According to the National Priorities Project, the Federal Government reels in approximately $12,000 from every man, woman, and child annually. In the 2015 fiscal year, the federal budget was $3.8 trillion. “These trillions of dollars make up about 21 percent of the U.S. economy (as measured by Gross Domestic Product, or GDP).”
So where does this money go?
The U.S. Treasury disperses all federal spending into three groups: mandatory spending, discretionary spending, and interest on debts.
Mandatory spending looks like earned-benefit programs like Social Security, Medicare, and SNAP (food stamps). Their budgets are determined by eligibility criteria. These criteria or eligibility rules allow Congress to designate a program’s budget so that it can increase or decrease the budget every year. Mandatory spending consumes two-thirds of the total federal budget.
Congress newly determines discretionary spending each year. Discretionary spending can vary from military programs to programs like Head Start (early childhood education). The programs’ budgets fluctuate. In 2015, Congress allocated $1.11 trillion to discretionary spending.
Interest on Debts
This group takes up the least room in all of the federal spending. “Interest on debt, which is a much smaller amount than the other two categories, is the interest the government pays on its accumulated debt, minus interest income received by the government for assets it owns (CBPP).” In other words, this group allocates spending for digging the Federal Government out of holes.
The allocated spending on each of these groups demonstrates clearly where the majority of our taxes go. According to the National Priorities Project’s analysis of mandatory and discretionary spending, the largest chunks of spending go to these groups:
- Military (Discretionary)
- Social Security, Unemployment, and Labor (Mandatory)
- Medicare and Health (Mandatory)
- Government (Discretionary)
- Education (Discretionary)
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