Have you ever wondered where all the money goes that your country spends? It’s a fairly complicated matter, so today we hope to make it a little less complicated while focusing solely on the budget of the USA. The U.S. government receives money each year, its revenue, while its outgoings are referred to as the national expenditure. How that money is spent, or how it’s earned, is a matter of ongoing debate. And it should be, given that for all intents and purposes, it’s YOUR money being spent. To simplify how the budget is apportioned, today we’ll imagine it’s just a small household allowance. Follow us on the money trail, in this episode of the Infographics Show, If the United States’ budget was only $100, how would it be spending it? First of all, let’s take a look at where the money for the U.S. budget comes from. The revenue comes mostly from you, in the taxes you pay. In 2018, the U.S. Federal government will have a total revenue of 3.654 trillion dollars. This sizable amount we are going to round down to 100 bucks. You can get an idea of how much the total budget is, if we say that one dollar of our 100 is equal to about 36 billion dollars.
Half of U.S. federal revenue will come from income taxes, and a further 33 percent from payroll taxes. Payroll tax is the money the employer or employee pays for such things as Social Security, Medicare, health insurance and unemployment insurance. 10 percent of the total revenue will come from corporate taxes, and a further 4 percent from excise taxes and tariffs. This is a special hidden tax on certain items, sometimes referred to as a ‘sin tax’ because it includes things we should probably consume less of such as alcohol, cigarettes, and gasoline. The rest of the revenue will consist of money earned by the Federal Reserve and slightly less than that amount from estate taxes. An estate tax is money the government takes when a person dies and leaves cash, property or stock to another person. This usually makes up 1 percent or less of the U.S. revenue.
Now that we know where the money comes from, let’s see if it’s enough to provide for the very large household of the USA. The money the U.S. receives from taxes is the globe’s largest revenue, but the U.S. is a big spender. The country will outlay more than it receives, making the USA one of many countries with a yearly deficit. Many other countries have a healthy looking bank balance, such as oil rich Qatar or the sensibly spending nation of Norway. As we will now see, the USA puts a lot of its cash into areas other countries seem to care much less about. One of those areas is the military, as you will know if you’ve watched our military-based episodes.
And so, without further ado, we’ll now take a look at some hard cash statistics. There are three types of government spending. ‘Mandatory’ spending is the money that goes towards entitlements for the U.S. people, safeguards such as social security, healthcare and unemployment compensation. This amount makes the biggest dent in our 100 dollar allowance. Mandatory spending is 62 percent of the entire budget, or 62 dollars from our 100 buck budget.
Social security will cost about 27 dollars, Medicare about 15 dollars and Medicaid about 11 dollars. Other mandatory programs, which could include things such as food stamps or many other welfare programs, will take up the rest of the mandatory budget. We should note here that there are fears that mandatory spending will outpace the money earned as there will simply be too many people to take care of and not enough labor force. This is what happened in Japan, a country with a lot of old people and many young people choosing not to have children. Something else to think about is the specter of massive job loss due to technological automation.
As for the 38 dollars we have left, most of that goes to what’s called ‘discretionary’ spending. This is part of the revenue that could change year by year depending on what Congress votes for.
The third outlay is the money the U.S. has to pay in interest for its national debt, which has almost reached 550 dollars if we are still rounding down to our 100 dollar budget. This interest keeps increasing, and in 2018 it will be about 9% of our 100 dollar total revenue. This is another 9 dollars from our budget that the U.S must keep paying lest it default on the debt. This national debt is by far the biggest in the world. After mandatory spending and interest debt is paid, we have about 29 dollars left to keep the USA running smoothly. Where does the rest of the money go?
According to the White House, in 2018, about 19 of our 100 dollars will be spent on the American military. This is by far the biggest chunk of the total discretionary budget. It’s more or less half of the 38 bucks the government had left before it had to pay the interest on its debt. This means from our 29 bucks, we have just 10 dollars left over for everything else…and there’s a lot to pay for.
The rest goes to other departments, of which there are many: About 50 cents goes to the department of agriculture, 44 cents goes to the dept of transportation, 2 dollars goes to the dept of education, 26 cents goes to the dept of labor, $1.20 goes to the dept of homeland security, 32 cents goes to the dept of the Interior, 77 cents goes to the dept of State and Other International Programs, $1.11 goes to the dept of Housing and Urban Development, 21 cents goes to the dept of Commerce, 76 cents goes to the dept of Justice, 32 cents goes to the dept of the Treasury, 2 dollars goes the Dept of Veterans Affairs, and 81 cents goes to the dept of Energy. There will also be smaller amounts spent on multiple government agencies.
And there’s more still to pay. Quite a lot of the remaining money from the discretionary budget goes into the emergency fund in case of war or natural disaster, as well as current military overseas operations. This involves multiple agencies, departments, and organizations, and amounts to around 2 dollars and 30 cents.
If you add up the entire budget, it is more than the entire revenue, which is just the way it works out each year in the USA. To save a few pennies, the Trump administration has made a few minor changes, such as taking out about 3 cents of our 100 dollars that was previously allocated to arts and cultural agencies. At the same time, Trump has also controversially decreased NASA’s budget by about one cent. If you watched our episode, NASA vs. SpaceX, you’ll know Trump aspires to send men back to the moon, or later, even Mars. NASA was budgeted just over 50 cents for 2018.
The budget deficit for 2018 amounts to $440 billion. This is around 12 percent of our original 100 buck revenue. It means there is around a 12 dollar deficit, so we’ve spent the grand total of 112 dollars.
The question we must now ask ourselves is will the U.S get out of debt, or will the debt keep growing? Well, like many other countries, the U.S. can just print its own money, so when in debt, just keep printing, right? Some people think this is not a good idea as it could lead to a financial crisis, and of course, it might upset the people whose taxes are going towards paying off the debt. A simple solution to the debt would seem to be to cut government spending or raise taxes, but the risk is that this might hamper economic growth. Another solution is to boost economic growth so it grows faster than the debt. In terms of the 100 dollars, how can the U.S. use it in areas where it will see higher returns? For example, some analysts believe the U.S. should spend less on defense, and more on public infrastructure.
Where do you think the U.S. should be allocating its money for the best of the American people? What would you do with the budget? Let us know in the comments. And if you liked this video, be sure to check out our other video Robots vs Humans! Thanks for watching, and, as always, don’t forget to like, share, and subscribe. See you next time!