US Government Budget: Sources and Expenditures

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The primary sources and uses of the U.S. national government’s revenues

The main sources of the U.S.’s national government revenues are payroll taxes and individual income taxes; another source is the corporate income tax. In 2010, for instance, they accounted for 40%, 42%, and 9% of federal tax revenue, respectively.¹ Other sources include “excise taxes, estate and gift taxes, customs duties, and miscellaneous receipts” ². Noteworthy, the U.S. uses the progressive tax system on the whole. ³^,⁴

The national government of the U.S. uses a large part of its money to cover mandatory spending, e.g., to pay for expenses dictated by-laws (in 2010, 55% of government spending was mandatory) ⁵. There are a number of activities that are approved by the Congress every year and covered by the budget⁶; these activities include defense, federal courts, road construction, etc. Another significant part of the budget is used to cover these activities, for the so-called discretionary purposes. In 2010, discretionary expenses comprised 39% of federal spending. ⁷ The rest of the budget is used to return national debts or interests.

The process by which appropriations are made

The U.S. Congress annually prepares a number of appropriations bills; they are written, passed, and given to the President to be signed. ⁸ There exist 12 U.S. House Committees on Appropriations, and 12 respective U.S. Senate Committees on Appropriations. Each of them is required to pass one regular appropriation bill each year; all of them must be passed before the next fiscal year starts (by October 1). If an appropriation bill is not passed by that time, Congress can pass a continuing resolution, which, in fact, extends the duration of the respective effective appropriation bill for the next fiscal year. Also, supplemental appropriation bills may be passed; they provide additional funding that exceeds the funding originally appropriated for a purpose before the fiscal year started. These bills provide additional money to fund various unexpected expenses, such as emergency management.

What tax expenditures are

Tax expenditures are “revenue losses attributable to tax provisions that often result from the use of the tax system to promote social goals without incurring direct expenditures.” ⁹ In other words, tax expenditures permit certain groups or activities to have tax exemptions, credits, or deductions, in order to pursue social aims. The tax expenditures can be of various nature; some of them are the result of tax provisions which lower the value of taxable incomes; others may influence the after-tax incomes of e.g., households by providing tax credits, etc. ¹⁰

It is noteworthy that tax expenditures usually comprise a significant part of the national budget. Among the largest tax expenditures in 2008 were the exclusion of the contributions of employers to the medical insurance of their workers; these contributions were not counted as a part of the employer’s gross income, whilst the employer could count them as an expenditure of their enterprise. Other major tax expenditures were related to pensions, mortgage, accelerated depreciation of equipment, deductibility of contributions to charity, exclusion of capital gains related to home sales, child credit, etc.¹¹

The role of financial resources (appropriations) in the success or failure of executive branch organizations’ efforts to implement public policy

The appropriations are responsible for the provision of a large part of the government’s funding. Therefore, the organizations of the executive branch of the government are highly dependent on the appropriations; in most cases, they provide most if not all financial resources for these organizations. The success or failure of public policy implemented by these government agencies is dictated by the appropriations in many cases.

Reference List

Williams, Roberton, “The Numbers: What are the federal government’s sources of revenue?,” 2011. Web.

Reader, p. 97-98.

Rohaly, Jeffrey, “Distribution: Are federal taxes progressive?,” 2008. Web.

Williams, Roberton, “The Numbers: How does the federal government spend its money?,” 2011. Web.

Donald F. Kettl, The Politics of the Administrative Process, 5^th ed. (Washington, DC: CQ Press, 2012), chapter 11.

“The Federal Budget.” Web.

Batchelder, Lily, “Tax Expenditures: What are they and how are they structured?,” 2009. Web.

Reynolds, Gillian, and Steuerle, C. Eugene, “Tax Expenditures: What are the largest tax expenditures?,” 2009. Web.

Footnotes

Williams, Roberton, “The Numbers: What are the federal government’s sources of revenue?”.
Williams, Roberton, “The Numbers: What are the federal government’s sources of revenue?”.
Reader, p. 97-98.
Rohaly, Jeffrey, “Distribution: Are federal taxes progressive?”.
Williams, Roberton, “The Numbers: How does the federal government spend its money?”.
Donald F. Kettl, The Politics of the Administrative Process, 5^th ed. (Washington, DC: CQ Press, 2012), chapter 11.
Williams, Roberton, “The Numbers: How does the federal government spend its money?”.
“The Federal Budget.”
Batchelder, Lily, “Tax Expenditures: What are they and how are they structured?”.
Batchelder, Lily, “Tax Expenditures: What are they and how are they structured?”.
Reynolds, Gillian, and Steuerle, C. Eugene, “Tax Expenditures: What are the largest tax expenditures?”.

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