United States Federal Budget

United States federal budget 1
United States federal budget

The Budget of the United States
Government is the President's
proposal to the U.S. Congress which
recommends funding levels for the
next fiscal year, beginning October 1.
Congressional decisions are governed
by rules and legislation regarding the
federal budget process. Budget
committees set spending limits for the
House and Senate committees and for
Appropriations subcommittees, which
then approve individual appropriations
bills to allocate funding to various
federal programs.
After Congress approves an

Fiscal Year 2010 U.S. Federal Spending Projections- Cash or Budget Basis.
appropriations bill, it is sent to the
President, who may sign it into law, or
may veto it. A vetoed bill is sent back
to Congress, which can pass it into law
with a two-thirds majority in each
chamber. Congress may also combine
all or some appropriations bills into an
omnibus reconciliation bill. In
addition, the president may request and
the Congress may pass supplemental
appropriations bills or emergency
supplemental appropriations bills.
Several government agencies provide
budget data and analysis. These
include the Government
Accountability Office (GAO),
Congressional Budget Office, the
Office of Management and Budget Fiscal Year 2010 U.S. Federal Receipts.
(OMB) and the U.S. Treasury

Department. These agencies have reported that the federal government is facing a series of important financing
challenges. In the short-run, tax revenues have declined significantly due to a severe recession and expenditures have
expanded dramatically for stimulus and bailout measures. In the long-run, expenditures related to entitlement
programs such as Social Security, Medicare and Medicaid are growing considerably faster than the economy overall
as the population matures.[1] [2]
Budget principles
The U.S. Constitution (Article I, section 9, clause 7) states that "[n]o money shall be drawn from the Treasury, but in
Consequence of Appropriations made by Law; and a regular Statement and Account of Receipts and Expenditures of
all public Money shall be published from time to time."
Each year, the President of the United States submits his budget request to Congress for the following fiscal year as
required by the Budget and Accounting Act of 1921. Current law (31 U.S.C. § 1105 [3](a)) requires the president to
submit a budget no earlier than the first Monday in January, and no later than the first Monday in February.
Typically, presidents submit budgets on the first Monday in February. The budget submission has been delayed,
however, in some new presidents' first year when previous president belonged to a different party.
The federal budget is calculated largely on a cash basis. That is, revenues and outlays are recognized when
transactions are made. Therefore, the full long-term costs of entitlement programs such as Medicare, Social Security,
and the federal portion of Medicaid are not reflected in the federal budget. By contrast, many businesses and some
foreign governments have adopted forms of accrual accounting, which recognizes obligations and revenues when
they are incurred. The costs of some federal credit and loan programs, according to provisions of the Federal Credit
Reform Act of 1990, are calculated on a net present value basis.[4]
Federal agencies cannot spend money unless funds are authorized and appropriated. Typically, separate
Congressional committees have jurisdiction over authorization and appropriations. The House and Senate
Appropriations Committees currently have 12 subcommittees, which are responsible for drafting the 12 regular
appropriations bills that determine amounts of discretionary spending for various federal programs. Appropriations
bills must pass both the House and Senate and then be signed by the president in order to give federal agencies legal
authority to spend.[5] In many recent years, regular appropriations bills have been combined into "omnibus" bills.
Congress may also pass "special" or "emergency" appropriations. Spending that is deemed an "emergency" is
exempt from certain Congressional budget enforcement rules. Funds for disaster relief have sometimes come from
supplemental appropriations, such as after Hurricane Katrina. In other cases, funds included in emergency
supplemental appropriations bills support activities not obviously related to actual emergencies, such as parts of the
2000 Census of Population and Housing. Special appropriations have been used to fund most of the costs of war and
occupation in Iraq and Afghanistan so far.
Budget resolutions and appropriations bills, which reflect spending priorities of Congress, will usually differ from
funding levels in the president's budget. The president, however, retains substantial influence over the budget process
through his veto power and through his congressional allies when his party has a majority in Congress.
Federal budget data

Several government agencies provide budget data. These include the Government Accountability Office (GAO), the
Congressional Budget Office, the Office of Management and Budget (OMB) and the U.S. Treasury Department.
CBO publishes The Budget and Economic Outlook in January, which is typically updated in August. It also publishes
a Monthly Budget Review. OMB, which is responsible for organizing the President's budget presented in February,
typically issues a budget update in July. GAO and Treasury issue Financial Statements of the U.S. Government,
usually in the December following the close of the federal fiscal year, which occurs September 30. There is a
corresponding Citizen's Guide, a short summary. The Treasury Department also produces a Combined Statement of
Receipts, Outlays, and Balances each December for the preceding fiscal year, which provides detailed data on
federal financial activities.
Historical tables within the President's Budget (OMB) provides a wide range of data on Federal Government
finances. Many of the data series begin in 1940 and include estimates of the President’s Budget for 2009–2014.
Additionally, Table 1.1 provides data on receipts, outlays, and surpluses or deficits for 1901–1939 and for earlier
multi-year periods. This document is composed of 17 sections, each of which has one or more tables. Each section
covers a common theme. Section 1, for example, provides an overview of the budget and off-budget totals; Section 2
provides tables on receipts by source; and Section 3 shows outlays by function. When a section contains several
tables, the general rule is to start with tables showing the broadest overview data and then work down to more
detailed tables. The purpose of these tables is to present a broad range of historical budgetary data in one convenient
reference source and to provide relevant comparisons likely to be most useful. The most common comparisons are in
terms of proportions (e.g., each major receipt category as a percentage of total receipts and of the gross domestic
product).[6]
Federal budget projections

CBO calculates 35-year baseline projections, which are used extensively in the budget process. Baseline projections
are intended to reflect spending under current law, and are not intended as predictions of the most likely path of the
economy. During the George W. Bush Administration, OMB presented 5-year projections, but presented 45-year
projections in the FY2010 budget submission. CBO and GAO issue long-term projections from time to time.
Major receipt categories

During FY 2010, the federal government collected approximately $2.16 trillion in tax revenue. Primary receipt
categories included individual income taxes (42%), Social Security/Social Insurance taxes (40%), and corporate
taxes (9%).[7] Other types included excise, estate and gift taxes.
Tax revenues have averaged approximately 18.3% of gross domestic product (GDP) over the 1970-2009 period,
generally ranging plus or minus 2% from that level. Tax revenues are significantly affected by the economy.
Recessions typically reduce government tax collections as economic activity slows. For example, during both
FY2009 and FY2010, the U.S. government collected about $400 billion less than FY2008 revenues of $2.5 trillion.
During 2009, individual income taxes declined 20%, while corporate taxes declined 50%. At 14.9% of GDP, the
2009 and 2010 collections were the lowest level of the past 50 years.[8]
Tax policy
The appropriate level and distribution of
federal taxes has long been a controversial
topic. Since the 1970s, some "supply side"
economists have contended that lowering
taxes could stimulate economic growth to
such a degree that tax revenues could rise,
other factors being held constant. However,
economic models and econometric analysis
have found weak support for the "supply
side" theory. The Center on Budget and
Policy Priorities (CBPP) summarized a
variety of studies done by economists across
the political spectrum that indicated tax cuts
do not pay for themselves and increase
deficits.[9] Studies by the CBO and the U.S. Revenue and Expense as % GDP.
Treasury also indicated that tax cuts do not
pay for themselves.[10] [11] [12] [13] In 2003, 450 economists, including ten Nobel Prize
laureate, signed the Economists' statement

opposing the Bush tax cuts, sent to President
Bush stating that "these tax cuts will worsen
the long-term budget outlook... will reduce
the capacity of the government to finance
Social Security and Medicare benefits as
well as investments in schools, health,
infrastructure, and basic research... [and]
generate further inequalities in after-tax
income."[14]
Economist Paul Krugman wrote in 2007:

