What are the 3 biggest expenses in the federal budget?
CBO: U.S. Federal spending and revenue components for fiscal year 2023. Major expenditure categories are healthcare, Social Security, and defense; income and payroll taxes are the primary revenue sources.
The largest categories of expenditures are defense, Social Security, and healthcare. Other important categories include infrastructure, education, and foreign aid. The exact composition of the federal budget changes every year depending on the priorities of the government.
- Social Security ($1,354 billion). ...
- Health ($889 billion). ...
- Medicare ($848 billion). ...
- National Defense ($820 billion). ...
- Income Security ($775 billion). ...
- Net Interest ($658 billion). ...
- Veterans Benefits and Services ($302 billion). ...
- Transportation ($126 billion).
- Mandatory spending - funding for Social Security, Medicare, veterans benefits, and other spending required by law. ...
- Discretionary spending - federal agency funding. ...
- Interest on the debt - this usually uses less than 10 percent of all funding.
The U.S. Treasury divides all federal spending into three groups: mandatory spending, discretionary spending and interest on debt.
- Military (Discretionary)
- Social Security, Unemployment, and Labor (Mandatory)
- Medicare and Health (Mandatory)
- Government (Discretionary)
- Education (Discretionary) Whether you owe money to the IRS or you have a State tax debt, our staff of Enrolled Agents and Tax Professionals can help you!
The four main areas of federal spending are national defense, Social Security, healthcare, and interest payments, which together account for about 70% of all federal spending.
President Joe Biden on Saturday signed a $460 billion package of spending bills approved by the Senate in time to avoid a shutdown of many key federal agencies. The legislation's success gets lawmakers about halfway home in wrapping up their appropriations work for the 2024 budget year.
State Government Spending
Total expenditures for all 50 states in the United States was nearly $3 trillion in 2021. General expenditures by function rounded in billions of dollars are listed in the table below. Welfare and education are the largest expenditures by state governments.
The largest federal transfer programs and the 2023 spending amounts are Social Security ($1.3 trillion), Medicare ($1.0 trillion), veterans' programs ($168 billion), refundable tax credits ($144 billion), and food stamps ($135 billion).
How much of federal budget is Social Security?
Social Security: In 2023, 21 percent of the budget, or $1.4 trillion, will be paid for Social Security, which will provide monthly retirement benefits averaging $1,836 to 48.6 million retired workers.
Sources of Federal Revenues
Individual income taxes are the largest single source of federal revenues, constituting nearly one-half of all receipts.
Residents in Connecticut, Massachusetts, New Jersey and New York have some of the highest tax bills in the nation. They also pay thousands more in federal taxes than their state receives back in federal funding.
Medicare and Medicaid, Social Security, and Defense. They make up just a little more than 60% of the budget. About $2.4 trillion.
The three biggest categories of expenditures are: Major health programs, such as Medicare and Medicaid. Social security. Defense and security.
Explanation: In ten years, the government will likely spend tax dollars on three important items: healthcare, education, and infrastructure. The allocation of funds for each item may vary depending on government priorities and policies.
Minnesota, New Jersey, Delaware, Illinois and Florida are least dependent on the federal government. These states all contribute multiples more to the federal government than they receive, with residents paying at least $5 in taxes for every $1 in direct support received from the federal government.
In fiscal year 2022, the Medicare program cost $747 billion — about 12 percent of total federal government spending.
About one-sixth of federal spending goes to national defense. CBO estimates the budgetary effects of legislation related to national security and assesses the cost-effectiveness of current and proposed defense programs. CBO also analyzes federal programs and issues related to veterans.
| Country/territory | US foreign-owned debt (January 2023) |
|---|---|
| Japan | $1,104,400,000,000 |
| China | $859,400,000,000 |
| United Kingdom | $668,300,000,000 |
| Belgium | $331,100,000,000 |
What are the two major kinds of spending in the federal budget?
The federal budget is made up of two major kinds of spending: mandatory and discretionary spending. A third category, interest on the national debt, will come up later. To set the federal budget, Congress passes two kinds of laws that set the budget for our country. The first are called authorization.
In 2020, about one-third of state and local spending went toward combined elementary and secondary education (21 percent) and higher education (9 percent). Another 23 percent of expenditures went toward public welfare in 2020.
House Passes First FY24 Package, Refocusing Washington Spending and Cutting Wasteful Bureaucracy. WASHINGTON - Today, the House of Representatives met to consider H.R. 4366, The Consolidated Appropriations Act, 2024. The measure was approved with a vote of 339 to 85.
A government shutdown happens when Congress does not pass appropriations bills: bills that finance the operation of the government for the upcoming fiscal year. These bills are designed to fund the government until the conclusion of each fiscal year, which ends on September 30.
Federal outlays in 2024 total $6.5 trillion, which amounts to 23.1 percent of GDP. They stay close to that level through 2028 and then increase, reaching 24.1 percent of GDP by 2034. Growth in spending on programs that benefit elderly people and rising net interest costs drive those increases.
