, despite its prominence in political debates, comes in third at $751 billion. That's still an enormous sum—more than the next ten countries combined spend on their militaries—but it represents a smaller share of the budget than many assume.
Then there's everything else the federal government does: running national parks, conducting scientific research, maintaining highways, staffing embassies, processing tax returns, inspecting food safety, managing air traffic control. All of these "non-defense discretionary" activities together cost $910 billion.
And increasingly, the government spends money simply on the cost of having borrowed money in the past. Net interest payments reached $475 billion in 2022 and are climbing rapidly as interest rates rise and the debt grows.
The Peculiar Calendar of Federal Finance
The federal government operates on a fiscal year that runs from October 1 through September 30—a calendar quirk that means "fiscal year 2025" actually began in fall 2024. Why October? It's a relic of legislative scheduling, giving Congress time after their summer recess to pass spending bills before the new year begins.
In theory.
In practice, Congress rarely finishes its budget work on time. The process is supposed to work like this: the President submits a budget proposal to Congress in early February, laying out priorities for the fiscal year beginning eight months later. Congressional committees then craft their own spending bills, which must pass both the House of Representatives and Senate before the President signs them into law.
But this orderly process has become increasingly rare. When Congress can't agree on spending bills before October 1, they pass "continuing resolutions"—temporary measures that keep the government funded at previous levels while negotiations continue. Sometimes these stopgaps last weeks. Sometimes months. And when even these fail, the government "shuts down," with hundreds of thousands of federal workers sent home without pay until a deal is reached.
The Constitutional Foundation
The framers of the Constitution were deeply suspicious of concentrated financial power. Having fought a revolution partly over taxation without representation, they embedded a crucial principle into Article I, Section 9: "No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law."
This means the President cannot spend federal money unilaterally. Every dollar requires congressional approval. It's a check on executive power that distinguishes the American system from many others, where heads of government have more direct control over national finances.
The requirement for Congress to publish "a regular Statement and Account of Receipts and Expenditures of all public Money" reflects the founders' belief that citizens in a democracy should know where their tax dollars go. Today, this manifests in thousands of pages of budget documents, websites tracking federal spending, and armies of analysts parsing the numbers.
Authorization Versus Appropriation: The Budget's Split Personality
Understanding the federal budget requires grasping a distinction that confuses even seasoned Washington observers: the difference between authorization and appropriation.
An authorization bill says the government may do something and sets a ceiling on how much it can spend. An appropriation bill says the government will do something and provides the actual money. Think of authorization as writing a check and appropriation as putting money in the bank account to cover it.
Congress can authorize a program without funding it. Conversely, some programs—particularly entitlements like Social Security and Medicare—operate on "mandatory" spending, where the law requires the government to pay benefits to anyone who qualifies, regardless of what any annual appropriation says.
This creates a peculiar situation. Only about one-third of federal spending is actually decided each year through the appropriations process. The rest runs on autopilot, driven by eligibility rules set in previous decades. To change mandatory spending, Congress must change the underlying laws—a far heavier political lift than simply adjusting an appropriation.
The Byzantine Committee System
If you've ever wondered why budget negotiations seem so complicated, look at the committee structure.
Both the House and Senate have Budget Committees that set overall spending targets. But these targets are just frameworks. The actual spending decisions happen in the Appropriations Committees, each of which has 12 subcommittees covering different slices of government: defense, homeland security, agriculture, energy, and so on.
Meanwhile, other committees—Armed Services, Ways and Means, Finance—control the authorization and revenue sides. The result is a system where dozens of powerful committee chairs and ranking members all have stakes in the process, each defending their jurisdictional turf while trying to advance their priorities.
This fragmentation is both a feature and a bug. It distributes power widely, preventing any single faction from dominating. But it also creates endless opportunities for gridlock, as bills must navigate through multiple committees, each with its own dynamics and deadlines.
Backdoor Spending: When the Rules Get Bent
Over the decades, clever legislators have developed workarounds to the authorization-appropriation system. These "backdoor" mechanisms let spending happen outside normal channels.
