The US government spent $6.2 trillion dollars last year and took in nearly $4.5 trillion in revenue. Watch Just the Facts with Steve Ballmer & USAFacts. The more we know, the better voters we can be.
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00:00Hi, I'm Steve Ballmer.
00:02I spent 34 years growing Microsoft,
00:0510 years owning the L.A. Clippers basketball team.
00:08I love computers, data, and facts.
00:11That's why I started USAFacts,
00:14to help understand what our government is up to
00:17and what's going on in America.
00:19I'll share with you the facts and data,
00:22all from our government,
00:24you make up your own mind.
00:26In this episode of Just the Facts,
00:28the budget.
00:30The federal budget is a measurement
00:33of how much our government spends
00:35and how much revenue it takes in.
00:37And the budget really took off with COVID.
00:40In the years leading up to the pandemic,
00:42annual federal government spending
00:45hovered between $5 and $5.3 trillion,
00:48adjusted for inflation.
00:50Then COVID hit in 2020,
00:52and the budget really went up to $7.7 trillion
00:56to help us through the crisis.
00:58Federal spending has exceeded $6 trillion
01:01every year since.
01:03It's really hard to make sense of a trillion of anything.
01:06So try thinking of it this way.
01:08If you spent $1,000 every day,
01:12it would take over 16 million years
01:15to spend $6 trillion.
01:17That's a big number.
01:19In 2023, the federal government spent less.
01:23As COVID, spending went away.
01:25Only $6.2 trillion.
01:28But it took in $4.5 trillion
01:31of mostly tax revenue.
01:33This means our government had to come up
01:35with $1.7 trillion
01:37to cover the difference between spending and revenue.
01:41In government speak, that's our deficit.
01:45Those deficits are ultimately funded with borrowing.
01:49When you add up all of federal government's borrowing
01:53over the years,
01:54you're going to get close to $35 trillion,
01:57which is the total national debt today,
02:00which in 2020 was the largest share of our economy
02:05as measured by our GDP
02:07at any time since World War II.
02:10Now let's dive into the details,
02:13starting with the spending part of the budget.
02:16About 60% of all federal spending
02:19is categorized as mandatory spending,
02:22which amounted to $3.8 trillion last year.
02:25This spending is essentially on autopilot
02:28because it funds programs whose eligibility rules
02:32and benefit formulas are set in law.
02:35This consists mostly of programs like Social Security,
02:39Medicare, Medicaid, and Veterans Care.
02:42Then there are interest payments on our debt,
02:45which totaled $659 billion last year.
02:50We're going to have to pay our interest on our debt.
02:53Everything else Washington does from defense and education
02:56to transportation, scientific research,
02:59it's all funded by what's called discretionary spending,
03:02which accounted for $1.7 trillion last year.
03:07Let's do a fact check.
03:09Mandatory spending, $3.8 trillion.
03:13Discretionary spending, $1.7 trillion.
03:16And net interest on the debt, $659 billion.
03:20Total, $6.16 trillion in government spending.
03:26Now let's try taking a deeper dive
03:28into the two biggest pieces of mandatory spending,
03:31Social Security and Medicare.
03:34Social Security has been around since 1935.
03:38It provides retirement, disability,
03:42and survivor benefits to eligible individuals.
03:46Some key facts about the program,
03:48it now costs about $1.4 trillion a year
03:52and accounts for 22% of the total federal budget.
03:57There are over 67 million people receiving Social Security
04:01and they're getting an average benefit
04:03of about $1,900 a month for the actual retirees
04:08and it's about $1,500 or so
04:11for the disabled and surviving spouses.
04:14Social Security, it actually relies on payroll taxes
04:18from current workers to go into a trust fund
04:22and then that trust fund pays out the benefits
04:26to those who receive them.
04:28With an aging population, there are projections
04:31that the Social Security trust fund
04:33will be exhausted by the year 2035.
04:36Now projections about where Social Security
04:39is heading could be wrong.
04:41As the old Yankee catcher from my youth,
04:44Yogi Berra liked to say,
04:46it's tough to make predictions,
04:49especially about the future.
04:53Let's talk about the second biggest
04:55mandatory spending item, which is Medicare.
04:58Medicare costs the federal government
05:00about $850 billion in 2023
05:04and that's about 14% of all of our federal spending.
05:09The bulk of the spending provides health insurance
05:12for anyone 65 and older.
05:14Today, Medicare covers 67 million Americans
05:17or about one in four adults.
05:19And in 2022, which is the most recent year released,
05:23we spend about $16,000 per beneficiary per year.
05:27Medicare's share of the federal budget
05:29has increased from 10% in 1994 to 14%
05:34as the number of enrollees in the program
05:37has continued to grow with our aging population.
05:40Medicaid, which is a program that provides
05:43health insurance coverage for those who can least afford it,
05:47is jointly financed by the federal and state governments.
05:51In total, the federal government, though,
05:55paid for $616 billion of it in 2023.
06:00As of December of 2023,
06:02there's about 78 million Americans on Medicaid
06:06and enrollment for the program has grown
06:09since the passage of the Affordable Care Act in 2010.
06:14Another line item in mandatory spending
06:16is veterans' benefits.
06:18They amount to about $299 billion.
06:22I, for one, am really happy about the mandatory nature
06:26of the benefits for our veterans.
06:28Here's another big ticket item.
06:30Through a combination of mandatory
06:32and discretionary spending,
06:34Washington sent nearly $1.1 trillion
06:38in grants to our states and local governments in 2023.
