US Federal Spending 2014-2019

The US federal budget is the financial representation of the federal government’s spending and revenue. The budget process begins with the president’s proposal to Congress requesting for funding levels for the following fiscal year. Congress is required by law to pass the appropriation bills which are signed into law by the president. On March 11, 2019, President Trump’s administration presented a budget request for the FY2020. The federal budget was a record of $4.746 trillion with an estimated revenue of $3.645 trillion, creating a deficit of over $1 trillion. From the president’s proposal, it is evident that the country’s spending is on the rise. How does the FY2020 compare with the previous six years?

Analysis of the FY2014-FY2019 Federal Spending

Rising Total Spending

From the budget estimates to actual spending, federal spending has been on an upward trajectory in the last five years. In 2014, the federal government spent about $3.5 trillion on both mandatory and discretionary programs as well as interest on debts. In FY2015, the spending increased by 5.3% to $3,691.9 trillion. In FY2019, total expenditure amounted to $4,446.6 trillion, representing a 26.8% increase from FY2014. The four spending programs that have contributed to such high spending by the US federal government are pension, health care, education, and defense. Expenditure on pension increased by an average of 3.5% during the period under review while spending on health care increased by an average of 8% in the six years. Spending on welfare, education, and defense program increased by smaller margins compared to pension and health care.

Growing Deficit and National Debt

One of Congress’ major headaches is dealing with the budget deficit and growing national debt. For the FY2014 to FY2019, the federal government operated on the deficit. In FY2014, the total deficit amounted to $484.8 billion. However, in FY2015, the deficit fell by about $42.8 billion only to raise $142.7 billion. In FY2019, the federal deficit was $984.4 billion and is expected to cross the one trillion mark in FY2020. From the budget analysis, it is evident that President Trump’s administration has higher expenses than the Obama administration. Each year, the federal deficit adds to the national debt, leading to slow economic growth. At the end of FY2014, the gross national debt was $17.8 trillion. In five years, the national debts grew by close to $5 trillion to $22.7 trillion in FY2019. Higher national debt raises interest rates as most investors demand more returns. Financial experts and policymakers believe Congress should create a surplus and not a deficit since the economy has recovered.

Categories of Government Spending

Government spending is broadly divided into three categories; interest on debts, discretionary, and mandatory spending. Interest on national budget accounts for the least proportion of the federal budget. Between FY2014 and 2019, interests grew by only $96 billion. Discretionary spending is an optional government spending implemented by Congress through appropriation bills. The largest discretionary spending is on defense and education which both grew marginally in the period under review. Mandatory spending is federal spending mandated by law. It accounts for the largest share of government spending. Over the period, social security and health care were the two largest items of mandatory spending.