"Supply side doctrine, which claimed
without evidence that tax cuts would pay for
themselves, never got any traction in the
Estimated Funding Gaps in Medicare and Social Security.
world of professional economic research,
even among conservatives."[15] Economist
Nouriel Roubini wrote in October 2010 that the Republican Party was "trapped in a belief in voodoo economics, the
economic equivalent of creationism" while the Democratic administration was unwilling to improve the tax system
via a carbon tax or value-added tax.[16] Warren Buffett wrote in 2003: "When you listen to tax-cut rhetoric,
remember that giving one class of taxpayer a 'break' requires -- now or down the line -- that an equivalent burden be
imposed on other parties. In other words, if I get a break, someone else pays. Government can't deliver a free lunch
to the country as a whole."[17] Former Comptroller General of the United States David Walker stated during January
2009: "You can't have guns, butter and tax cuts. The numbers just don't add up."[18]
Francis Fukuyama summarized these concepts: "Prior to the 1980s, conservatives were fiscally conservative— that
is, they were unwilling to spend more than they collected in taxes. But Reaganomics introduced the idea that
virtually any tax cut would so stimulate growth that the government would end up taking in more revenue in the end
(the so-called Laffer curve). In fact, the traditional view was correct: if you cut taxes without cutting spending, you
end up with a damaging deficit. Thus the Reagan tax cuts of the 1980s produced a big deficit; the Clinton tax
increases of the 1990s produced a surplus; and the Bush tax cuts of the early 21st century produced an even larger
deficit."[19]
Economist Bruce Bartlett wrote in 2009 that without benefit cuts in Medicare and Social Security, federal taxes
would have to increase by 8.1% of GDP now and forever to cover estimated program shortfalls, while avoiding debt
increases.[20] The 30-year historical average federal tax receipts are 18.4% of GDP, so this would represent an
enormous tax increase.[21]
Tax expenditures
The term "tax expenditures" refers to income exemptions or deductions that reduce the tax collections that would be
made applying a particular tax rate alone. In November 2009, The Economist estimated the additional federal tax
revenue generated from eliminating certain tax expenditures, for the 2013-2014 period. These included: income
exemptions for employer-provided health insurance ($215 billion); and various income deductions such as mortgage
interest ($147B), state & local taxes ($65B), capital gains on homes ($60B), property taxes ($33B) and municipal
bond interest ($37B). These total $557 billion. All of these steps together would reduce the projected deficit at that
time by nearly half.[22]
U.S. taxes relative to foreign countries

Comparison of tax rates around the world is difficult and somewhat subjective. Tax laws in most countries are
extremely complex, and tax burden falls differently on different groups in each country and sub-national units
(states, counties and municipalities) and the types of services rendered through those taxes are also different.
One way to measure the overall tax burden is by looking at it as a percentage of the overall economy in terms of
GDP. The Tax Policy Center wrote: "U.S. taxes are low relative to those in other developed countries. In 2006 U.S.
taxes at all levels of government claimed 28 percent of GDP, compared with an average of 36 percent of GDP for the
30 member countries of the Organization for Economic Co-operation and Development (OECD)."[23] Economist
Simon Johnson wrote in 2010: "The U.S. government doesn’t take in much tax revenue -- at least 10 percentage
points of GDP less than comparable developed economies -- and it also doesn’t spend much except on the military,
Social Security and Medicare."[24]
In comparing corporate taxes, the Congressional Budget Office found in 2005 that the top statutory tax rate was the
third highest among OECD countries behind Japan and Germany. However, the U.S. ranked 27th lowest of 30
OECD countries in its collection of corporate taxes relative to GDP, at 1.8% vs. the average 2.5%.[25] A comparison
of taxation on individuals amongst OECD countries shows that the U.S. tax burden is just slightly below the average
tax for middle income earners.[26]
Major expenditure categories

The federal government's expenditures include Medicare & Medicaid ($793B or 23%), Social Security ($701B or
20%), Defense Department ($689B or 20%), and non-defense discretionary ($660B or 19%). Expenditures are
classified as mandatory, with payments required by specific laws, or discretionary, with payment amounts renewed
annually as part of the budget process. During FY 2010, the federal government spent $3.46 trillion on a budget or
cash basis, down 2% vs. FY 2009 but up 16% versus FY2008 spend of $2.97 trillion.
Mandatory spending and entitlements

Social Security, Medicare, and Medicaid
expenditures are funded by permanent
appropriations and so are considered
mandatory spending. Social Security and
Medicare are sometimes called
"entitlements," because people meeting
relevant eligibility requirements are legally
entitled to benefits, although most pay taxes
into these programs throughout their
working lives. Some programs, such as
Food Stamps, are appropriated entitlements.
Some mandatory spending, such as
Congressional salaries, is not part of any
entitlement program. Mandatory spending
accounted for 53% of total federal outlays in Entitlement Spending Risks
FY2008, with net interest payments
accounting for an additional 8.5%.[27]
Mandatory spending is expected to increase as a share of GDP. This is due to demographic trends, as the number of
workers continues declining relative to those receiving benefits. For example, the number of workers per retiree was
5.1 in 1960; this declined to 3.3 in 2007 and is projected to decline to 2.1 by 2040.[28] These programs are also
affected by per-person costs, which are also expected to increase at a rate significantly higher than the economy. This
unfavorable combination of demographics and per-capita rate increases is expected to drive both Social Security and
Medicare into large deficits during the 21st century. Unless these long-term fiscal imbalances are addressed by
reforms to these programs, raising taxes or drastic cuts in discretionary programs, the federal government will at
some point be unable to pay its obligations without significant risk to the value of the dollar (inflation).[29] [30]
• Medicare was established in 1965 and expanded thereafter. In 2009, the program covered an estimated 45 million
persons (38 million aged and 7 million disabled). It consists of four distinct parts which are funded differently:
Hospital Insurance, mainly funded by a dedicated payroll tax of 2.9% of earnings, shared equally between
employers and workers; Supplementary Medical Insurance, funded through beneficiary premiums (set at 25% of
estimated program costs for the aged) and general revenues (the remaining amount, approximately 75%);
Medicare Advantage, a private plan option for beneficiaries, funded through the Hospital Insurance and
Supplementary Medical Insurance trust funds; and the "Part D" prescription drug benefits, for which funding is
included in the Supplementary Medical Insurance trust fund and is financed through beneficiary premiums (about
25%) and general revenues (about 75%).[31] Spending on Medicare and Medicaid is projected to grow
dramatically in coming decades. The number of persons enrolled in Medicare is expected to increase from 47
million in 2010 to 80 million by 2030.[32] While the same demographic trends that affect Social Security also
affect Medicare, rapidly rising medical prices appear to be a more important cause of projected spending
increases. Various reform strategies were proposed for healthcare,[33] and in March 2010, the Patient Protection
and Affordable Care Act was enacted as a means of health care reform.
• Social Security is a social insurance program officially called "Old-Age, Survivors, and Disability Insurance"
(OASDI), in reference to its three components. It is primarily funded through a dedicated payroll tax of 12.4%.
During 2009, total benefits of $686 billion were paid out versus income (taxes and interest) of $807 billion, a
$121 billion annual surplus. An estimated 156 million people paid into the program and 53 million received
benefits, roughly 2.94 workers per beneficiary.[34] Since the Greenspan Commission in the early 1980's, Social
Security has cumulatively collected far more in payroll taxes dedicated to the program than it has paid out to
recipients—nearly $2.4 trillion by 2008. This annual surplus is credited to Social Security trust funds that hold
special non-marketable Treasury securities, and this surplus amount is commonly referred to as the "Social
Security Trust Fund". The proceeds are paid into the U.S. Treasury where they may be used for other government
purposes. Social Security spending will increase sharply over the next decades, largely due to the retirement of
the baby boom generation. The number of program recipients is expected to increase from 44 million in 2010 to
73 million in 2030.[35] Program spending is projected to rise from 4.8% of GDP in 2010 to 5.9% of GDP by 2030,
where it will stabilize.[36] The Social Security Administration projects that an increase in payroll taxes equivalent
to 1.9% of the payroll tax base or 0.7% of GDP would be necessary to put the Social Security program in fiscal
balance for the next 75 years. Over an infinite time horizon, these shortfalls average 3.4% of the payroll tax base
and 1.2% of GDP.[37] Various reforms have been debated for Social Security. Examples include reducing future
annual cost of living adjustments (COLA) provided to recipients, raising the retirement age, and raising the
income limit subject to the payroll tax ($106,800 in 2009).[38] [39] Because of the large accumulated surplus in the
Social Security Trust Fund, however, the Social Security system is expected to be able to pay all promised
benefits through 2037 without adding to the deficit.[40]
Other spending
• Military spending: The military budget
of the United States during FY 2009 was
approximately $683 billion in expenses
for the Department of Defense (DoD)
and $54 billion for Homeland Security, a
total of $737 billion.[41] The U.S. defense
budget (excluding spending for the wars
in Iraq and Afghanistan, Homeland
Security, and Veteran's Affairs) is around
4% of GDP.[42] Adding these other costs
places defense and homeland security
spending between 5% and 6% of GDP.
The DoD baseline budget, excluding
supplemental funding for the wars, has
grown from $297 billion in FY2001 to a Defense Spending 2000 - 2011.
budgeted $534 billion for FY2010, an
81% increase.[43] According to the CBO,
defense spending grew 9% annually on
average from fiscal year 2000-2009.[44]
Much of the costs for the wars in Iraq and
Afghanistan have not been funded
through regular appropriations bills, but
through emergency supplemental
appropriations bills. As such, most of
these expenses were not included in the
budget deficit calculation prior to
FY2010. Some budget experts argue that
emergency supplemental appropriations
bills do not receive the same level of
legislative care as regular appropriations
bills.[45]
FY 2010 Estimated Federal Spending per 2011 Budget
• Non-defense discretionary spending is

