The Federal Budget in Fiscal Year 2022: An Overview
The federal government’s fiscal year 2022 budget exhibited a deficit of $1.4 trillion, equivalent to 5.5% of the gross domestic product (GDP) (Congressional Budget Office, 2023). This deficit exceeded the average deficit of the past 50 years by nearly 2 percentage points.
Key Facts
- The federal deficit in 2022 was $1.4 trillion, which was equal to 5.5 percent of the gross domestic product (GDP).
- The federal government’s spending is divided into two primary categories: mandatory and discretionary spending.
- Mandatory spending represents nearly two-thirds of annual federal spending and includes funding for entitlement programs like Medicare and Social Security, as well as other payments to individuals, businesses, and state and local governments.
- Discretionary spending is money formally approved by Congress and the President during the annual appropriations process. It includes funding for national defense, as well as the administration of other agencies and programs such as transportation, education, housing, social services, science, and environmental organizations.
- Supplemental appropriations, also known as supplemental spending, are additional appropriations enacted after the regular annual appropriations. These are passed to address urgent needs that arise after the fiscal year has begun.
Categories of Federal Spending
Federal spending is broadly classified into two primary categories: mandatory and discretionary spending (U.S. Treasury, n.d.).
Mandatory Spending
Mandatory spending constitutes nearly two-thirds of the annual federal budget and encompasses funding for entitlement programs like Medicare and Social Security, along with other payments to individuals, businesses, and state and local governments. These expenditures are mandated by existing laws and do not require an annual vote by Congress.
Discretionary Spending
Discretionary spending, on the other hand, is subject to annual approval by Congress and the President through the appropriations process. It encompasses funding for national defense, as well as the administration of various agencies and programs, including transportation, education, housing, social services, science, and environmental organizations.
Supplemental Appropriations
In addition to mandatory and discretionary spending, the federal government may also allocate supplemental appropriations to address urgent needs that arise after the fiscal year has commenced. These appropriations are enacted separately from the regular annual appropriations process.
Conclusion
The federal budget in fiscal year 2022 was characterized by a significant deficit, primarily driven by increased spending and relatively stagnant revenue growth. The government’s spending is categorized into mandatory and discretionary spending, with mandatory spending constituting a larger proportion of the budget. Supplemental appropriations may also be allocated to address urgent needs that arise during the fiscal year.
References:
Congressional Budget Office. (2023). The Federal Budget in Fiscal Year 2022: An Infographic. https://www.cbo.gov/publication/58888
U.S. Treasury. (n.d.). Federal Spending. https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/
FAQs
How much did the U.S. government spend in 2022?
The U.S. government spent $6.27 trillion in fiscal year 2022.
What percentage of the GDP was federal spending in 2022?
Federal spending in 2022 was equal to 24.1% of the gross domestic product (GDP).
What are the two primary categories of federal spending?
Federal spending is divided into two primary categories: mandatory spending and discretionary spending.
What is mandatory spending?
Mandatory spending is spending that is required by law, such as Social Security and Medicare benefits. It does not require annual approval by Congress.
What is discretionary spending?
Discretionary spending is spending that is approved annually by Congress through the appropriations process. It includes funding for programs such as national defense, education, and transportation.
What are supplemental appropriations?
Supplemental appropriations are additional appropriations that are enacted after the regular annual appropriations process to address urgent needs that arise during the fiscal year.
How much of the federal budget is mandatory spending?
Mandatory spending составляет около двух третей годового федерального бюджета.
How much of the federal budget is discretionary spending?
Discretionary spending составляет около одной трети годового федерального бюджета.