Salem

The US budget begins with an estimate of the GDP, which for the 2017 calendar year, is 19.51 trillion dollars. This is important because the expected receipts from taxes are a function of the incomes of households and businesses, and the budget for federal spending is based on expected receipts.

Changes to the economy which cause the estimate to become inaccurate will cause changes in Federal Revenue and in Federal Spending as well, and so possible changes that might occur unexpectedly during the year and probable effects on the GDP are estimated next. From this, a bell curve projection is calculated of how much the GDP is likely to diverge from the estimates.

Next, the administration calculates a 10 year estimate of how receipts and spending will change based on a baseline in which nothing changes followed by several more estimates of how things might change if various policies are enacted. It's much more complicated than it sounds. Honestly I'm amazed they feel able to project so far as 10 years.

Next, public debt. The government owed 13.117 trillion dollars in principle to its creditors in 2015 and held 1.234 trillion dollars in assets. It paid approximately 261 billion dollars in interest on this public debt. This debt is comprised of money lent to it by US citizens and corporations and foreign governments through things like treasury bonds.

The Gross Federal debt is higher than the public debt and includes another 5 trillion dollars in debt held by Government accounts. Programs like Social Security can earn more in a year than they pay out and instead of just leaving such money in a bank account, the government uses that money to buy Treasury Bills. The government then gets to use the money for more immediate needs until the program it borrowed from needs it back and said program gets extra income through interest paid on the debt.

Learn more here: http://useconomy.about.com/od/monetaryp ... l-Debt.htm.

The next section of the document, Performance Management, and the one after, Budget Concepts and Budget Process were both very long and had little of interest to me at the moment. Feel free to read them yourself though. A quick overview indicated to me that they are mostly details about predicting expected revenues and calculating what the ensuing budget should be.

This part starts on page 225 for anyone who would like to read the explanation themselves. I've done my best to explain it accurately below. Let's start with a quote from the first paragraph of the section:

"The Government records money collected in one of two ways. It is either recorded as a governmental receipt and included in the amount reported on the receipts side of the budget or it is recorded as an offsetting collection or offsetting receipt, which reduces (or “offsets”) the amount reported on the outlay side of the budget."

For 2015 the gross outlays to the public were $4.204 trillion, which offsetting collections and receipts brought down to a net of $3.688 trillion for a difference of $516 billion in offsetting receipts from the public. $1,034 billion offsetting receipts came from intergovernmental transfers and were paid into other areas of the budget. The estimates for fiscal year 2016 are $510.3 billion from the public offsetting receipts and $1,109.6 billion from governmental offsetting receipts.

So, what receipts are reported as offsetting? When the source is the public, it is any receipt than can be classified more as a voluntary business transaction than a tax and these receipts are applied to the cost of the particular service they came from. For example, the sale of postage stamps, government owned land, state park camping fees, Medicare premiums, passport fees, are all offsetting receipts and are applied to the cost of maintaining each service. Camping fees are applied to the cost of running state parks. Medicare premiums are applied back to Medicare. Etc.

When the source of an offsetting receipt is the government, it is an intergovernmental transfer. These transfers come from within the budget and have no net effect on it. Examples include interest payments to funds such as Social Security trust funds which hold government Treasury Bills and payments by government agencies to healthcare or retirement funds for their employees.

"The Congressional Budget Act of 1974 (Public Law 93–344) requires that a list of “tax expenditures’’ be included in the budget. Tax expenditures are defined in the law as “revenue losses attributable to provisions of the Federal tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability.’’ These exceptions may be viewed as alternatives to other policy instruments, such as spending or regulatory programs."

Tax Expenditures are all the deductions, tax credits, deferrals, and other refunds people get back from paying taxes or that let them avoid or defer paying some taxes in the first place. I'm including mention of them because the government counts them as a revenue loss rather than as an expense except in the case of when someone receives a refund greater than what they paid in, giving that person or corporation a net gain. Where such a loss to the government is involved, the government counts it as an expenditure.