used to fund the executive departments (e.g., the Department of Education) and independent agencies (e.g., the
Environmental Protection Agency), although these do receive a smaller amount of mandatory funding as well.
Discretionary budget authority is established annually by Congress, as opposed to mandatory spending that is
required by laws that span multiple years, such as Social Security or Medicare. The Federal government spent
approximately $660 billion during 2010 on the Cabinet Departments and Agencies, excluding the Department of
Defense, representing 19% of budgeted expenditures[46] or about 4.5% of GDP. Several politicians and think
tanks have proposed freezing non-defense discretionary spending at particular levels and holding this spending
constant for various periods of time. President Obama proposed freezing discretionary spending representing
approximately 12% of the budget in his 2011 State of the Union address.[47]
• Interest expense: Budgeted net interest on the public debt was approximately $189 billion in FY2009 (5% of
spending). During FY2009, the government also accrued a non-cash interest expense of $192 billion for
intra-governmental debt, primarily the Social Security Trust Fund, for a total interest expense of $381 billion.[48]
Net interest costs paid on the public debt declined from $242 billion in 2008 to $189 billion in 2009 because of
lower interest rates.[49] Should these rates return to historical averages, the interest cost would increase
dramatically. Historian Niall Ferguson described the risk that foreign investors would demand higher interest
rates as the U.S. debt levels increase over time in a November 2009 interview.[50] Public debt owned by
foreigners has increased to approximately 50% of the total or approximately $3.4 trillion.[51] As a result, nearly
50% of the interest payments are now leaving the country, which is different from past years when interest was
paid to U.S. citizens holding the public debt. Interest expenses are projected to grow dramatically as the U.S. debt
increases and interest rates rise from very low levels in 2009 to more typical historical levels.
Understanding deficits and debt

The annual budget deficit is the difference
between actual cash collections and
budgeted spending (a partial measure of
total spending) during a given fiscal year,
which runs from October 1 to September 30.
Since 1970, the U.S. Federal Government
has run deficits for all but four years
(1998–2001)[52] contributing to a total debt
of $14.0 trillion as of December 2010.[53]
The U.S. Federal Government collected

$2.52 trillion in FY2008, while budgeted
spending was $2.98 trillion, generating a
total deficit of $455 billion. However,
during FY2008 the national debt increased
Deficit and Debt Increases 2001-2009.
by $1,017 billion, much more than the $455
billion deficit figure. This means actual
expenditure was closer to $3.5 trillion [why?]. The national debt represents the outstanding obligations of the
government at any given time, comprising both public and intra-governmental debt, which was $12.3 trillion as of
January 18, 2010.[54] Differences between the annual deficit and annual change in the national debt include the
treatment of the surplus Social Security payroll tax revenues (which increase the debt but not the deficit),
supplemental appropriations for the Iraq and Afghanistan wars, and earmarks.
These differences can make it more challenging to determine how much the government actually spends relative to
tax revenues. The increase in the national debt during a given year is a helpful measure to determine this amount.
From FY 2003-2007, the national debt increased approximately $550 billion per year on average. For the first time
in FY 2008, the U.S. added $1 trillion to the national debt.[55] In relative terms, from 2003-2007 the government
spent roughly $1.20 for each $1.00 it collected in taxes. This increased to $1.40 in FY2008 and $1.90 in FY2009.
Social Security payroll taxes and benefit payments, along with the net balance of the U.S. Postal Service are
considered "off-budget." Administrative costs of the Social Security Administration (SSA), however, are classified
as "on-budget." In large part because of Social Security surpluses, the total federal budget deficit is smaller than the
on-budget deficit. The surplus of Social Security payroll taxes over benefit payments is invested in special Treasury
securities held by the Social Security Trust Fund. Social Security and other federal trust funds are part of the
"intergovernmental debt." The total federal debt is divided into "intergovernmental debt" and "debt held by the
public."
Contemporary issues and debates
Budgetary impact of the 2001 and 2003 tax cuts

A variety of tax cuts were enacted under
President Bush between 2001–2003
(commonly referred to as the "Bush tax
cuts"), through the Economic Growth and
Tax Relief Reconciliation Act of 2001
(EGTRRA) and the Jobs and Growth Tax
Relief Reconciliation Act of 2003
(JGTRRA). Most of these tax cuts were
scheduled to expire December 31, 2010.
Since CBO projections are based on current
law, the projections discussed above assume
these tax cuts will expire, which may prove
politically challenging.
In August 2010, CBO estimated that

Congressional Research Service-Impact of Extension of the Bush Tax Cuts
extending the tax cuts for the 2011-2020
time period would add $3.3 trillion to the
national debt: $2.65 trillion in foregone tax revenue plus another $0.66 trillion for interest and debt service costs.[56]
The non-partisan Pew Charitable Trusts estimated in May 2010 that extending some or all of the Bush tax cuts would
have the following impact under these scenarios:
• Making the tax cuts permanent for all taxpayers, regardless of income, would increase the national debt $3.1
trillion over the next 10 years.
• Limiting the extension to individuals making less than $200,000 and married couples earning less than $250,000
would increase the debt about $2.3 trillion in the next decade.
• Extending the tax cuts for all taxpayers for only two years would cost $558 billion over the next 10 years.[57]
The non-partisan Congressional Research Service (CRS) has reported the 10-year revenue loss from extending the
2001 and 2003 tax cuts beyond 2010 at $2.9 trillion, with an additional $606 billion in debt service costs (interest),
for a combined total of $3.5 trillion. CRS cited CBO estimates that extending the cuts permanently, including the
repeal of the estate tax, would add 2% of GDP to the annual deficit.[58]
The Center on Budget and Policy Priorities wrote in 2010: "The 75-year Social Security shortfall is about the same
size as the cost, over that period, of extending the 2001 and 2003 tax cuts for the richest 2 percent of Americans
(those with incomes above $250,000 a year). Members of Congress cannot simultaneously claim that the tax cuts for
people at the top are affordable while the Social Security shortfall constitutes a dire fiscal threat."[59]
Stimulus packages
The Economic Stimulus Act of 2008 provided an estimated $170 billion in tax rebates to stimulate the economy. The
Congressional Budget Office (CBO) estimated that the Act "would increase budget deficits (or reduce future
surpluses) by $152 billion in 2008 and by a net amount of $124 billion over the 2008-2018 period."[60]
The American Recovery and Reinvestment Act of 2009 was passed by the U.S. Congress on 13 February 2009. The
nearly $800 billion bill appropriated money toward tax credits and infrastructure programs. The CBO estimates that
enacting the bill would increase federal budget deficits by $185 billion over the remaining months of fiscal year
2009, by $399 billion in 2010, by $134 billion in 2011, and by $787 billion over the 2009-2019 period.[61]
Stimulus can be characterized as investment, spending or tax cuts. For example, if the funds are used to create a
physical asset that generates future cash flows (e.g., a power plant or toll road), the stimulus could be characterized
as investment. Extending unemployment benefits are examples of government spending. Tax cuts may or may not be
spent. There is significant debate among economists regarding which type of stimulus has the highest "multiplier"
(i.e., increase in economic activity per dollar of stimulus).[62]
Earmarks
GAO defines "earmarking" as "designating any portion of a lump-sum amount for particular purposes by means of
legislative language." Earmarking can also mean "dedicating collections by law for a specific purpose." [63] In some
cases, legislative language may direct federal agencies to spend funds for specific projects. In other cases, earmarks
refer to directions in appropriation committee reports, which are not law. Various organizations have estimated the
total number and amount of earmarks. An estimated 16,000 earmarks containing nearly $48 billion in spending were
inserted into larger, often unrelated bills during 2005.[64] While the number of earmarks has grown in the past
decade, the total amount of earmarked funds is approximately 1-2 percent of federal spending.[65]
Fraud, waste and abuse

