Federal spending and debt are out of control, and if America does not change course, the future will be dramatically worse. Now more than ever, it is crucial that Americans understand what our nation’s spending, taxes, and debt mean for them and their families. The Heritage Foundation’s Federal Budget in Pictures offers a unique tool to learn about the federal budget in a clear and compelling way.
These pictures reveal the urgent need to rein in spending. The federal budget is on an unsustainable course, because
Publicly Held Debt Is Set to Skyrocket despite Taxes Soaring Past Highest Level Ever. Federal Spending per Household Is Skyrocketing, and Federal Spending Exceeds Federal Revenue by More than $1 Trillion. If Congress fails to adopt the transformational reforms necessary to cut spending and stabilize the debt, U.S. Debt Is on Track to Fuel an Economic Crisis.
Runaway Spending, Not Inadequate Tax Revenue, Is Responsible for Future Deficits. Medicare Is Adding to Federal Deficits Faster than Other Government Spending Programs, and Social Security Deficits are Permanent and Growing. Meanwhile, Medicare and Other Entitlements Are Crowding Out Spending on Defense, a core constitutional function of government.
Some suggest raising taxes to cover budget deficits. However, Balancing the Budget Without Cutting Spending Would Cause Taxes to Skyrocket to the point where Hiking Taxes to Balance the Budget Would Require Doubling Tax Rates. Taxing the Wealthy to Balance the Budget Will Not Work, as this would necessitate raising tax rates to mathematically impossible levels.
President Obama’s Budget Hikes Taxes by $2 Trillion even though Increasing Tax Rates Does Not Necessarily Lead to Higher Income Tax Receipts. Higher taxes on working, saving, and investing would, however, discourage the productive activities that enable the American economy to flourish and the American people to prosper. American businesses are already hamstrung internationally, as the U.S. Has the Highest Corporate Tax Rate.
Bold, transformational reforms are needed to solve America’s spending and debt crises. The Heritage plan, Saving the American Dream, achieves this through spending, entitlement, and tax reforms. It reduces the size of government, encourages personal fiscal responsibility, and fosters economic growth. It balances the federal budget in ten years—without raising taxes.
The Federal Budget in Pictures will help all Americans understand the severity of the nation’s current fiscal situation and appreciate the growing magnitude of decisions that lawmakers must confront to fix the debt, cut spending, and restore prosperity in America.
Emily Goff
Research Associate, Thomas A. Roe Institute for Economic Policy Studies
Romina Boccia
Research Coordinator, Thomas A. Roe Institute for Economic Policy Studies
John Fleming
Senior Data Graphics Editor
The charts in this publication are based primarily on data available as of February 2012 from the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). The charts using OMB data display the historical growth of federal spending, revenue, and debt to 2011, while the charts using CBO data show both historical and projected growth from as early as 1940 to as far as 2085. Projections based on OMB data are taken from the President’s budget for fiscal year 2013.
The charts show annual data except where calculations are made for Administration averages. Debt limit data are based on the limit in effect at the end of the calendar year. All spending and revenue data are based on the federal fiscal year. Prior to 1976, the fiscal year was from July 1 to June 30. That year, the current format of October 1 to September 30 was implemented. In the charts, the transition is omitted for simplicity.
Charts designating presidential Administrations begin with the fiscal year in which the Administration presented its first budget. In the case of 2009—an atypical year in which much was spent before the Administration’s first fiscal year budget (FY 2010), all revenue and spending up to the CBO January 2009 “Budget and Economic Outlook” is attributed to President George W. Bush. All revenue and spending thereafter is attributed to President Obama.
There are different ways to calculate average historic levels of revenue, spending, and debt. Such averages vary due to the time periods covered. In this publication, these averages span 50 years (1959–2008), encompassing post–World War II and pre–Great Recession years.