Government spending is out of control. In March 2021, the Congressional Budget Office (CBO) projected that federal government spending in fiscal year 2021 (which began on October 1, 2020) will come to at least $5.8 trillion, with tax revenues of $3.5 trillion, and a resulting budget deficit of over $2.3 trillion. The total federal accumulated debt will be approaching $30 trillion.
“Mandatory” government spending – the “entitlement programs” – will come to about $3.7 trillion out of all expenditures of $5.8 trillion, or 66 percent of that total. “Discretionary” spending will be over $1.6 trillion, with interest payments on prior accumulated federal debt being another $303 billion. Notice that the entitlement spending for Uncle Sam’s current fiscal year of $3.7 trillion will be larger than the anticipated total tax revenues of $3.5 trillion from all sources. The core welfare state expenses are costing $200 billion more than all of what is collected from American taxpayers. So, the government is borrowing money to cover part of the entitlement expenditures, plus all “discretionary” spending, and the interest on the national debt.
In this fiscal year, government spending will equal 26.3 percent of U.S. Gross Domestic Product (GDP), with tax revenues coming to 16 percent of GDP, and the budget deficit equaling 10.3 percent of GDP. That is, federal government spending will be more than one out of every four dollars of the total value of national output. And the budget deficit will be more than one out of every 10 dollars of GDP.
(It also should be kept in mind that in 2021 state and local government spending is likely to be an additional $4 trillion, on top of what the federal government is spending.)
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