The Office of Management and Budget estimated that the federal government made $98 billion in "improper
payments" during FY2009, an increase of 38% vs. the $72 billion the prior year. This increase was due in part to
effects of the financial crisis and improved methods of detection. The total included $54 billion for healthcare-related
programs, 9.4% of the $573 billion spent on those programs. The government pledged to do more to combat this
problem, including better analysis, auditing, and incentives.[66] [67] During July 2010, President Obama signed into
law the Improper Payments Elimination and Recovery Act of 2010, citing approximately $110 billion in
unauthorized payments of all types.[68]
Former GAO Director David Walker said: "Some people think that we can solve our financial problems by stopping
fraud, waste and abuse or by canceling the Bush tax cuts or by ending the war in Iraq. The truth is, we could do all
three of these things and we would not come close to solving our nation's fiscal challenges."[69]
2010 Budget Proposal

President Barack Obama proposed his 2010
budget during February, 2009. He has
indicated that health care, clean energy,
education, and infrastructure will be
priorities. The proposed increases in the
national debt exceed $900 billion each year
from 2010–2019, following the Bush
administration's outgoing budget which
allowed for a $2.5 trillion increase in the
national debt for FY 2009.[70]
Tax cuts will expire for the wealthiest

taxpayers to increase revenues, returning
marginal rates to the Clinton levels. Further,
the base Department of Defense budget
2010 Budget: Projected Deficits and Debt Increases
increases slightly through 2014 (Table S-7),
from $534 to $575 billion, although
supplemental appropriations for the Iraq War are expected to be reduced. In addition, estimates of revenue are based
on GDP growth assumptions that exceed the Blue Chip Economists' consensus forecast considerably through 2012
(Table S-8).[71] [72]
2010 Healthcare reform

The CBO estimated in December 2009 that the Senate healthcare reform bill, later signed into law on 23 March
2010, would reduce the deficit during the 2010-2019 period by a total of $132 billion. This figure comprises $615
billion in incremental costs, offset by cost reductions of $483 billion and additional taxes of $264 billion. The CBO
also estimated that the deficit would be about 0.5% lower each year in the 2020-2029 decade, or about $70 billion
annually in 2010 dollars.[73] Whether the deficit reduction will materialize is questioned by some conservative
budget experts.[74]
State finances
The U.S. federal government may be required to assist state governments further, as many U.S. states are facing
budget shortfalls due to the 2008-2010 recession. The sharp decline in home prices has affected property tax
revenue, while the decline in economic activity and consumer spending has led to a falloff in revenues from state
sales taxes and income taxes. The Center on Budget and Policy Priorities estimated that the 2010 and 2011 state
shortfalls will total $375 billion.[75] As of July 2010, over 30 states had raised taxes, while 45 had reduced
services.[76] State and local governments cut 405,000 jobs between January 2009 and February 2011.[77]
GAO estimates that (absent policy changes) state and local governments will face budget gaps that rise from 1% of
GDP in 2010 to around 2% by 2020, 2.5% by 2030, and 3.5% by 2040.[78]
Further, many states have underfunded pensions, meaning the state has not contributed the amount estimated to be
necessary to pay future obligations to retired workers. The Pew Center on the States reported in February 2010 that
states have underfunded their pensions by nearly $1 trillion as of 2008, representing the gap between the $2.35
trillion states had set aside to pay for employees’ retirement benefits and the $3.35 trillion price tag of those
promises.[79]
Whether a U.S. state can declare bankruptcy, enabling it to re-negotiate its obligations to bondholders, pensioners,
and public employee unions is a matter of legal and political debate. Journalist Matt Miller explained some of these
issues in February 2011: "The AG [State Attorney General] might put a plan forward and agree to conditions.
However, the AG has no say over the legislature. And only a legislature can raise taxes. In some cases, it would
require a state constitutional amendment to reduce pensions. Add to this a federal judge who would oversee the
process...and a state has sovereign immunity, which means the governor or legislature may simply refuse to go along
with anything the judge rules or reject the reorganization plan itself."[80]
Unemployment, trade deficit and globalization

CBO reported in 2009 that income tax revenues had declined by nearly
20% due to higher unemployment caused by the recession, while social
safety net expenditures increased significantly.[81] The Economic
Policy Institute (EPI) estimated in May 2010 that 15 million
Americans were unemployed and another 11 million were
involuntarily working part time or had dropped out of the labor
force.[82]
U.S. Current Account or Trade Deficit

The U.S. has a large current account or trade deficit, meaning its imports exceed exports. This also affects
employment levels. In 2005, Ben Bernanke addressed the implications of the USA's high and rising current account
deficit, which increased by $650 billion between 1996 and 2004, from 1.5% to 5.8% of GDP.[83] The trade deficit
reached a dollar peak of approximately $700 billion in 2008 (4.9% of GDP) before dropping to $420 billion in 2009
(2.9% of GDP) due to the 2009 recession.[84]
Imported goods are made by workers in other countries. EPI estimated U.S. job losses due to the trade deficit with
China alone at 2.3 million jobs between 2001 and 2007, along with significantly lowered U.S. wages.[85] USA Today
reported in 2007 that an estimated one in six factory jobs (3.2 million) have disappeared from the U.S. since 2000,
due to automation or off-shoring to countries like Mexico and China, where labor is cheaper. These lost
manufacturing jobs are fueling a debate over globalization -- the increasing connection of the United States and other
economies. An estimated 84% of Americans in the labor force are employed in service jobs, up from 81% in 2000.
Princeton economist Alan Blinder said in 2007 that the number of jobs at risk of being shipped out of the country
could reach 40 million over the next 10 to 20 years. That would be one out of every three service sector jobs that
could be at risk.[86]
Former Fed chair Paul Volcker argued in February 2010 that the U.S. should make more of the goods it consumes
domestically: "We need to do more manufacturing again. We're never going to be the major world manufacturer as
we were some years ago, but we could do more than we're doing and be more competitive. And we've got to close
that big gap. You know, consumption is running about 5 percent above normal. That 5 percent is reflected just about
equally to what we're importing in excess of what we're exporting. And we've got to bring that back into closer
balance."[87]
Implications of entitlement trust funds

Both Social Security and Medicare are funded by payroll tax revenues dedicated to those programs. Program tax
revenues historically have exceeded payouts, resulting in program surpluses and the building of trust fund balances.
The trust funds earn interest. Both Social Security and Medicare each have two component trust funds. As of
FY2008, Social Security had a combined $2.4 trillion trust fund balance and Medicare's was $380 billion. If during
an individual year program payouts exceed the sum of tax income and interest earned during that year (i.e., an annual
program deficit), the trust fund for the program is drawn down to the extent of the shortfall. Legally, the mandatory
nature of these programs compels the government to fund them to the extent of tax income plus any remaining trust
fund balances, borrowing as needed. Once the trust funds are eliminated through expected future deficits, technically
these programs can only draw on payroll taxes during the current year. In effect, they are "pay as you go" programs,
with additional legal claims to the extent of their remaining trust fund balances.[88]
Deficit
Describing the budgetary challenge

Then OMB Director Peter Orszag stated in a November 2009 interview: "It's very popular to complain about the
deficit, but then many of the specific steps that you could take to address it are unpopular. And that is the
fundamental challenge that we are facing, and that we need help both from the American public and Congress in
addressing." He characterized the budget problem in two parts: a short- to medium-term problem related to the
financial crisis of 2007–2010, which has reduced tax revenues significantly and involved large stimulus spending;
and a long-term problem primarily driven by increasing healthcare costs per person. He argued that the U.S. cannot
return to a sustainable long-term fiscal path by either tax increases or cuts to non-healthcare cost categories alone;
the U.S. must confront the rising healthcare costs driving expenditures in the Medicare and Medicaid programs.[89]
Fareed Zakaria said in February 2010: "But, in one sense, Washington is delivering to the American people exactly
what they seem to want. In poll after poll, we find that the public is generally opposed to any new taxes, but we also
discover that the public will immediately punish anyone who proposes spending cuts in any middle class program
which are the ones where the money is in the federal budget. Now, there is only one way to square this circle short of
magic, and that is to borrow money, and that is what we have done for decades now at the local, state and federal
level...So, the next time you accuse Washington of being irresponsible, save some of that blame for yourself and
your friends."[90]
Andrew Sullivan said in March 2010: "...the biggest problem in this country is...they're big babies. I mean, people
keep saying they don't want any tax increases, but they don't want to have their Medicare cut, they don't want to have
their Medicaid [cut] or they don't want to have their Social Security touched an inch. Well, it's about time someone
tells them, you can't have it, baby...You have to make a choice. And I fear that—and I always thought, you see, that
that was the Conservative position. The Conservative is the Grinch who says no. And, in some ways, I think this in
the long run, looking back in history, was Reagan's greatest bad legacy, which is he tried to tell people you can have
it all. We can't have it all."[91]
Harvard historian Niall Ferguson stated in a November 2009 interview: "The United States is on an unsustainable
fiscal path. And we know that path ends in one of two ways; you either default on that debt, or you depreciate it
away. You inflate it away with your currency effectively." He said the most likely case is that the U.S. would default
on its entitlement obligations for Social Security and Medicare first, by reducing the obligations through entitlement
reform. He also warned about the risk that foreign investors would demand a higher interest rate to purchase U.S.
debt, damaging U.S. growth prospects.[92]
The CBO reported several types of risk factors related to rising debt levels in a July 2010 publication:
• A growing portion of savings would go towards purchases of government debt, rather than investments in
productive capital goods such as factories and computers, leading to lower output and incomes than would
otherwise occur;
• If higher marginal tax rates were used to pay rising interest costs, savings would be reduced and work would be
discouraged;
• Rising interest costs would force reductions in important government programs;
• Restrictions to the ability of policymakers to use fiscal policy to respond to economic challenges; and
• An increased risk of a sudden fiscal crisis, in which investors demand higher interest rates.[93]
Can the U.S. outgrow the problem?

