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U.S. Federal Budget Key Concepts
  • Budget receipts constitute the income side of the budget and are composed almost entirely of taxes or other compulsory payments to the Government.
  • Budget outlays constitute the spending side of the budget and include mandatory and discretionary spending.
  • The budget surplus refers to any excess of budget receipts over budget outlays, while the budget deficit refers to any excess of budget outlays over budget receipts.
  • Taxes include:
    • Individual Income Taxes (46% to 48% of receipts).
    • Corporation Income Taxe (11% to 12% of receipts).
    • Social Insurance and Retirement Receipts, also known as Payroll Taxes (31% to 34% of receipts).
    • Excise Taxes (about 3% of receipts. Excise taxes are indirect taxes such as taxes on alcohol, tobacco, fuels, telephone, and include highway, airport, hazardous substances and other trust funds).
  • Other receipts, including estate and gift taxes, customs duties and fees and miscellaneous receipts (around 5% of receipts).
Offsetting collections and offsetting receipts:
  • Any income from business-type activities, either with the public (e.g., sale of postage stamps, the fees charged for admittance to recreation areas, the proceeds from the sale of Government-owned land), or between Government agencies (e.g. rental of office premises) is offset against outlays, so that total budget outlays are reported net of offsetting collections. Offsetting collections and offsetting receipts are deducted from gross budget authority and outlays, rather than added to receipts.
On-budget and off-budget items:
  • The terms on-budget and off-budget receipts, outlays, surpluses, and deficits refer to similar categories. Although there is a legal distinction between on-budget and off-budget entities, there is no conceptual difference between the two. They both engage in the same kinds of governmental activities, they both result in the same kind of outlays and receipts and both are owned and controlled by the Government.
Federal funds and trust funds:
  • The budget is divided between two fund groups, federal funds and trust funds. The term trust fund in the private sector refers to funds of one party held by a second party (the trustee) in a fiduciary capacity. However, in federal budget accounting it means only that the law requires the funds be accounted for separately and used only for specified purposes and that the account in which the funds are deposited is designated as a 'trust fund.' All receipts and outlays not specified by law as being trust funds are included under Federal funds.
  • Outlays are broken down into Discretionary, and Mandatory and Net Interest outlays, following the legislative procedure adopted to authorize the government to spend money, either an annual (in some cases multi-year) authorization, or a law dispensing with additional authorizations.
  • Discretionary programs are those whose budgetary resources are determined by annual appropriations acts . There are two major categories of discretionary programs: National Defense and Nondefense (all other discretionary programs).
  • Mandatory outlays are those whose budget authority is determined by law other than appropriations acts, and include programmatic spending and undistributed offsetting receipts (offsetting receipts, including asset sales, that are not offset against any specific agency or programmatic function).
  • Programmatic mandatory spending includes civil service and military retirement, Social Security, Medicare, and unemployment benefits, deposit insurance, and means-tested entitlements (programs that transfer income in cash or in kind to individuals or families, with limits to benefits or payments based on the beneficiary's income and/or assets, e.g. Medicaid, SNAP (formerly food stamps), Supplemental Security Income, the refundable portions of a variety of tax credits, veterans' pensions and defense and veterans' health benefits), which receive proforma appropriations.
  • Net interest includes net interest paid to the public as interest on the Federal debt.
Federal debt:
  • Gross Federal debt is composed both of Federal debt held (owned) by the public and Federal debt held by Federal Government accounts, which is mostly held by trust funds.
  • Federal debt held by the public consists of all Federal debt held outside the Federal Government accounts. For example, it includes debt held by individuals, private banks and insurance companies, the Federal Reserve Banks, and foreign central banks.
  • The sale (or repayment) of Federal debt to the public is the principal means of financing a Federal budget deficit (or disposing of a Federal budget surplus).
[Quoted or adapted from Historical Tables-Budget of the U.S. Government, FY 2015 , US Government Printing Office