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This stacked bar chart shows the expected income and proposed spending in President Obama's unified federal budget for FY2011 (which starts next October 1). Click on the chart to see a larger version and click here to see a table with the same numbers.

The recession (which greatly reduces tax revenue and increases costs) plus huge spending on the bloated military is expected to produce a massive deficit next year of more than $1.2 trillion.

US Budget FY2011

Below the fold are details about this chart and a comparison to the estimated income and expenditures in FY2010 (the current year), the actual values for FY2009 (which ended last September 30), and the actual values for FY2000 (the last Clinton budget and more indicative of a “normal” year before Bush/Republican policies of tax cuts for the wealthy, deregulation, and war devastated the budget and sent the country into a recession).

Adjustment to Reveal Strength of Social Security

All the numbers reported here come directly from the US Budget for FY2011. However, I've made one important change to illuminate a critical point. In its budget, the government first subtracts the interest earned from trust funds before reporting the overall interest paid out on Treasury bonds. This hides the income from the Social Security trust fund (which currently has assets of approximately $2.5 trillion) and makes it appear that the Social Security program is more expensive and more endangered than it actually is. So I have instead opted to list the full amount of interest earned by the trust funds in the income column and the full amount of the interest paid on Treasury debt in the spending column. This change increases both columns by $251 billion to $4,082 billion instead of the $3,834 billion total the government reports. For decades, the income from Social Security taxes has far exceeded the amount paid out in benefits. Interest earned on these trust funds are used to pay for other parts of the federal government and thereby reduce the net deficit.

Notes on FY2011 Income

As you can see, sources of income for the federal government are individual and corporate income taxes, estate and gift taxes, excise taxes, custom duties, interest on federal insurance deposits, and a few others. In addition, the government collects payroll taxes for the Social Security trust fund (Old Age, Survivors, and Disability (OASD)), Hospital taxes for the Medicare trust fund, unemployment taxes for the Unemployment Insurance fund, and some other taxes.

Because the economy is in bad shape and companies have laid off millions of workers, President Obama assumes that the amount collected from all of these taxes in FY2011 will be much smaller than usual, so net borrowing to cover the deficit will be $1,267 billion. When most Americans have jobs again, then tax income will also grow and the need for borrowing will shrink.

Notes on FY2011 Spending

Spending is divided into two main categories: discretionary spending that Congress allocates each year through 15 spending bills and mandatory spending required by various on-going programs.

Mandatory spending includes Social Security benefits, Unemployment Compensation, Medicare benefits, and pensions for retired federal workers as well as means-tested entitlements such as Medicaid payments to states, benefits to disabled Veterans, Supplemental Security Income (SSI) payments to disabled people, the Earned Income Tax Credit (EITC) for poor working people, and Food and Nutrition Assistance (food stamps) for those in need. Interest on Treasury Bonds (the national debt) must also be paid.

The continuing bad economy means that in FY2011 many more people will be entitled to Unemployment Compensation, Medicaid, food stamps, etc. Many people are also likely to retire early and apply for Social Security. All of this will greatly increase government spending. But because interest rates are so low, the expected interest to be paid on the debt in FY2011 ($499 billion) is relatively small even though the overall federal debt has grown a great deal.

Discretionary spending is allocated by 15 spending bills passed by Congress between June and October 1 (when the fiscal year starts). Last year, Casual Wednesday prepared a detailed description of the Appropriations committees and how this process works.

About half of discretionary spending goes to pay for the military — active duty armed service personnel, civilian employees, defense contractors, and  the expected costs of the Iraq and Afghanistan wars. Obama's request is for $744 billion for FY2011, 53% of the total discretionary budget. The request for the military is now almost twice as large as the $378 billion (adjusted for inflation) spent in FY2000. See my previous diary, Our Taxes are Off to War — 2010 Edition for a discussion of why it is unconscionable to spend this immense amount on the military.

