When the federal government spends more money than it receives in taxes in a given year, it runs a budget deficit.
Government spending covers a range of services provided by the federal, state, and local governments. federal budget, and state and local budgets Explain the differences between the U.S.budget deficit and surplus trends over the past five decades In the end, the agreement only saved $1.3 trillion, according to Brian Riedl, a fellow with the conservative Manhattan Institute.By the end of this section, you will be able to: But lawmakers opted to bypass those caps in the years that followed. In 2011, Democratic President Barack Obama reached a deal with Republicans to save $1.8 trillion over 10 years through discretionary spending caps. "Spending restraint always sounds good in the abstract and sounds less good when you're talking about specifics," said Jan Moller, head of the Louisiana Budget Project, a nonpartisan think tank.Įven if Biden and McCarthy agree to spending caps in the years ahead, Congress might not stick to the agreement. While Republicans on the federal level have generally pushed for funding cuts to these discretionary items and Democrats to increase them, Republican-leaning states tend to benefit more from federal domestic spending, according to a Reuters analysis. The Democratic-controlled Senate is not likely to accept those figures - which could lead to a government shutdown if the two sides do not reach agreement by Sept. That would likely require cuts of more than 13% in other areas like scientific research and environmental protection if they want to keep overall spending at the same level as this year, according to the Center on Budget and Policy Priorities, a left-leaning think tank.
The Republican-led House Appropriations Committee has unveiled legislation that would boost spending on veterans' care, border security, and other priorities next year. Republicans have said they do not want to cut spending on national defense and veterans' care, which would require other programs to shoulder steeper cuts.
#FEDERAL SPENDING SERIES#
If they can hammer out a general agreement on these levels and caps, if could help the United States avoid default, but would likely set up another series of budget battles, as lawmakers would still have to agree on funding levels for everything from fighter-plane construction to border enforcement. spending on health, retirement and other benefit programs has climbed steadily in recent decades, but negotiators in debt-ceiling talks look to cut other domestic and military spending. Together, these programs account for roughly 37% of current federal spending. The Social Security pension program is projected to increase by 67% by 2032, and the Medicare health program for seniors will nearly double in cost during that period, according to the nonpartisan Congressional Budget Office. debt: rising retirement and health costs, driven by an aging population.
#FEDERAL SPENDING DRIVER#
Negotiators are avoiding the main driver of U.S. Republicans say they will not accept a deal unless it results in the government spending less money than it did in the last fiscal year, and are pushing for cuts to 2022 levels.īoth sides are also at odds over how long any spending caps should last, with Republicans now offering caps for six years, and the White House only two. House Republicans passed a plan last month that would save $3.2 trillion by capping growth at 1% annually for 10 years. Reuters Graphics HOW COULD DISCRETIONARY CUTS WORK?īiden and Democrats have offered to hold discretionary spending flat from the current 2023 fiscal year, a cut from Biden's 2024 budget, and then cap spending in future years. The other half is devoted to domestic programs like law enforcement, transportation, housing and scientific research.
Military spending typically accounts for roughly half of that total, though the amount varies from year to year. In 2022, discretionary spending reached $1.7 trillion, accounting for 27% of the overall $6.27 trillion spent, according to federal figures. WHAT IS THE US DISCRETIONARY BUDGET?Ĭongress sets funding levels for discretionary spending every year, which powers a wide swath of military and domestic programs. Instead, funds for programs from education to rail safety to law enforcement could be cut, trims that economists warn will slow U.S. But cuts to Social Security and Medicare programs that eat up most of the U.S. Talks are fluid as Biden and McCarthy work towards a deal to raise the $31.4 trillion debt ceiling and avoid a default as soon as June 1. WASHINGTON, May 24 (Reuters) - The central pillar of any debt-ceiling agreement between President Joe Biden and House Republican Kevin McCarthy is shaping up to be "discretionary spending" - the chunk of the United States' roughly $6 trillion annual federal budget that is set annually by Congress.
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