The Congressional Budget Office shows very clearly something we've known for a long time: America's spending and debt are out of control. Now reaching $140,000 per American household, the national debt is bigger than what the entire U.S. economy produces in a year. U.S. public debt-what the nation has borrowed in credit markets-has doubled, as a share of the economy, since before the recession to levels not seen since around World War II.
Why does the debt matter? Extensive research shows that this excessive debt burden harms job growth and ultimately lowers Americans' personal incomes. Unless America changes course soon, younger and future generations will inherit a massive national debt and a less prosperous nation.
It is crucial that Americans understand what our nation's spending, debt, and taxes mean for them and their families-as well as what solutions can point the way forward. The Heritage Foundation's Federal Budget in Pictures offers a unique tool to learn about these vital issues in a clear, compelling way.
The federal government has borrowed to finance much of the spending growth over the past two decades. When the Government Accountability Office and others independently evaluate government programs, the reports too often show spending being wasted on duplicative and ineffective government programs. Moreover, the federal government has become bloated, intruding in areas better handled by the private sector and state and local governments.
Dealing with government waste, fraud, and inappropriate spending is crucial-one key element of budget reform. Follow the money and another essential aspect is revealed: Medicare, Medicaid, and Social Security make up 45 percent of our national budget. Millions of Americans rely on these programs, yet these programs are unaffordable and unsustainable because of outdated structures designed decades ago. Congress has yet to take the steps needed to reform and preserve these programs so they benefit those most in need-and are affordable for taxpayers.
The 2014 Federal Budget in Pictures helps Americans understand the severity of the nation's current fiscal situation. Lawmakers must make the tough choices to cut government spending, just as American households have trimmed back their own unnecessary spending in recent years. We can change the nation's current course, support a budget based on real constitutional priorities, and unshackle the enormous power of free people to create jobs, wealth, and prosperity.
Grover M. Hermann Fellow in Federal Budgetary Affairs
Research Assistant in the Thomas A. Roe Institute for Economic Policy Studies
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. 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 year in which the Administration took office. Historical averages for spending and revenues in this publication span from 1952 to 2008, encompassing post-World War II and pre-Great Recession years.