The fiscal year 2007 budget guided federal spending for the period October 1, 2006, through September 30, 2007. The $2.568 trillion in revenue received did not cover the $2.729 trillion in spending, creating a $161 billion deficit.
FY 2007 Revenue
Income taxes contributed most of the revenue, at $1.163 trillion.
Social Security taxes made up $869.6 billion, and corporate taxes added $370 billion. The rest came from other taxes, such as excise ($65 billion), estate ($26 billion), and other miscellaneous taxes.
The Bush administration had estimated it would receive $2.416 trillion in its budget.
The Federal government spent $2.729 trillion. Over half ($1.450 trillion) went to mandatory programs, such as Social Security, Medicare, and Military Retirement programs.
These expenditures are mandated by prior Acts of Congress, and therefore cannot be changed without a subsequent Congressional Act. That means all budgets for these categories are simply estimates of what will be paid to fulfill the mandates.
That leaves $1.042 trillion for discretionary spending, which includes Defense and all other departments. A whopping $237 billion was spent on nothing more than paying the interest on the (at that time) $9 trillion national debt.
The government's original budget estimate for FY 2007 spending was $2.77 trillion.
Mandatory spending was $1.450 trillion. Social Security ($581 billion) was the largest Mandatory expenditure.
Medicare was the next largest expenditure at $371 billion, followed by $191 billion in benefits for Medicaid. All other remaining mandatory programs cost $307 billion.
These programs include:
- Food stamps
- Unemployment compensation
- Child nutrition
- Child tax credits
- Supplemental Security for the Blind and Disabled
- Student loans
- Retirement/disability programs for civil servants
- The Coast Guard and the Military
Less than half the budget ($1.042 trillion) was discretionary. This is the part that's negotiated between the President and Congress each year to pay for the management of all departments.
Much of the discretionary budget was for defense and other security-related expenditures. This includes:
- The base budget of the Defense Department - $431.7 billion.
- Supplemental security spending for the War on Terror - $169.2 billion.
- Homeland Security - $39.9 billion
- Veterans Affairs - $35.2 billion
- State Department - $29.5 billion
- FBI - $6.0 billion
- National Nuclear Security Administration - $9.1 billion
Non-security spending made up the rest of the discretionary budget. The largest departments were:
- Health and Human Services - $69.0 billion
- Education - $57.4 billion
- Housing and Urban Development - $49.0 billion
- Agriculture - $24.4 billion
Thanks to higher than expected revenues, the FY 2007 budget only had a $161 billion deficit.
However, when you stop to think about it, why was there even a deficit at all? Economic growth had been steady for several years, and the stock market hit its peak of 14,164 in October of that year. The government should have been using those "fat years" to save for the future and cool economic growth, not overheat it with deficit spending.
This expansionary fiscal policy contributed to the economic bubble which became the Great Recession when it burst.
Continued deficit spending put downward pressure on the dollar's value over the long term. It increases 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.
Compare to Other U.S. Federal Budgets
- Current Federal Budget
- FY 2019
- FY 2018
- FY 2017
- FY 2016
- FY 2015
- FY 2014
- FY 2013
- FY 2012
- FY 2011
- FY 2010
- FY 2009
- FY 2008
- FY 2006