Backgroud Of The United States Budget Essay

, Research Paper

Background of the United States Budget

This coming year, in 1999, our Federal Government will spend over $1.7 trillion. They use this money to support causes that aid to the betterment of society, the health of the people, research for better and new materials, education, and one of the biggest, the military. Each year, by the first Monday if February, the President of the United States presents to Congress the proposed Federal Budget for the next fiscal year. Each fiscal year starts on October 1st of the preceding year. This budget is gathered and created by the White House?s Office of Management and Budget (OMB). They create the budget based on requests made by individual agencies and from consulting with the President?s senior advisors and officials from cabinet departments and other agencies. After receiving the proposed budget from the President, the congress meets to overlook it.

During the process of overlooking the budget, the congress, with the President, decide how much they are going to spend to each activity that the government endorses. Some examples are public libraries, police forces, education, national zoo?s, the CIA, FBI and other organizations. Once they have a concrete estimate of how much money the government will spend in the next year, they then decide how much they are going to have to tax the American public in order to cover all of the proposed expenditures fo the budget. There is a fine line that the congress has to worry about. If they tax too much, the people in the U.S. will not have enough money to spend on products, therefore hurting our economy. On the other hand, if the government does not tax enough to cover all of the expenditures, then they have to take our loans to cover all that they are paying for. When this happens, it is called a deficit.

The deficit of the United States really made news in the late 80?s and early 90?s when the deficit climbed dramatically. The government during this time, under the leadership of President Ronald Reagan, spent a huge amount more then the government was bringing in. As of 1997, the Gross Federal Debt had accumulated to $5.37 trillion dollars and is expected to keep rising to a projected debt of $6.336 trillion by the year 2003. Finally although, the project budget for 1999 shows a budget surplus of $10 billion.

Many of the deficits occur because of mandatory spending. Mandatory Spending is required by permanent laws that are directed to help the public. Social Security, Medicare, Medicaid, Veteran?s Benefits, Food Stamps, and interest on the National Debt are all examples of what the government is required by law to pay for each year. Mandatory Spending accounts for 67 percent of all government spending. The remaining 33 percent is considered Discretionary Spending. This money is really what the President and his officials have control over to appropriate towards causes which they seems worthy, such as the Coast Guard, FBI, CIA, housing and education, space exploration, highway construction, foreign aid, and of course, defense.

The money used by the Government comes from various types of taxation. Most of what the government collects comes from individual income taxes. In the year 1997, the Internal Revenue Service collected 737 billion dollars from the people of the United States. This amounted to 46 percent of the total income for the U.S. and is equal to about 9 percent of the Gross Domestic Product (GDP). Social Insurance payroll taxes were the second largest collection of income in 1997, amounting to around 539 billion dollars. The rest are described in the pie chart below.

The Defense Department

The Budget and the Effect of the Economy

Last year, in 1997, the United States government spent 270 billion dollars on National Defense, or fifteen percent of the total government spending that year. 258 billion dollars of this went to strictly the Military. Next year for 1999, the budget makers are predicting a minute drop in funding to 267 billion. This money goes to the payment of salaries for troops, transportation of the troops, the weapons they use, the actual costs of war, and the testing and development of new weapons and tactics, as well as other obvious expenditures (and many other secret projects which are kept classified). Because of the money we delegate to the military, it is the finest, most talented, and best-equipped military force in the world.

The money the government allows the Defense Department to spend is not considered to be gone. The majority of the money the Military spends is on products made by U.S. companies. Each depends upon each other to exist. Without the U.S. companies making our weapons and materials, our military would not be anything that it is today. Without the military funding, many companies would not even exist and the technology of today would be much less than it has turned out to be. This type of spending allows the economy to prosper because we are keeping the circulation of money within our own country. We are making ourselves richer by buying products from ourselves.

The struggle of businesses to obtain government military contracts is a tough one. Each year, a published list of the top 100 companies shows the winners of contracts and the bounty of which they were awarded. These companies, because of these contracts, have become some of the largest in