A "backdoor authorization" occurs when an appropriation bill includes language requiring an agency to spend money even though no authorization exists. A "backdoor appropriation" happens when authorization legislation mandates specific spending, forcing appropriators to find the money whether they like it or not.
These maneuvers are sources of perpetual tension in Congress. Authorization committees resent appropriators who fund unauthorized programs. Appropriators resent authorizers who commit future dollars without their consent. The turf battles can get vicious, with committees retaliating against perceived overreach by blocking each other's priorities.
Emergency spending has become another escape valve. Designating something as an "emergency" exempts it from budget caps and other constraints. While this makes sense for genuine disasters like hurricanes, the emergency label has been stretched to cover military operations, census funding, and other items that seem, charitably, foreseeable.
Cash Accounting in a Credit Card World
Here's a peculiarity that most Americans would find bizarre: the federal government largely uses cash accounting rather than accrual accounting.
In cash accounting, you record transactions when money changes hands. In accrual accounting, you record obligations when you incur them—even if payment comes later. Most major corporations use accrual accounting because it provides a more accurate picture of financial health.
The federal government's cash-based approach means that many long-term obligations don't appear in the budget until payments actually go out. The full cost of pensions promised to current workers, the healthcare benefits guaranteed to future retirees, the interest that will accrue on borrowed money—these loom largely off the official books.
Some programs do get special treatment. The Federal Credit Reform Act of 1990 requires certain loan and credit programs to be calculated on a "net present value" basis, essentially accounting for their long-term costs upfront. But this remains the exception rather than the rule.
The Revenue Side of the Ledger
In fiscal year 2018, the federal government collected $3.33 trillion in revenue. Where did it come from?
Individual income taxes provided the largest share: $1.68 trillion, or 51 percent of total receipts. This is the tax most Americans file returns for each April, with rates ranging from 10 percent on the lowest incomes to 37 percent on the highest.
Payroll taxes—primarily Social Security and Medicare taxes split between workers and employers—contributed $1.17 trillion, or 35 percent. Unlike income taxes, payroll taxes apply from the first dollar earned and, for Social Security, cap out at a certain income level (around $160,000 in recent years). This structure makes payroll taxes somewhat regressive: a worker earning $50,000 pays the same Social Security tax rate as one earning $150,000, while someone earning $500,000 pays a lower effective rate because income above the cap is exempt.
Corporate income taxes brought in just $205 billion, or 6 percent—a share that dropped dramatically after the Tax Cuts and Jobs Act of 2017 slashed the corporate rate from 35 percent to 21 percent. Corporate tax revenue fell by $92 billion, or 32 percent, in a single year.
The remaining revenue trickles in from excise taxes (on gasoline, tobacco, alcohol, and other specific goods), estate and gift taxes, customs duties, and miscellaneous fees.
The Deficit Trajectory
The Congressional Budget Office projected a federal budget deficit of $1.6 trillion for 2024. To put that in perspective: every day, the government borrows roughly $4.4 billion more than it takes in.
Deficits aren't inherently problematic. During recessions, deficit spending can stabilize the economy when private spending collapses. Most economists agree that the massive deficits during the 2008 financial crisis and the 2020 pandemic helped prevent even worse economic outcomes.
The concern is what economists call the "structural" deficit—the gap between revenue and spending that persists even in good economic times. When the economy is strong and unemployment is low, deficits arguably should shrink or turn into surpluses, building a buffer for the next downturn. Instead, recent years have seen large deficits even during periods of growth.
The CBO projects deficits will grow from 5.6 percent of GDP (gross domestic product, the total value of goods and services the economy produces) in 2024 to 6.1 percent by 2034. The primary drivers are the aging of the American population, which increases spending on Social Security and Medicare, and rising interest costs on the accumulated debt.
The Debt Spiral Concern
There's a mathematical dynamic that keeps budget analysts up at night: when debt grows faster than the economy, and interest rates exceed economic growth, debt can spiral upward even without any new borrowing decisions.