A couple interesting things include a table showing surplus and deficit of the budget for the last several decades. Dates beyond 2015 are projected estimates.



And a chart of general sources of receipts.

National Defense

Discretionary spending includes paying for all DoD Military personnel, operation and maintenance, procurement, research, and housing. Also, all atomic energy defense (nuclear weapons related stuff) and defense related activities of the FBI and other programs is included here for a total Discretionary budget of 609,859 million dollars.

Mandatory spending includes retirement payments, operation and maintenance, procurement, research, atomic energy defense, and some trusts for a total Mandatory budget of 9,607 million dollars.

International Affairs

This is almost entirely discretionary, with the mandatory category including a few trust funds and loan guarantees. Discretionary spending includes humanitarian assistance ~25 billion dollars, international security assistance (financing of foreign militaries, help with antiterrorism) ~12.8 billion dollars, embassies, culture exchange programs, and financial programs for a total of 58,129 million dollars.

General Science, Space, and Technology

This is funding for the National Science Foundation, Department of Engergy science programs, and NASA. Most of it is discretionary with a small percent being proposed legislation for mandatory spending. The total is 31,909 million dollars.

Energy

This category covers programs relating to energy conservation, renewable energy, emergency preparedness, and regulation. Discretionary spending is 5,417 million dollars and mandatory spending is 3,553 million dollars for a total of 8,970 million dollars.

Natural Resources and Environment

Discretionary spending here involves dams, water reclamation, the forest service and fish and wildlife service, other conservation, land management, state park maintenance, pollution control and abatement, and other programs like NOAA totaling 35,833 million dollars in discretionary spending. 6,334 million dollars in mandatory spending mostly goes into the conservation, recreation (state parks), and pollution control and abatement categories for a grand total of 42,167 million dollars in this category.

Agriculture

Discretionary and Mandatory spending go the same categories here with slight variations in percentage. Those categories are research and education, inspection, and loan programs, for a total of 25,485 million dollars.

Commerce and Housing Credit

This includes FHA loan programs, the Postal service, small business assistance, mortgage programs and deposit insurance (FDIC). Discretionary spending actually comes out to a net gain of 5,228 million dollars thanks to interest on loans and the postal service being slightly profitable. Mandatory spending comes to 7,358 million dollars, but the total spending in this category is only 2,130 million dollars.

Transportation

Highways, trains, airports and airways (FAA), air transport security (TSA, maybe? It doesn't specify), marine safety and transportation, and coast guard retirement pay. This one is pretty simple and every category contains both discretionary and mandatory spending except coast guard retirement pay, which is all mandatory. of course. Discretionary spending totals 24,723 million dollars, while mandatory spending totals 84,100 dollars, for a total of 108,823 million dollars. About 60% of this category goes to ground transport: highways, trains, mass transport, infrastructure, and highway safety.

Community and Regional Development

Discretionary spending: Community development, Indian programs, disaster relief, 17,542 million dollars. Mandatory spending: Housing grants, Indian programs, disaster relief insurance, 12,057 million dollars. Total of 29,599 million dollars.

Education, Training, Employment, and Social Services

Discretionary spending here covers a wide range. ~40 billion is spent on education for the disadvantaged, vocational and other adult education, English as a second language, etc. ~28.5 billion goes to college scholarship and other higher education aid. ~4 billion to Library of Congress, Smithsonian, and PBS tv. And ~24 billion goes to employment programs, rehabilitation services, older citizens employment programs, and other social / training services for a total of 96,865 million dollars discretionary.

Mandatory includes the most of the same categories with ~5 billion in lower education, ~6.7 billion in higher education, and ~19 billion in training and other social services.

Grand total for Education: 127,835 million dollars. Note that these programs only include special services. General K-12 schooling isn't funded at the federal level.