There is debate regarding whether tax cuts,
less intrusive regulation, and productivity
improvements could feasibly generate
sufficient economic growth to offset the
deficit and debt challenges facing the
country. According to David Stockman,
OMB Director under President Reagan,
post-1980 Republican ideology embraces
the idea that the "economy will outgrow the
deficit if plied with enough tax cuts."[94]
Former President George W. Bush
exemplified this ideology when he wrote in
2007: "...it is also a fact that our tax cuts
have fueled robust economic growth and
record revenues."[95] However, as described GAO Comparative Increase in Spend vs. GDP.
in the tax policy section of this article, multiple studies by economists across the political spectrum and several
government organizations argue that tax cuts increase deficits and debt.[9] [96]
Further, the GAO has estimated that double-digit GDP growth would be required for the next 75 years to outgrow
the projected increases in deficits and debt; GDP growth averaged 3.2% during the 1990s. Because mandatory
spending growth rates will far exceed any reasonable growth rate in GDP and the tax base, the GAO concluded that
the U.S. cannot grow its way out of the problem.[97]
Fed Chair Ben Bernanke stated in April 2010: "Unfortunately, we cannot grow our way out of this problem. No
credible forecast suggests that future rates of growth of the U.S. economy will be sufficient to close these deficits
without significant changes to our fiscal policies."[98]
Polls
According to a CBS News/New York Times poll in July 2009, 56% of people were opposed to paying more taxes to
reduce the deficit and 53% were also opposed to cutting spending. According to a Pew Research poll in June 2009,
there was no single category of spending that a majority of Americans favored cutting. Only cuts in foreign aid (less
than 1% of the budget), polled higher than 33%. Economist Bruce Bartlett wrote in December 2009: "Nevertheless, I
can't really blame members of Congress for lacking the courage or responsibility to get the budget under some
semblance of control. All the evidence suggests that they are just doing what voters want them to do, which is
nothing."[99]
A Bloomberg/Selzer national poll conducted in December 2009 indicated that more than two-thirds of Americans
favored tax increases on the rich (individuals making over $500,000) to help solve the deficit problem. Further, an
across-the-board 5% cut in all federal discretionary spending would be supported by 57%; this category is about 30%
of federal spending. Only 26% favored tax increases on the middle class and only 23% favored reducing the growth
rate in entitlements, such as Social Security.[100] [101]
A Rasmussen Reports survey in February 2010 showed that only 35% of voters correctly believe that the majority of
federal spending goes to just defense, Social Security and Medicare. Forty-four percent (44%) say it’s not true, and
20% are not sure. [102] A January 2010 Rasmussen report showed that overall, 57% would like to see a cut in
government spending, 23% favor a freeze, and 12% say the government should increase spending. Republicans and
unaffiliated voters overwhelmingly favor spending cuts. Democrats are evenly divided between spending cuts and a
spending freeze.[103]
According to a Pew Research poll in March 2010, 31% of Republicans would be willing to decrease military
spending to bring down the deficit. A majority of Democrats (55%) and 46% of Independents say they would accept
cuts in military spending to reduce the deficit.[104]
Proposed solutions
Solution strategies
In January 2008, then GAO Director David Walker presented a strategy for addressing what he called the federal
budget "burning platform" and "unsustainable fiscal policy." This included improved financial reporting to better
capture the obligations of the government; public education; improved budgetary and legislative processes, such as
"pay as you go" rules; the restructure of entitlement programs and tax policy; and creation of a bi-partisan fiscal
reform commission. He pointed to four types of "deficits" that comprise the problem: budget, trade, savings and
leadership.[105]
Economist Paul Krugman wrote in February 2011: "What would a serious approach to our fiscal problems involve? I
can summarize it in seven words: health care, health care, health care, revenue...Long-run projections suggest that
spending on the major entitlement programs will rise sharply over the decades ahead, but the great bulk of that rise
will come from the health insurance programs, not Social Security. So anyone who is really serious about the budget
should be focusing mainly on health care...[by] getting behind specific actions to rein in costs."[106]
Economist Nouriel Roubini wrote in May 2010: "There are only two solutions to the sovereign debt crisis — raise
taxes or cut spending — but the political gridlock may prevent either from happening...In the US, the average tax
burden as a share of GDP is much lower than in other advanced economies. The right adjustment for the US would
be to phase in revenue increases gradually over time so that you don't kill the recovery while controlling the growth
of government spending."[107]
David Leonhardt wrote in The New York Times in March 2010: "For now, political leaders in both parties are still in
denial about what the solution will entail. To be fair, so is much of the public. What needs to happen? Spending will
need to be cut, and taxes will need to rise. They won’t need to rise just on households making more than $250,000,
as Mr. Obama has suggested. They will probably need to rise on your household, however much you make...A
solution that relied only on spending cuts would dismantle some bedrock parts of modern American society...A
solution that relied only on taxes would muzzle economic growth."[108]
Fed Chair Ben Bernanke stated in April 2010: "Thus, the reality is that the Congress, the Administration, and the
American people will have to choose among making modifications to entitlement programs such as Medicare and
Social Security, restraining federal spending on everything else, accepting higher taxes, or some combination
thereof."[98]
Journalist Steven Pearlstein argued in May 2010 for a comprehensive series of budgetary reforms. These included:
Spending caps on Medicare and Medicaid; gradually raising the eligibility age for Social Security and Medicare;
limiting discretionary spending increases to the rate of inflation; and imposing a value-added tax.[109]
National Research Council strategies

During January 2010, the National Research Council and the National Academy of Public Administration reported a
series of strategies to address the problem. They included four scenarios designed to prevent the public debt to GDP
ratio from exceeding 60%:
1. Low spending and low taxes. This path would allow payroll and income tax rates to remain roughly
unchanged, but it would require sharp reductions in the projected growth of health and retirement programs;
defense and domestic spending cuts of 20 percent; and no funds for any new programs without additional
spending cuts.
2. Intermediate path 1. This path would raise income and payroll tax rates modestly. It would allow for some
growth in health and retirement spending; defense and domestic program cuts of 8 percent; and selected new
public investments, such as for the environment and to promote economic growth.
3. Intermediate path 2. This path would raise income and payroll taxes somewhat higher than with the previous
path. Spending growth for health and retirement programs would be slowed, but less than under the other
intermediate path; and spending for all other federal responsibilities would be reduced. This path gives higher
priority to entitlement programs for the elderly than to other types of government spending.
4. High spending and taxes. This path would require substantially higher taxes. It would maintain the projected
growth in Social Security benefits for all future retirees and require smaller reductions over time in the growth
of spending for health programs. It would allow spending on all other federal programs to be higher than the
level implied by current policies.[110] [111]
CBO budget options reports