Consider a simplified example. If a government owes $100 at 5 percent interest, it must pay $5 in interest next year. If the economy grows 3 percent but spending and taxes stay constant, the government must borrow to cover that interest payment. Now it owes $105. The next year's interest is $5.25. The gap between what's owed and what the economy can support widens each year.
This isn't an immediate crisis—the United States can borrow more cheaply than almost any other country because the dollar is the world's reserve currency and U.S. Treasury bonds are considered the safest assets on Earth. But that privileged position isn't guaranteed forever, and the CBO's projections show debt reaching levels unprecedented in American history.
What Would It Take to Change Course?
The CBO has modeled what changes would be needed to stabilize or reduce the debt. The numbers are sobering.
To bring debt down to 41 percent of GDP by 2048—its average over the past 50 years—policymakers would need to cut spending, raise revenues, or combine both approaches to the tune of 3 percent of GDP annually. In 2019 dollars, that meant roughly $630 billion per year in deficit reduction, every year, starting immediately.
To merely stabilize debt at 2018 levels (78 percent of GDP), the required adjustment was smaller but still substantial: 1.9 percent of GDP, or about $400 billion annually.
Every year of delay makes these numbers larger. The longer the debt compounds, the bigger the eventual adjustment must be.
The Agencies Watching the Numbers
Several government agencies serve as watchdogs and analysts of federal finances.
The Congressional Budget Office (CBO), created in 1974, provides nonpartisan analysis to Congress. Its projections of what legislation will cost are often decisive in political debates. If the CBO "scores" a bill as increasing the deficit, it becomes harder to pass. The CBO publishes regular budget outlooks, economic projections, and analyses of proposed legislation.
The Office of Management and Budget (OMB), part of the executive branch, prepares the President's budget proposal and tracks spending across federal agencies. Unlike the CBO, the OMB serves the President and can be more political in its assumptions and projections.
The Government Accountability Office (GAO), sometimes called the "congressional watchdog," audits federal programs and investigates how taxpayer money is spent. Its reports often reveal waste, fraud, and mismanagement that might otherwise escape notice.
The Treasury Department manages the government's actual finances—collecting taxes, paying bills, issuing debt. It publishes detailed financial statements and maintains the definitive records of what the government has received and spent.
The Long-Term Challenge
All of these agencies have raised alarms about the same fundamental challenge: the collision between an aging population and programs designed for a younger one.
When Social Security was created in 1935, there were roughly 40 workers for every retiree, and the average American died before reaching 65. Today, there are fewer than three workers per retiree, and average life expectancy extends well into the late 70s. Medicare, created in 1965, has faced similar demographic pressures compounded by the explosive growth in healthcare costs.
These programs aren't failing—they're succeeding at their intended purpose of providing security to older Americans. But the math has changed. Either benefits must be reduced, taxes must be increased, or the debt will continue growing faster than the economy.
This isn't a partisan observation. Analysts across the political spectrum agree on the basic arithmetic. Where they disagree—fiercely—is on what to do about it. Some argue for benefit cuts or means-testing. Others call for raising the cap on payroll taxes or implementing new revenue sources. Still others suggest the projections are too pessimistic and that economic growth will solve the problem.
The Human Stakes Behind the Numbers
It's easy to get lost in trillions and percentages of GDP, to treat the budget as an abstraction debated by politicians and analyzed by economists. But every number represents real consequences for real people.
When Congress debates Medicare spending, they're deciding whether grandparents can afford their medications. Defense appropriations determine whether military families get adequate housing. The obscure line items in appropriations bills fund the scientists searching for cancer cures, the rangers protecting national parks, the inspectors ensuring food safety.
The federal budget is, ultimately, a statement of national priorities written in numbers. Understanding it—how it works, where the money comes from, and where it goes—is essential for any citizen who wants to participate meaningfully in democracy.
Because those trillions of dollars? They're not just the government's money. They're ours.