Each year, the federal government publishes the Budget of the United States Government, a document of several hundred pages. It gives the expected receipts and proposed outlays of the federal government for the following year. It also includes the Historical Tables, a collection of tables that summarize past budget information. This article references these tables to provide an introduction to the federal budget.
The following table shows the percentage of the outlays that are spent on each major government function. This is done for every tenth year from 1945 to 1995 in order to get some idea of how the allocation of outlays has evolved. This does not show every short-term trend. For example, right after World War II, around 1948, National Defense dipped briefly to 30.6 percent of outlays and Veteran Benefits, Net Interest, and International Affairs rose briefly to 21.7, 14.6, and 16.8 percent of outlays, respectively. However, the table does show most long-term trends since 1945.
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OUTLAYS BY SUPERFUNCTION AND FUNCTION: 1945-1995
(as percent of total outlays)
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SUPERFUNCTION and Function 1945 1955 1965 1975 1985 1995
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NATIONAL DEFENSE.................. 89.49 62.43 42.82 26.03 26.71 17.91
HUMAN RESOURCES
Education, training, employment,
and social services.......... 0.14 0.65 1.81 4.82 3.10 3.57
Health........................... 0.23 0.43 1.51 3.89 3.54 7.60
Medicare......................... 0.00 0.00 0.00 3.87 6.96 10.52
Income Security.................. 1.23 7.41 8.00 15.09 13.55 14.51
Social Security.................. 0.29 6.47 14.77 19.46 19.93 22.11
Veterans benefits and services... 0.12 6.83 4.84 4.99 2.78 2.50
PHYSICAL RESOURCES
Energy........................... 0.03 0.47 0.59 0.88 0.60 0.32
Natural resources and environment 0.49 1.37 2.14 2.21 1.41 1.46
Commerce and housing credit...... -2.84 0.13 0.98 2.99 0.45 -0.95
Transportation................... 3.94 1.82 4.87 3.29 2.73 2.59
Community & regional development. 0.26 0.19 0.94 1.30 0.81 0.70
NET INTEREST...................... 3.36 7.09 7.27 6.99 13.68 15.28
OTHER FUNCTIONS
International affairs............ 2.06 3.25 4.46 2.14 1.71 1.08
General science, space & technlgy 0.12 0.11 4.93 1.20 0.91 1.10
Agriculture...................... 1.76 5.13 3.35 0.91 2.70 0.64
Administration of justice........ 0.19 0.37 0.45 0.89 0.66 1.07
General government............... 0.63 0.95 1.27 3.13 1.22 0.91
Allowances....................... 0.00 0.00 0.00 0.00 0.00 0.00
UNDISTRIBUTED OFFSETTING RECEIPTS. -1.50 -5.10 -5.00 -4.09 -3.46 -2.93
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TOTAL, FEDERAL OUTLAYS............ 100.0 100.0 100.0 100.0 100.0 100.0
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Source: Budget of the United States Government, FY 1997,
Historical Tables, table 3.1 (percentages calculated)
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Of the twenty functions listed, the largest six made up nearly 88 percent of outlays in 1995. In ascending order, these functions were Health (7.6%), Medicare (10.52%), Income Security (14.51%), Net Interest (15.28%), National Defense (17.91%), and Social Security (22.11%). Of these six, only National Defense is dropping steadily as a percent of outlays. Income Security appears to have grown rapidly until about 1975 at which point it stabilized. The other four functions appear to be still growing as a percent of outlays with Health and Medicare growing most rapidly.
The next table shows the percentage composition of receipts by source from 1945 to 1995. The leading source, Individual Income Taxes, has stayed fairly stable at about 40 percent of receipts. Corporation Income Taxes and Social Insurance Taxes and Contributions appear to have pretty much switched places.
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PERCENTAGE COMPOSITION OF RECEIPTS BY SOURCE: 1945-1995
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Source 1945 1955 1965 1975 1985 1995
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Individual Income Taxes........... 40.7 43.9 41.8 43.9 45.6 43.6
Corporation Income Taxes.......... 35.4 27.3 21.8 14.6 8.4 11.6
Social Insurance Taxes & Contrib.. 7.6 12.0 19.0 30.3 36.1 35.7
Excise Taxes...................... 13.9 14.0 12.5 5.9 4.9 4.2
Other............................. 2.4 2.8 4.9 5.4 5.0 4.9
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TOTAL, FEDERAL RECEIPTS........... 100.0 100.0 100.0 100.0 100.0 100.0
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Source: Budget of the United States Government, FY 1997,
Historical Tables, table 2.2
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The final table shows the total federal outlays, receipts, deficits and debt as a percent of GDP (Gross Domestic Product) and in billions of dollars. As can be seen, the federal deficit (also called the "Reported Deficit") is simply equal to federal outlays minus federal receipts. The gross federal debt is the accumulation of all past deficits with one addition. It also includes monies that are borrowed by the government from its own trust funds. The 1997 Budget states: "The Federal Government accounts holding the largest amount of Federal debt securities are the civil service and military retirement, social security, and medicare trust funds." Hence, the gross federal debt increases each year by the amount of the reported deficit plus any additional borrowing from trust funds.
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SUMMARY OF OUTLAYS, RECEIPTS, DEFICITS, AND DEBT: 1945-1995
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1945 1955 1965 1975 1985 1995
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(as percent of GDP)
TOTAL, FEDERAL OUTLAYS............ 43.7 17.8 17.6 22.0 23.9 21.7
FEDERAL RECEIPTS........... 21.3 17.0 17.4 18.5 18.5 19.3
FEDERAL DEFICIT............ 22.4 0.8 0.2 3.5 5.4 2.3
GROSS FEDERAL DEBT............... 122.7 71.3 48.0 35.9 45.8 70.3
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(in billions of dollars)
TOTAL, FEDERAL OUTLAYS............ 92.7 68.4 118.2 332.3 946.4 1519.1
FEDERAL RECEIPTS........... 45.2 65.5 116.8 279.1 734.1 1355.2
FEDERAL DEFICIT............ 47.6 3.0 1.4 53.2 212.3 163.9
GROSS FEDERAL DEBT............... 260.1 274.4 322.3 541.9 1817.5 4921.0
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Source: Budget of the United States Government, FY 1997,
Historical Tables, tables 1.3 and 7.1
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As can be seen from the table, the debt reached 122.7 percent of GDP at the end of World War II. It's peak was 127.5 percent in 1946. From there, it steadily declined to 35.9 percent of GDP in 1975. It's lowest point was actually 33.6 percent in 1981. Since then, it has risen back up to 70.3 percent of GDP. It has continued to rise despite the fact that the deficit has recently declined. Hence, a stabilizing of the deficit does not necessarily imply a stabilizing of the debt.
Hopefully, this article has succeeded in providing a brief introduction to the federal budget. Further information can be found by referencing the actual budget. For example, table 3.2 in the Historical Tables further divides up outlays according to subfunctions. In any case, the Budget of the United States Government can be found in most public libraries. It can also be found on the World Wide Web at location http://cher.eda.doc.gov/BudgetFY97/index.html. The Historical Tables can be accessed directly and downloaded in text or spreadsheet format from location http://cher.eda.doc.gov/BudgetFY97/histtoc.html.