United States federal budget

United States federal budget
Country	United States
Budget year	2024
Submitted by	Joe Biden
Submitted to	118th United States Congress
Total revenue	$4.9 trillion (est.)
Total expenditures	$6.9 trillion (est.)
Deficit	$1.9 trillion (est.)
Debt	~$34.6 trillion (public)
Website	[https://www.whitehouse.gov/omb/budget/ Office of Management and Budget]

United States federal budget. The financial plan of the U.S. federal government is a detailed outline of its anticipated revenues and authorized expenditures for each fiscal year. It is a central instrument of national economic policy, influencing everything from national defense to social security. The creation and execution of this plan involves complex interactions between the Executive Office of the President, United States Congress, and numerous federal agencies, governed by laws like the Congressional Budget and Impoundment Control Act of 1974.

Introduction to the United States Federal Budget

The formulation of this annual financial plan is a fundamental constitutional exercise, stemming from the power of the United States Congress to levy taxes and pay debts as outlined in Article One of the United States Constitution. Its scope encompasses all activities of the Federal government of the United States, funding entities from the Department of Defense to the Department of Health and Human Services. The process is initiated by the President of the United States but requires extensive negotiation and approval from both the United States Senate and the United States House of Representatives. Key guiding documents include the president's budget request and subsequent congressional resolutions.

History of the United States Federal Budget

Prior to the 20th century, federal spending was relatively limited, with major expenditures often tied to events like the American Civil War. The modern budgetary framework began with the Budget and Accounting Act of 1921, which created the precursor to the Office of Management and Budget and required the president to submit an annual plan. Landmark expansions occurred during the Great Depression under Franklin D. Roosevelt's New Deal and during World War II. The latter half of the century saw the establishment of major entitlement programs like Medicare and Medicaid, permanently altering the budget's composition. The Congressional Budget and Impoundment Control Act of 1974 established the modern congressional process and created the Congressional Budget Office.

Budget Process and Approval

The process formally begins when the President of the United States submits a detailed request to Congress, prepared by the Office of Management and Budget after consulting federal agencies. Congress then drafts a budget resolution, a concurrent resolution setting fiscal targets, through the House and Senate Budget Committees. This is followed by the passage of appropriations bills by the House and Senate Appropriations Committees to fund government operations. If appropriations are not passed, a government shutdown may occur. The Congressional Budget Office provides independent analyses throughout.

Budget Composition and Breakdown

Revenues are primarily derived from individual income taxes, payroll taxes, and corporate income taxes, administered by the Internal Revenue Service. The largest mandatory spending categories are Social Security, Medicare, and Medicaid, which are governed by permanent law. Major discretionary spending areas include funding for the Department of Defense, the Department of Veterans Affairs, and the Department of Homeland Security. Other significant expenditures include interest payments on the public debt held by entities like the Federal Reserve and foreign governments.

Deficits, Debt, and Fiscal Policy

A budget deficit occurs when annual expenditures exceed revenues, a common occurrence since the late 20th century, with significant increases following the 2007–2008 financial crisis and the COVID-19 pandemic in the United States. Cumulative deficits contribute to the National debt of the United States, which is managed by the United States Department of the Treasury. Fiscal policy debates often center on the economic impact of deficits, as analyzed by institutions like the Federal Reserve and the Peterson Institute for International Economics. Major legislative acts affecting revenue and spending include the Tax Cuts and Jobs Act of 2017 and the American Rescue Plan Act of 2021.

Budget Enforcement and Reform Efforts

Statutory controls like the Gramm–Rudman–Hollings Balanced Budget Act and the Budget Enforcement Act of 1990 have attempted to impose fiscal discipline. The concept of a balanced budget amendment to the United States Constitution has been frequently proposed in Congress. Bipartisan commissions, such as the Simpson–Bowles Commission, have been convened to propose long-term solutions to unsustainable debt trajectories. Ongoing debates involve proposals affecting major programs like Social Security, the tax code, and defense spending administered by the Department of Defense.

Category:United States federal budgets