In FY2011, the Obama administration expects Medicare, Medicaid, other Mandatory Healthcare, plus discretionary Health Care to cost the federal government a total of $892 billion. Some of this money is wasted (such as subsidies for Medicare Advantage), but the rest provides essential healthcare to millions of aging retirees, veterans, government employees, and poor people.

FY2010 Income and Spending

To see how the proposed FY2011 budget compares to previous years, here is a chart with the estimated income and expenditures for FY2010 (the current year which ends next September 30). Click on the chart to see a larger version and click here to see a table with the same numbers.

US Budget FY2010

FY2009 Income and Spending

Here is a chart with the actual income and expenditures in FY2009 (the year which ended last September 30). Click on the chart to see a larger version and click here to see a table with the same numbers.

US Budget FY2009

FY2000 Income and Spending

Here is a chart with the actual income and expenditures in FY2000 (though all the figures have been adjusted for inflation to 2010 levels (by multiplying by 1.28014) so they can be easily compared with the other charts). This is the last Clinton budget and more indicative of a “normal” year before Bush/Republican policies of tax cuts for the wealthy, deregulation, and war devastated the budget and sent the country into a recession. Click on the chart to see a larger version and click here to see a table with the same numbers.

Note that some of the overall growth in the size of the federal government since 2000 corresponds to the 10% growth in the population since then (from 282,385,000 in 2000 to 310,233,000 in 2010), but partly it is attributable to the need for federal spending to support us through the recession.

US Budget FY2000

In FY2000, the booming economy meant that tax revenue from all sources was quite large and the need for spending on social services was much lower. With no wars being waged, spending on the military ($378 billion in inflation-adjusted 2010 dollars) was approximately half the level projected for FY2011. Even though the accumulated national debt was only about half as large as now, the cost of interest on the national debt in FY2000 ($463 billion) was relatively large because interest rates were much higher then. But high interest rates also meant that the trust funds were able to earn $166 billion. Overall, the government had a surplus in FY2000 of $302 billion (in 2010 dollars).

Additional Resources

The Center on Budget and Policy Priorities (CBPP) provides extensive analysis of the budget and the origins of the deficit (mostly due to the recession, the Bush tax cuts, and increased military spending).

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Why Doesn't the Government Prepare Charts like This?

A final note: It is very frustrating that I have to put together this chart. One of the most important things that the President and Congress do each year is put together a budget. As citizens of this country, we should have a clear presentation of how the government plans to spend our money so that we can provide meaningful input. Instead, the basic budget documents for FY2011 are long, complex documents filled with jargon and tables of numbers, many of them seemingly inconsistent.

Admittedly, the federal government budget is very large, includes many kinds of receipts (taxes, fees, interest, rents and royalties, and sales of land, natural resources, radio frequencies, postage stamps) and many kinds of expenditures (payroll, contracts, payments to individuals, grants to states, trust funds, loans, etc.). There are multi-year budget authorizations and then the actual yearly spending allocations. There are funds considered “off-budget” and “on-budget,” receipts (from fees or sales) that offset spending, taxes not collected that are considered spending, allowances for future disasters, and lots of other oddities that make it difficult to provide a comprehensive and comprehensible overview.

Still, for legislators and the public to understand the budget, there should be a simple presentation of the overall figures. This is the only overall chart from the government I could find and it is so simplified as to be almost meaningless. This interactive graphic of projected government spending from the New York Times is much better, but only shows spending.

To fill this gap, I've put together the charts on this page using numbers from multiple tables in the FY2011 Historical Tables document. But I am not a budget expert by any means and may have made errors. It would be better for the people who are experts to create this chart.

Originally posted to RandomNonviolence on Wed Mar 10, 2010 at 11:59 AM PST.

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Comment Preferences

    •  Great work! Q re: Social Security. (0+ / 0-)

      Thank you for this outstanding work.

      Your graphs show Social Security already spending more than it takes in. But most media accounts project a SocSec surplus through about 2015 or 2016.

      I read your paragraph on your interest adjustment, and I see that when you add interest earned by the SocSec trust fund to SocSec payroll tax receipts, SocSec still has a surplus. But if I recall correctly 100% of that interest is on US Treasury securities, which of course are serviced by general tax receipts. So in effect we already have general tax receipts subsidizing SocSec. Right?

