A good introduction to the U.S. budget. The numbers are from 2021.
- Click here for it.
Bottom Line:
Social Security ($1,135 billion).
Health ($796 billion).
National Defense ($754 billion).
Medicare ($696 billion).
Net Interest ($352 billion).
Commerce and Housing Credit ($308 billion).
Education, Training, Employment, and Social Services ($298 billion).
General Government ($274 billion).
Veterans Benefits and Services ($234 billion).
Britannica provides a brief summary of the history of the U.S. budget. We will build off this over the course of the semester. Click here for the source.
In the United States, when the federal government was formed, it assumed the debts of the states and various other obligations incurred during the American Revolution, all of which were funded into a single debt issue of $75,000,000 in 1790. The government was highly successful in avoiding additional borrowing in the early years, except for the War of 1812, and during 1835 all federal debt was eliminated. The years 1835 and 1836 were the only ones in the history of the country during which there was no federal debt at all. The American Civil War, only 25 percent of which was financed by taxation, pushed the debt to a total of $2,678,000,000 in 1865. Most of this debt was retired by budget surpluses during the following decades; debt reduction proceeded so far that bonds available for security behind national bank notes became inadequate. The debt remained relatively constant in the 1890s and during the early 1900s. World War I brought an increase to $26,000,000,000, consisting in part of short-term and intermediate-term securities and in part of Liberty Loan bonds. In the 1920s the government was able to reduce the debt; the low point reached was $16,185,000,000 in 1930, primarily by budget surpluses.
The 1930s brought budget deficits because of the Depression and the efforts to stimulate recovery. Despite extensive borrowing, which raised the total debt to $42,968,000,000 by 1940, interest rates fell sharply as a result of the surplus of money capital and federal reserve action. A substantial part of the borrowing was on a short-term basis, partly because the interest on such loans was extremely low. With the outbreak of World War II, borrowing rose sharply and by 1946 the debt had reached $269,000,000,000.
In the postwar period the debt fell to a low of $252,000,000,000 in 1948, then gradually rose. This increase was caused by budget deficits arising primarily from a high level of defense spending and the unwillingness of Congress to hold taxes to rates high enough to meet the expense and in some years from a desire to stimulate economic activity. During the 1970s the debt increased each fiscal year; by the mid-1980s it had passed $1,400,000,000,000, and it continued to grow, although some factions sought legislation that would put a ceiling on the national debt.
The states incurred substantial debts in the early part of the 19th century, largely for public improvements, and some found themselves in financial difficulties. As a result, borrowing came nearly to an end until after 1900; after that date there was further borrowing, particularly for highways. After 1945 the state debt increased sharply and had passed $167,000,000,000 by the mid-1980s. Much of this additional borrowing was for highway purposes. The local governments have traditionally borrowed more than the states, largely because of the nature of their functions. Local debt in the 20th century increased steadily and had passed $287,000,000,000 by the mid-1980s.
