FY 2006 U.S. Federal Budget and Spending

FY 2006 budget
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For Fiscal Year 2006, the Federal government received $2.407 trillion in revenue. Income taxes contributed 45 percent, Social Security taxes were 34 percent, corporate taxes were 12 percent, and the remaining 9 percent came from excise and other miscellaneous taxes. The Bush Administration had budgeted for $2.178 in revenue receipts. (Source for all actual receipts and spending is FY 2008 Budget Summary Tables. Source for all budget estimates is FY 2006 Budget Summary Tables.)


The Federal government spent $2.655 trillion. Over half ($1.412 trillion) went toward Mandatory programs, such as Social Security, Medicare and Military Retirement programs. These expenditures are mandated by law, and cannot be changed without an act from Congress. Discretionary spending was $1.017 trillion. A whopping $227 billion was spent on nothing more than paying the interest on the $8.4 trillion national debt.  The Bush Administration had budgeted $2.568 trillion.

Mandatory Spending. Social Security ($544 billion) was the largest Mandatory expenditure, at 37 percent of the total. Health care spending was next, at $511 billion. Of this, Medicare was $325 billion and Medicaid was $186 billion. All other remaining mandatory programs cost $357 billion.

Discretionary Spending. Less than half the budget ($1.017 trillion) was Discretionary, which was negotiated by the President and Congress. Non-security spending was $451 billion. The largest departments were: Health and Human Services ($69 billion), Education ($56 billion), Housing and Urban Development ($34 billion), Veterans Affairs ($33 billion), the State Department ($30.2 billion) and Agriculture ($21 billion).

Discretionary spending included supplemental spending for Hurricane Katrina clean-up ($24.7 billion), the influenza pandemic ($6.1 billion) and border security ($2.2 billion). This totaled $33 billion. (Source: FY 2008 Budget, Table S-2, Table S-3)

Military Spending, the largest category in the discretionary budget, was $639.7 billion. It includes: 

  • The Base Budget for the Department of Defense  - $410.7 billion.
  • War on Terror supplemental spending - $120.4 billion.
  • Support departments - $108.6 billion. These include Homeland Security ($30.7 billion), Veterans Administration ($32.9 billion), State Department ($30.2 billion), FBI ($5.7 billion) and the National Nuclear Security Administration ($9.1 billion).


The worst effect of the FY 2006 budget was its $248 billion deficit. Keep in mind, most of this deficit went to pay the interest on the debt. As in all budget proposals, the deficit was projected to decline five years out. The government always paints a rosy picture of revenues gracefully rising faster than outlays. Instead, rising deficits reached a peak of $1.6 trillion in FY 2010 - more than the entire discretionary budget in FY 2006.

Continued deficit spending puts downward pressure on the dollar's value, increasing the price of imports and the cost of living. At the same time, it acts as a tax on future generations, who must bear the burden of paying off our debt. This puts downward pressure on future economic growth.

Why was there even a deficit at all? Economic growth had been steady for several years. The government should have been using those "fat years" to save for the future. It should have spent less, thus cooling the economy, not overheating it with deficit spending. Expansionary fiscal policy in FY 2006 contributed to the economic boom which, when it was over, caused the Great Recession.

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