Health

Discretionary spending includes the CDC, NIH, FDA, and other health care, research, training, and safety programs and administrations. Total discretionary spending is 51,569 million dollars. Mandatory spending includes ~377.5 billion dollars in grants to states for Medicaid, ~23 billion for CHIP, and refunds and tax credits for health insurance premiums, plus ~26.7 billion for all DoD and federal employee retirement healthcare benefits for a total of 516,748 million dollars in mandatory spending; 568,317 million dollars total in the health category.

Medicare

Medicare is budgeted separately from the rest of Health. Discretionary spending involves administrative expenses and fraud prevention for 7,019 spend on discretionary Medicare. Mandatory expenses for Medicare come to 598,361 million dollars, for a total in this category of 605,380 million dollars.

Income Security

Most of the 69,641 million dollars in spending in the discretionary section of this category goes to housing assistance. Section 8, homeless assistance, other HUD programs, etc amount to ~46.3 billion dollars. WIC accounts for ~6.5 billion dollars. Other expenses include utilities assistance, refugee assistance, and administration of unemployment compensation. Mandatory spending comes to 480,341 million dollars and includes ~34.8 billion dollars in unemployment compensation, ~106.5 billion dollars in SNAP and other child nutrition programs, and ~184.5 billion dollars in various tax credits and assistances being counted as expenditures. ~144.6 billion dollars in the mandatory category also goes to military and civilian retirement and disability payments adding up to a total of 549,982 million dollars in Income Security spending.

Social Security

There are 5,786 million dollars in administrative expenses budgeted to discretionary expenses. The mandatory Social Security expenses are 970,688 million dollars, for a total of 976,474 million dollars in Social Security expenses.

Veterans Benefits

Discretionary veterans benefits spending includes ~66.7 billion in medical care, plus housing, cemetery administration, and education/training/rehab for employment for a total of 75,377 in discretionary spending. Mandatory spending includes ~86.1 billion dollars in pensions for a total of 103,839 million dollars in mandatory spending. The total coming to 179,216 million dollars in veterans benefits.

Administration of Justice

This includes funding for the FBI, Secret Service, IRS, DEA, other law enforcement agencies, lawyers fees, prison funding, and border patrol. Discretionary spending is 44,860 million dollars, mandatory spending is 14,934 million dollars. The total comes to 59,794 million dollars.

General Government

This category covers all governmental administrative costs such as tax administration, salaries, property management, reelection funds, and other miscellaneous... things. This one has a lot of minutiae. Discretionary spending comes to 19,053 million dollars, mandatory to 12,939 million dollars, for a total of 31,992 million dollars.

Net Interest

Due to the nature of this category, there is no discretionary spending. Spending in this category amounts to 302,697 million dollars. 511,659 million dollars of interest will go to interest on Treasury debt securities. If you have investments in a mutual fund or if you bought savings bonds, much of the interest you make on those things is being paid to you by the government as interest. Almost all of the national debt is composed of money borrowed by buying US treasury bonds and bills (though some of these are bought by other countries). Understanding this makes it clearer why 'paying back the national debt' is not so simple as just having the money to pay it back. How is this interest larger than the total? The government has a number of trust funds and savings accounts for which it collects interest, which is applied to the interest paid out in this category.

Allowances

This is a sort of placeholder category for adding extra costs into the budget later for things like overseas operations. For now, there is only 15,000 million dollars in mandatory outlays allowed for immigration and disaster costs.

Undistributed Offsetting Receipts

Remember offsetting receipts? These are outlays which are paid by one part of the budget to another part of the budget so that without this section, the money would be counted twice. They have been listed previously as outlays, but they are receipts from other areas in the budget. For example, payments made to military personnel include deductions for retirement funds. The entire paycheck amount is counted as an outlay in Military (in the same way that your employer counts your gross pay as your salary, not your net pay), and then the disability deduction from the paycheck is moved to the military retirement fund and paid out, where it counts as part of Income Security. In order to not count this money twice, it's kept track of and deducted from the total budget so that there is no net effect on the budget of moving money from one section to another. The total Offsetting Receipts for this category is 108,488 million dollars, which is subtracted from the total net budget.