The CBO provided a two-volume report discussing the cost and revenue impact of various budget options during
2008 and 2009.[112] [113] The CBO also estimated in 2007 that allowing the 2001 and 2003 income tax cuts to expire
on schedule in 2010 would reduce the annual deficit by $200–300 billion.[114] In addition, CBO reported that annual
defense spending has increased from approximately $300 billion in 2001 (when the budget was last balanced) to
$650 billion in 2009.[115]
Republican proposals
Rep. Paul Ryan (R) has proposed the Roadmap for America's Future, which is a series of budgetary reforms. His
January 2010 version of the plan includes partial privatization of Social Security, the transition of Medicare to a
voucher system, discretionary spending cuts and freezes, and tax reform.[116] A series of graphs and charts
summarizing the impact of the plan are included.[117] Economists have both praised and criticized particular features
of the plan.[118] [119] The CBO also did a partial evaluation of the bill.[120] The Center for Budget and Policy
Priorities (CBPP) was very critical of the Roadmap.[121] Rep. Ryan provided a response to the CBPP's analysis.[122]
The Republican Party website includes an alternative budget proposal provided to the President in January 2010. It
includes lower taxes, lower annual increases in entitlement spending growth, and marginally higher defense
spending than the President's 2011 budget proposal.[123] During September 2010, Republicans published "A Pledge
to America" which advocated a repeal of recent healthcare legislation, reduced spending and the size of government,
and tax reductions.[124] The NYT editorial board was very critical of the Pledge, stating: "...[The Pledge] offers a
laundry list of spending-cut proposals, none of which are up to the scale of the problem, and many that cannot be
taken seriously."[125]
Fiscal reform commission

President Obama established a budget reform commission, the National Commission on Fiscal Responsibility and
Reform, during February, 2010. The Commission "shall propose recommendations designed to balance the budget,
excluding interest payments on the debt, by 2015. This result is projected to stabilize the debt-to-GDP ratio at an
acceptable level once the economy recovers." The Commission's report is due by December 1, 2010.[126]
The Commission released a draft of its proposals on November 10, 2010. It included various tax and spend
adjustments to bring long-run government tax revenue and spending into line at approximately 21% of GDP. For
fiscal year 2009, tax revenues were approximately 15% of GDP and spending was 24% of GDP. The Co-chairs
summary of the plan states that it:
• Achieves nearly $4 trillion in deficit reduction through 2020 via 50+ specific ways to cut outdated programs and
strengthen competitiveness by making Washington cut and invest, not borrow and spend.
• Reduces the deficit to 2.2% of GDP by 2015, exceeding President’s goal of primary balance (about 3% of GDP).
• Reduces tax rates, abolishes the alternative minimum tax, and cuts backdoor spending (e.g., mortgage interest
deductions) in the tax code.
• Stabilizes debt by 2014 and reduces debt to 60% of GDP by 2024 and 40% by 2037.
• Ensures lasting Social Security solvency, prevents projected 22% cuts in 2037, reduces elderly poverty, and
distributes burden fairly.[127]
The Center on Budget and Policy Priorities evaluated the draft plan, praising that it "puts everything on the table" but
criticizing that it "lacks an appropriate balance between program cuts and revenue increases."[128]
Total outlays in recent budget submissions

• 2012 United States federal budget -
$3.7 trillion (submitted 2011 by
President Obama)
President Obama)
President Obama)
President Bush)
Annual U.S. spending 1930-2014 alongside U.S. GDP for comparison.
President Bush)
• 2007 United States federal budget - $2.8 trillion (submitted 2006 by President Bush)
• 2001 United States federal budget - $1.9 trillion (submitted 2000 by President Clinton)
The President's budget also contains revenue and spending projections for the current fiscal year, the coming fiscal
years, as well as several future fiscal years. In recent years, the President's budget contained projections five years
into the future. The Congressional Budget Office (CBO) issues a "Budget and Economic Outlook" each January and
an analysis of the President's budget each March. CBO also issues an updated budget and economic outlook in
August.
[129]
Actual budget data for prior years is available from the Congressional Budget Office and from the Office of
Management and Budget (OMB).[130]
Basic budget terms (based on GAO Glossary)