      "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

      by HeyMikey on Wed Mar 10, 2010 at 02:59:17 PM PST

      [ Parent ]

      •  Regarding Social Security (0+ / 0-)

        Because so many people are out of work and will be through FY2011, the Social Security program will not receive as much payroll taxes as they originally thought. So that is why there is a deficit expected in FY2011 for SSS. But if you add the income from interest earned on the Social Security Trust Fund (which has $2.5 trillion right now), then SS will continue to have a surplus in FY2011.

        Since the rest of the budget is in deficit, the government essentially "borrows" the interest earned from Social Security (and spends it). The government also has to borrow even more by selling Treasury bonds and bills to cover the rest of the deficit. So Social Security is actually subsidizing the rest of the government right now.

  •  Very nice. (2+ / 0-)
    Recommended by:
    theran, Nailbanger

    It would be useful to have the 2008 charts, so that
    one could compare them to the 2000 charts see the true effect of the Bush years w/o any complications introduced by Obama and the stimulus.

  •  Nice work (0+ / 0-)

    and the inclusion of trust fund in the chart is enlightening.
    Now could you do one for my retirement plan, they never seem to want to show how much money I made lost.

  •  Two points (2+ / 0-)
    Recommended by:
    HeyMikey, RandomNonviolence

    But first, kudos for preparing a visual map of spending and taxing.  Well done.  I suspect it was a PITA.

    1.  Does the OASD figure consist of SS and Medicare taxes?  If so, people should be paying very close attention to it.  It's half as large as the individual income tax amount, but most of it comes from the poor and middle class taxpayers.  The zillion-dollar CEOs, the stock market gamblers, and the ultrarich whose income comes from stock, pay what is only a tiny percentage of their income into it.
    1. The interest on debt is up to half a trillion dollars.  I'm guessing that the only reason it's not higher is that interest is so low.  So, instead of raising taxes (preferably on the rich), we borrow more money.  Brilliant.  If you're holding your breath waiting for someone to propose this great idea for reducing spending - pay off the debt - you're asphyxiating yourself.

    Oh, one other thing.  I wouldn't mind seeing the decimal place on military spending moved one spot to the left.

    I am become Man, the destroyer of worlds

    by tle on Wed Mar 10, 2010 at 12:22:39 PM PST

    •  Re: Three points (1+ / 0-)
      Recommended by:
      tle
      1. Old Age, Survivors, and Disability (OASD) is the official name of Social Security. The OASD tax on your pay stub is a very recessive tax: a flat 6.5% on the first $105,000 of your income or so and nothing after that. Medicare is paid for by the "Hospital Tax". This is slightly less regressive in that it is a flat tax on all earned income (but zero on interest, dividends, capital gains, rent, etc. - the primary incomes of the super rich). As you say, both of these taxes are paid for mostly by the poor and middle class -- the rich pay a relatively small part of them.
      1. "Borrow and spend" is much easier to sell politically than "cut programs" or "raise taxes". But continually borrowing is not very responsible. We really need to raise the rates - especially on the super rich - of progressive taxes such as the income tax and estate tax and perhaps institute a wealth tax to recover some of the massive amount of money that has gone to the wealthy in the past 30 years, much of it through corrupt and/or immoral means.
      1. Cutting military spending is definitely important. See my previous diary Our Taxes are Off to War - 2010 Edition.
  •  Very well done... (1+ / 0-)
    Recommended by:
    HeyMikey

    Isn't it funny how Social Security and the military now have roughly the same price tag, but it's only Social Security that's at risk of going broke?

  •  Love your charts (0+ / 0-)
    But I can't get them to expanf for easier reading.  
  •  Nothing "easy to read" about that! (0+ / 0-)

    I'm getting eye-strain!

    No, seriously for a moment- I know these are projections, but take a look at the top line items on the income side.  They're about $250 billion higher in 2011 than 2010FY.  That's a sign of an improving economy.

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