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