Appropriations "Budget authority to incur obligations and to make payments from the Treasury for specified
purposes."
Budget Authority "Authority provided by federal law to enter into financial obligations that will result in immediate
or future outlays involving federal government funds."
Outlay "The issuance of checks, disbursement of cash, or electronic transfer of funds made to liquidate a federal
obligation." The term "outlays" is usually synonymous with "expenditure" or "spending."
The amount of budget authority and outlays for a fiscal year usually differ because budget authority from a previous
fiscal year in some cases can be used for outlays in the current fiscal year. Some military and some housing
programs have multi-year appropriations, in which budget authority is specified for several coming fiscal years.
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[70] Auerbach & Gale (Brookings) -Analysis of 2010 Budget (http:/ / www. taxpolicycenter. org/ UploadedPDF/ 411843_economic_crisis. pdf)
[71] 2010 Budget (http:/ / www. gpoaccess. gov/ usbudget/ fy10/ pdf/ fy10-newera. pdf)
[72] Washington Post-Montgomery-Battle Lines Quickly Set Over Planned Policy Shifts (http:/ / www. washingtonpost. com/ wp-dyn/ content/
article/ 2009/ 02/ 28/ AR2009022801960. html?hpid=topnews)
[73] CBO Letter to Senator Harry Reid-December 19, 2009 See Table 1 and Page 16 (http:/ / www. cbo. gov/ ftpdocs/ 108xx/ doc10868/
12-19-Reid_Letter_Managers_Correction_Noted. pdf)
[74] NYT-Holtz-Eakin Op Ed-The Real Arithmetic of Healthcare Reform-March 2010 (http:/ / www. nytimes. com/ 2010/ 03/ 21/ opinion/
21holtz-eakin. html)
[75] CBPP-Recession Continues to Batter State Budgets-February 2010 (http:/ / www. cbpp. org/ cms/ index. cfm?fa=view& id=711)
[76] CBPP-Recession Continues to Batter State Budgets-July 2010 (http:/ / www. cbpp. org/ cms/ ?fa=view& id=711)
[77] NYT-Why Budget Cuts Don't Bring Prosperity-February 2011 (http:/ / www. nytimes. com/ 2011/ 02/ 23/ business/ economy/ 23leonhardt.
html)
[78] Rockefeller Institute-Boyd-Presentation-November 2009 (http:/ / www. rockinst. org/ pdf/ health_care/
2009-11-19-boyd-state_budgets_health_care_NAPA. pdf)
[79] Pew Center on the States-The Trillion Dollar Gap-February 2010 (http:/ / www. pewcenteronthestates. org/ report_detail. aspx?id=56695)
[80] Matt Miller-The Deal-February 2011-The World Wonders, Can States Go Bankrupt? (http:/ / www. thedeal. com/ magazine/ ID/ 038443/
2011/ the-world-wonders-can-states-go-bankrupt. php)
[81] CBO-Monthly Budget Review-October 2009 (http:/ / www. cbo. gov/ ftpdocs/ 106xx/ doc10640/ 10-2009-MBR. pdf)
[82] EPI-The Real Deficit Crisis: Jobs-May 2010 (http:/ / www. epi. org/ analysis_and_opinion/ entry/ the_real_deficit_crisis_jobs/ )
[83] "Bernanke-The Global Saving Glut and U.S. Current Account Deficit" (http:/ / www. federalreserve. gov/ boarddocs/ speeches/ 2005/
20050414/ default. htm). Federalreserve.gov. . Retrieved 2009-02-27.
[84] BEA-U.S. Current Account Deficit Decreases in 2009-March 2010 (http:/ / www. bea. gov/ newsreleases/ international/ transactions/ 2010/
pdf/ trans_annual09_fax. pdf)
[85] EPI-The China Trade Toll-July 2008 (http:/ / www. epi. org/ publications/ entry/ bp219/ )
[86] USA Today-Factory Jobs: 3 Million Lost Since 2000-April 2007 (http:/ / www. usatoday. com/ money/ economy/
2007-04-20-4155011268_x. htm)
[87] Fareed Zakaria GPS-Paul Volcker Interview-February 2010 (http:/ / transcripts. cnn. com/ TRANSCRIPTS/ 1002/ 14/ fzgps. 01. html)
[88] Social Security Trustees Report - 2009 Summary (http:/ / www. ssa. gov/ OACT/ TRSUM/ index. html)
[89] Charlie Rose Show-Peter Orszag Interview-November 3, 2009 (http:/ / www. charlierose. com/ download/ transcript/ 10697)
[90] Zakaria GPS-February 21, 2010 (http:/ / transcripts. cnn. com/ TRANSCRIPTS/ 1002/ 21/ fzgps. 01. html)
[91] Zakaria GPS-April 4,2010 (http:/ / transcripts. cnn. com/ TRANSCRIPTS/ 1004/ 04/ fzgps. 01. html)
[92] Charlie Rose Interview with Niall Ferguson-November 3, 2009 (http:/ / www. charlierose. com/ )
[93] Congressional Budget Office-"Federal Debt and the Risk of a Fiscal Crisis"-July 2010 (http:/ / www. cbo. gov/ doc. cfm?index=11659)
[94] NY Times-David Stockman-Four Defamations of the Apocalypse-August 2010 (http:/ / www. nytimes. com/ 2010/ 08/ 01/ opinion/
01stockman. html?pagewanted=all)
[95] Washington Post-A Heckuva Claim-January 2007 (http:/ / www. washingtonpost. com/ wp-dyn/ content/ article/ 2007/ 01/ 05/
AR2007010501801. html)
[96] CBO-Analyzing the Economic and Budgetary Effects of a Ten Percent Cut in Income Tax Rates-December 2005 (http:/ / www. cbo. gov/
ftpdocs/ 69xx/ doc6908/ 12-01-10PercentTaxCut. pdf)
[97] GAO U.S. Fiscal Briefing 1/08 (http:/ / www. gao. gov/ cghome/ d08446cg. pdf)
[98] Ben Bernanke-Speech before the National Commission on Fiscal Responsibility and Reform-April 2010 (http:/ / www. federalreserve. gov/
newsevents/ speech/ bernanke20100427a. htm)
[99] Bartlett-Forbes-Not Another Budget Commission!-December 2010 (http:/ / www. forbes. com/ 2009/ 12/ 17/
budget-commission-deficit-opinions-columnists-bruce-bartlett. html)
[100] Americans want government to spend for jobs, send bill to rich (http:/ / www. bloomberg. com/ apps/ news?pid=20601087&
sid=awkrRPMONDW8& pos=9)
[101] Bloomberg/Selzer-Poll Data Detail (http:/ / media. bloomberg. com/ bb/ avfile/ rkt5pqJYr5tM)
[102] Rassmussen Reports-February 2010 (http:/ / www. rasmussenreports. com/ public_content/ politics/ general_politics/ february_2010/
just_35_realize_most_federal_spending_goes_to_national_defense_social_security_medicare)
[103] Rassmussen Reports-January 28, 2010 (http:/ / www. rasmussenreports. com/ public_content/ politics/ obama_administration/
january_2010/ 9_expect_obama_s_spending_freeze_to_have_big_impact_on_deficit)
[104] Pew Research-Deficit Concerns Rise, but Solutions are Elusive-March 2010 (http:/ / pewresearch. org/ pubs/ 1519/
deficit-concerns-rise-little-support-for-spending-cuts)
[105] GAO-U.S. Financial Condition and Fiscal Future Briefing-David Walker-January 2008 (http:/ / www. gao. gov/ cghome/ d08446cg. pdf)
[106] NYT-Paul Krugman-Willie Sutton Wept-February 2011 (http:/ / www. nytimes. com/ 2011/ 02/ 18/ opinion/ 18krugman. html?_r=1&
ref=opinion)
[107] Gulfnews-Nouriel Roubini-U.S. Faces Inflation or Default-May 2010 (http:/ / gulfnews. com/ business/ opinion/
us-faces-inflation-or-default-1. 622397)
[108] Leonhardt-NYT-The Perils of Pay Less, Get More-March 16, 2010 (http:/ / www. nytimes. com/ 2010/ 03/ 17/ business/ economy/
17leonhardt. html?hp)
[109] Washington Post-Steven Pearlstein-Solving the Deficit Problem Requires an Open Mind, Common Sense and Courage-May 2010 (http:/ /
www. washingtonpost. com/ wp-dyn/ content/ article/ 2010/ 05/ 11/ AR2010051105000. html)
[110] (http:/ / www8. nationalacademies. org/ onpinews/ newsitem. aspx?RecordID=12808)
[111] Fiscal Reform Commission-Testimony of Rudolph Penner-April 2010 (http:/ / www. fiscalcommission. gov/ files/
fiscal_commission_penner_testimony. pdf)
[112] CBO Budget Options-Volume 1 Healthcare-December 2008 (http:/ / www. cbo. gov/ doc. cfm?index=9925)
[113] CBO Budget Options-Volume 2-August 2009 (http:/ / www. cbo. gov/ ftpdocs/ 102xx/ doc10294/ 08-06-BudgetOptions. pdf)
[114] CBO-Analysis of President's Budget for FY2008-March 2007-Table 1-3 Page 6 (http:/ / www. cbo. gov/ ftpdocs/ 78xx/ doc7878/
03-21-PresidentsBudget. pdf)
[115] CBO-Historical Tables-Table F-7 (http:/ / www. cbo. gov/ ftpdocs/ 108xx/ doc10871/ historicaltables. pdf)
[116] Republican Website-Roadmap for America's Future (http:/ / www. roadmap. republicans. budget. house. gov/ )
[117] Roadmap for America's Future-Charts & Graphs-February 2010 (http:/ / www. roadmap. republicans. budget. house. gov/ plan/ charts.
htm)
[118] Washington Post-Robert Samuelson-Paul Ryan's Lonely Challenge-February 2010 (http:/ / www. washingtonpost. com/ wp-dyn/ content/
article/ 2010/ 02/ 12/ AR2010021202382. html?hpid=opinionsbox1)
[119] Forbes-Bartlett-Paul Ryan's Budgetary Holy Grail-February 2010 (http:/ / www. forbes. com/ 2010/ 02/ 11/
cut-spending-taxes-budget-medicare-paul-ryan-opinions-columnists-bruce-bartlett. html)
[120] CBO-Ryan Roadmap Letter-January 2010 (http:/ / www. cbo. gov/ ftpdocs/ 108xx/ doc10851/ 01-27-Ryan-Roadmap-Letter. pdf)
[121] CBPP-Ryan Bill Analysis-March 10, 2010 (http:/ / www. cbpp. org/ files/ 3-10-10bud. pdf)
[122] Paul Ryan-Response to CBPP Study-March 11, 2010 (http:/ / www. roadmap. republicans. budget. house. gov/ News/ DocumentSingle.
aspx?DocumentID=175628)
[123] GOP Solutions for America-Budget-Retrieved September, 2010 (http:/ / www. gop. gov/ solutions/ budget)
[124] Republican Party-A Pledge to America-September 2010 (http:/ / pledge. gop. gov/ )
[125] NYT Editorial-The GOP's Pledge-September 25, 2010 (http:/ / www. nytimes. com/ 2010/ 09/ 26/ opinion/ 26sun1. html?src=me&
ref=general)
[126] Fiscal Reform Commission-Executive Order-February 18, 2010 (http:/ / budget. senate. gov/ democratic/ documents/ 2010/ 2010fiscal. eo.
pdf)
[127] Nation Commission-Co-Chairs Report Draft-November 10,2010 (http:/ / www. fiscalcommission. gov/ sites/ fiscalcommission. gov/ files/
documents/ CoChair_Draft. pdf)
[128] CBPP-Bowles Simpson Plan Evaluation-November 16,2010 (http:/ / www. cbpp. org/ cms/ index. cfm?fa=view& id=3325)
[129] Historical budgets (http:/ / www. cbo. gov/ budget/ historical. shtml), from the Congressional Budget Office
[130] Office of Management and Budget website (http:/ / www. omb. gov)
External links
• NYT-2011 Budget Interactive Graphic-February 2010 (http://www.nytimes.com/interactive/2010/02/01/us/
budget.html)
• Death and Taxes: 2009 (http://www.wallstats.com/deathandtaxes/resource/) A visual representation of the
2009 United States federal discretionary budget.
• Columbia University selective guide for research on the U.S. Federal budget process (http://www.columbia.
edu/cu/lweb/indiv/usgd/budget.html)
• FederalSpending.org "Federal Contracts and Grants" (http://www.fedspending.org/)
• Historical budget statistics (http://www.gpoaccess.gov/usbudget/fy09/pdf/hist.pdf)
• The Project on Middle East Democracy's May 2008 Report on the President's Budget Request for FY09 for
Democracy, Governance, and Human Rights in the Middle East (http://pomed.org/fy-09-budget-request-report)
• FY 2009 Omnibus Budget (http://publicservice.evendon.com/OmniApprop2009M.htm) Passed by the House
25Feb2009
• FY 2010 Budget Proposal (http://publicservice.evendon.com/FY2010BudgetM.htm) Submitted by The
President 26Feb2009
• Brookings Institution - Auerbach & Gale - An Update on the Economic and Fiscal Crises 2009 and Beyond -
September 2009 (http://www.brookings.edu/papers/2009/06_fiscal_crisis_gale.aspx)
• Gale & Auerbach (Brookings) - Analysis of 2010 Budget (http://www.taxpolicycenter.org/UploadedPDF/
411843_economic_crisis.pdf)
• NYT-Warren Buffet-Op Ed-The Greenback Effect (http://www.nytimes.com/2009/08/19/opinion/19buffett.
html)
• Federal Budget Experts (http://www.whorunsgov.com/Issues/Federal_budget/) at WhoRunsGov at The
Washington Post
"Chart talk" examples