06:43More than half of that was for Medicaid,
06:46which we just discussed,
06:47as well as some children's health programs.
06:50The rest of this spend with the states
06:52is for a range of programs,
06:54from education to infrastructure
06:57and also some other social programs.
07:00National defense is the single largest category
07:03of the discretionary part of federal spending,
07:06and it came in at $820 billion in 2023.
07:11The two biggest defense expenditures
07:13are salaries and benefits
07:15and maintaining and acquiring new weapons systems.
07:19America has 1.3 million active-duty service members
07:23in the Army, Navy, Marines, Air Force,
07:26Coast Guard, and elsewhere.
07:28We have 767,000 people in the reserves.
07:32These are people in civilian jobs
07:34who do regular training, though, for the military
07:37and can be called into active duty in the future.
07:40And 779,000 are civilians
07:43that are filling various support roles in the military.
07:46I actually had no idea
07:48we had so many civilians doing important work
07:51for our military.
07:53America has also 16 million veterans,
07:57a number that is declining.
07:59In 1990, about 11% of the population were veterans,
08:03while today it's about 6%.
08:06Finally, as a share of American GDP,
08:09defense spending's about 3%.
08:12That's the lowest it's been
08:14since the data started being published
08:16around the Korean War.
08:19When you combine all federal mandatory spending
08:22with discretionary defense spending
08:24and our interest payments,
08:26that accounts for 86% of the 2023 federal spend.
08:30The remaining 14% is discretionary spending,
08:34and it covers the rest of the federal government,
08:36from payments to farmers, food safety,
08:39environmental protection,
08:40the administration of justice, and more.
08:43Some bills signed in the last few years
08:45will also impact our budget.
08:47The 2021 Infrastructure and Jobs Act
08:50will inject an additional $110 billion
08:53on average per year through 2026
08:56into public works priorities
08:58like roads, bridges, water, and broadband.
09:01That's a 32% increase over the 2021
09:04combined federal, state, and local spending
09:07in those areas.
09:09However, the exact funds are not evenly distributed
09:12each year and are still being allocated.
09:15Now let's look at where the money comes from.
09:18$4.4 trillion out of our $4.5 trillion
09:23of federal government revenue came from taxes.
09:27Of the taxes collected in 2023,
09:30$2.2 trillion, or 49%,
09:34were from individual income taxes,
09:37which are the taxes that are paid
09:39on income from salary, commissions, fees,
09:43tips, capital gains, dividends,
09:45retirement income, and more.
09:48$1.6 trillion, which is 37% of the revenue,
09:53came from payroll taxes,
09:55and another $420 billion, or 9%,
09:58came from corporate income taxes.
10:00So those are the big revenue streams.
10:03The federal government does get money
10:05from other sources, including another
10:07$80 billion from customs duties,
10:09$76 billion from sales and excise taxes,
10:13which are taxes on goods like alcohol, gas, cigarettes.
10:18Let's take a closer look at individual income taxes
10:21and who pays them.
10:23The top 5%, who made a minimum of about $253,000,
10:29paid $1.4 trillion of tax,
10:33or close to 66% of all income taxes,
10:36collected in 2021.
10:38While the top 10%, who made at least $170,000,
10:43paid $1.7 trillion,
10:45or almost 76% of all income tax.
10:49The bottom 50% of filers,
10:51who made less than $46,637,
10:55which is 77 million people,
10:57paid 2.3% of all income taxes.
11:01But just to remember,
11:03people do pay into Social Security
11:05and Medicare via payroll taxes,
11:08and they're subject to various state, local taxes,
11:12and of course sales taxes is part of that.
11:15In 2017, Congress passed
11:17and President Trump signed the Tax Cut and Jobs Act.
11:21That lowered individual rates for every tax bracket
11:25and increased the tax credit for each child to $2,000.
11:30Most of that $2,000 is refundable,
11:33which means you receive cash back
11:36even if you don't owe federal taxes.
11:39The bill also cut the corporate income tax rate
11:42from 35% to 21%.
11:45Now adjusted for inflation,
11:47tax revenue from companies went from $379 billion in 2016
11:52to $248 billion in 2018
11:56and $422 billion by 2021.
12:00There's a key thing to note though.
12:02At the end of 2025,
12:04the individual tax cuts expire, they go away,
12:09while the corporate tax cuts do remain in place.
12:13Let's do a fact check.
12:15The federal government spent $6.2 trillion last year
12:19and it took in nearly $4.5 trillion in revenue.
12:23That leaves a deficit of $1.7 trillion just for 2023.
12:29I'm going to let you know my personal view on this.
12:31I do worry about the size
12:33and especially the growth in our debt.
12:35In the last 15 years alone,
12:37Washington has added another $24 trillion to our total debt
12:42and the interest the government pays on that debt
12:45has gone up just like it has for millions of Americans.
12:49America still has the largest
12:51and most vibrant economy in the world
12:54and that has sustained us so far.
12:56But in my view, if we don't have our fiscal house in order,
13:00it could all unwind.
13:02Now, you may or may not agree with me.
13:04That's really not the point.
13:06You have data now to help you start thinking about these issues.
13:11And, of course, we'll have to see
13:13what the presidential candidates have to say about the matter.
13:17That's it for the federal budget.
13:19Thanks for hanging in there.
13:20I hope you agree, the more we know,
13:23the better voters we can be.
13:25Just the facts from USA Facts.
13:28You decide what you believe.