2010 Summary of U.S. Budget & Financial Outlook

A Taxpayers’ Guide to Uncle Sam’s Checkbook

Many Kentuckians have questions about the state of the U.S. government’s finances. All citizens of this country should have a firm understanding of where our country garners its revenue from; where it spends its money; and what the state of our checkbook is today. For this reason, I have created a simple outline to our government’s budget that I hope my fellow Kentuckians will find useful.

U.S. Federal Spending

Many Americans may wonder where the government spends all of the money it takes in every year from individual and corporate taxes, as well as other sources. Below are two charts which outline where our money comes from and where it goes.

*Defense/Military Spending: Funding for Departments of Defense, Veterans Affairs, State, International Affairs and Homeland Security
*Government Appropriations: Funding for all other non-defense related agencies and general government appropriations
*Bailout of Financial Sector: Funding for the Troubled Assets Relief Program (TARP), created in response to financial fallout of 2008
*Other Mandatory Programs: Funding for all other mandatory programs such as food stamps and educational entitlements
*Net Interest: Cost of financing our national debt

Spending More Than We Make

With President Obama’s proposed budget for Fiscal Year 2011, the government is expected to spend $3.8 trillion. The government is expected to collect $2.6 trillion that same year. This will result in a deficit of $1.3 trillion for the year.

The National Debt

As of April 2010, the U.S. debt sits at an all time high of $12.6 trillion. The nation’s debt is held by a variety of entities, the largest being the American taxpayer. Below is an outline of who the U.S. government owes money to and how much we owe.

U.S. Government: $4.2 trillion
*U.S. Government: The large majority of this debt comes from the Social Security Trust Fund

Foreign Governments and Overseas Investors: $3.69 trillion
*Foreign Governments and Overseas Investors: This includes all foreign governments, businesses and other entities

Treasury Securities: $3.04 trillion
*Treasury Securities: This includes bonds and Treasury bills held by individuals or businesses

Federal Reserve: $894 billion
*Federal Reserve: Recently, the Federal Reserve has bought an increased number of treasury securities for such things as the Stimulus Bill

State and Local Government: $502 billion
*State and Local Government: Money owed to state and local governments for pension plans

Below is a breakdown of which foreign governments hold our debt and how much we owe them.

Projected Budget Future Under Obama Plan

Experts predict that under President Obama's proposed budget, spending will continue to increase and, consequently, so will the national debt. The graphs below outline projected spending increases over the next ten years as well as the increase in the national debt. In the graph entitled “Increased Spending,” ‘Baseline Spending’ represents projected spending under current law while ‘Obama Spending’ represents projected spending under President Obama’s agenda as calculated by the Congressional Budget office. President Obama’s agenda includes such things as healthcare reform, which is reflected in the graph.