One of the best ways to understand the long-term budget risks is through helpful charts. The following sources
contain charts and commentary:
• GAO Fiscal Briefing by David Walker (http://www.gao.gov/cghome/d08446cg.pdf)
• Perot Charts (http://perotcharts.com/challenges/)
• The Heritage Foundation's "Budget Chart Book" (http://www.heritage.org/budgetchartbook/)
• Peter G. Peterson Foundation Citizen's Guide (http://www.pgpf.org/~/media/PGPF/Media/PDF/2010/05/
PGPF_CitizensGuide_2010.ashx?pid={4F7D605D-BE87-4B20-A867-EA24ACB761C8})
• I.O.U.S.A. Movie - 30 Minute You Tube Summary-Narrated by Former GAO Director David Walker (http://
www.iousathemovie.com/)
Budget games and simulations

• American Public Media has developed a budget game that allows players to select various policy choices and
measure the effect on key economic variables. It is available at APM-Budget Hero Game (http://marketplace.
publicradio.org/features/budget_hero/)
• Committee for a Responsible Federal Budget-Stabilize the Debt Simulator (http://crfb.org/stabilizethedebt/)
Article Sources and Contributors 23
Article Sources and Contributors

United States federal budget Source: http://en.wikipedia.org/w/index.php?oldid=419654930 Contributors: 2rock, A little insignificant, AaronSw, Aaustin, Adoniscik, Ageekgal,
Ahoerstemeier, Akadonnew, Alansohn, Alfie66, Alpha Quadrant (alt), AndrewGioia, Antony-22, Anwar saadat, Art LaPella, Australian cowboy, AutoGeek, Barberio, Basel Maven, Beland,
Ben76266, Bento00, Calatayudboy, CapitalR, Carmichael95, Chris the speller, Ckatz, Crohnie, Cst17, D6, Daniel Pritchard, Dcmacnut, Decltype, Detah, DickClarkMises, Dthomsen8,
Duffman894, Eastlaw, Elderp, Enon, Excirial, Failure2002, Farcaster, Flyboy121, Footwarrior, Gfenno, Giraffedata, Grampion76, GregorB, Grittsu, Ground Zero, Gudeldar, Gvotno,
IntrigueBlue, JaGa, JamesMLane, Jamesdowallen, Jatkins, Jfreedom007, Joetheguy, John Broughton, Jojhutton, Jsg278, KGasso, Kalmia, Kborer, King of Hearts, Kingturtle, Kslays, Kurieeto,
Lacey.Loftin, Levineps, Lifthrasir1, LilHelpa, M3taphysical, Markles, MaryD99, Maxis ftw, Mibs, Michael Keenan, Mikael Häggström, Miss Madeline, Mluehrmann, Mnm628, Morphh,
Mtalleyrand, NawlinWiki, Nick Number, Nononsenseplease, Nsaa, Ottre, Oxymoron83, Pacomartin, Pharaoh of the Wizards, Pinkkeith, Psoreilly, R'n'B, Razorflame, Rich Farmbrough,
RightCowLeftCoast, Rjwilmsi, Ronhjones, Rricci, Sardonicone, Sebmol, Sicjedi, Skeejay, Sonia, South Bay, Spencerk, Stevewiki56, Student7, TastyPoutine, Texture, The Thing That Should Not
Be, Theodork, Thrillspillchill, TimeClock871, TomCat4680, TomPointTwo, Top-50-in-the-World-MBA, Tulandro, Van helsing, VolatileChemical, Votarys, Wasted Time R, WildRichLord, Will
Pittenger, WorthWhatPaid, Zebov, Zzyzx11, 242 anonymous edits
Image Sources, Licenses and Contributors

Image:U.S. Federal Spending - FY 2007.png Source: http://en.wikipedia.org/w/index.php?title=File:U.S._Federal_Spending_-_FY_2007.png License: GNU Free Documentation License
Contributors: farcaster
Image:U.S. Federal Receipts - FY 2007.png Source: http://en.wikipedia.org/w/index.php?title=File:U.S._Federal_Receipts_-_FY_2007.png License: Creative Commons Attribution-Sharealike
3.0 Contributors: farcaster
Image:Revenue and Expense to GDP Chart 1993 - 2008.png Source: http://en.wikipedia.org/w/index.php?title=File:Revenue_and_Expense_to_GDP_Chart_1993_-_2008.png License: GNU
Free Documentation License Contributors: User:Farcaster
File:Estimated Funding Gaps in Medicare and Social Security Programs.png Source:
http://en.wikipedia.org/w/index.php?title=File:Estimated_Funding_Gaps_in_Medicare_and_Social_Security_Programs.png License: GNU Free Documentation License Contributors:
User:Farcaster
Image:GAO Slide.png Source: http://en.wikipedia.org/w/index.php?title=File:GAO_Slide.png License: Public Domain Contributors: GAO. Original uploader was Farcaster at en.wikipedia
File:U.S. Defense Spending Trends.png Source: http://en.wikipedia.org/w/index.php?title=File:U.S._Defense_Spending_Trends.png License: GNU Free Documentation License Contributors:
User:Farcaster
File:Discretionary Spending by Dpt - 2010E.png Source: http://en.wikipedia.org/w/index.php?title=File:Discretionary_Spending_by_Dpt_-_2010E.png License: GNU Free Documentation
License Contributors: User:Farcaster
File:Deficits vs. Debt Increases - 2009.png Source: http://en.wikipedia.org/w/index.php?title=File:Deficits_vs._Debt_Increases_-_2009.png License: GNU Free Documentation License
Contributors: Farcaster (talk) 17:59, 17 October 2009 (UTC). Original uploader was Farcaster at en.wikipedia
File:Impact of Bush Tax Cut Extension.png Source: http://en.wikipedia.org/w/index.php?title=File:Impact_of_Bush_Tax_Cut_Extension.png License: Public Domain Contributors:
User:Farcaster
File:2010 Budget - Deficit and Debt Increases.png Source: http://en.wikipedia.org/w/index.php?title=File:2010_Budget_-_Deficit_and_Debt_Increases.png License: GNU Free Documentation
License Contributors: Farcaster (talk) 18:54, 1 March 2009 (UTC). Original uploader was Farcaster at en.wikipedia
File:U.S. Trade Deficit Dollars and % GDP.png Source: http://en.wikipedia.org/w/index.php?title=File:U.S._Trade_Deficit_Dollars_and_%_GDP.png License: unknown Contributors: -
Image:Growth Rates GDP vs. Entitlements.png Source: http://en.wikipedia.org/w/index.php?title=File:Growth_Rates_GDP_vs._Entitlements.png License: unknown Contributors: GAO
Image:US Federal Outlay and GDP linear graph.svg Source: http://en.wikipedia.org/w/index.php?title=File:US_Federal_Outlay_and_GDP_linear_graph.svg License: Creative Commons
Zero Contributors: User:Xp84
License
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United States Federal Budget

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United States federal budget 1

United States federal budget

After Congress approves an

(OMB) and the U.S. Treasury

Federal budget data

Federal budget projections

Major receipt categories

laureate, signed the Economists' statement

Economist Paul Krugman wrote in 2007:

U.S. taxes relative to foreign countries

Major expenditure categories

Mandatory spending and entitlements

• Non-defense discretionary spending is

Understanding deficits and debt

The U.S. Federal Government collected

Contemporary issues and debates

Budgetary impact of the 2001 and 2003 tax cuts

In August 2010, CBO estimated that

Fraud, waste and abuse

2010 Budget Proposal

Tax cuts will expire for the wealthiest

2010 Healthcare reform

Unemployment, trade deficit and globalization

U.S. Current Account or Trade Deficit

Implications of entitlement trust funds

Describing the budgetary challenge

Can the U.S. outgrow the problem?

National Research Council strategies

CBO budget options reports

Fiscal reform commission

Total outlays in recent budget submissions

Basic budget terms (based on GAO Glossary)

"Chart talk" examples

Budget games and simulations

Article Sources and Contributors

Image Sources, Licenses and Contributors

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