FY 2014 U.S. Federal Budget and Spending

Summary of the President's Budget, Why It Didn't Pass and What Was Spent

Obama-FY 2014 budget.jpg
Obama should be smiling -- the budget deficit is dropping. Photo by Chip Somodevilla/Getty Images

The president's budget for fiscal year 2014 was supposed to kick-off negotiations with Congress over how to fund government operations for October 1, 2013 through September 30, 2014. However, Congress didn't follow the normal budget process.  

Instead, tea party Republicans used the budget cycle to shut down the government. They initially refused to raise the debt ceiling, threatening to allow the U.S. to default on its debt.

Why? They were a minority that wanted to force their policy on the majority, overriding the safeguards of democracy. They wanted to defund Obamacare, reduce the national debt, and lower mandatory spending -- something they had no chance of doing in a normal budget process. For a day-by-day recap, see Government Shutdown.

What Happened?

February 12, 2013 - President Obama outlined his budget priorities in the 2013 State of the Union Address. They were to reduce Medicare spending as outlined in the Simpson-Bowles report, create jobs, and attack climate change. He also urged Congress to vote on immigration reform and gun control bills. Finally, he proposed several education programs and shifts in defense spending.

April 10, 2013 - President Obama submitted the FY 2014 budget to Congress. The Republican-controlled House ignored it.

March 21, 2013 - The House passed its own budget proposal created by Committee Chairman Paul Ryan called the Path to Prosperity.

It would balance the budget in 10 years by reducing mandatory spending, requiring Congressional approval outside of the normal budget process.It would repeal Obamacare, privatize Medicare and change Medicaid to state block grants. It would open the Keystone pipeline. This was ignored by the Democratic-controlled Senate.

March 23, 2013 - The Senate approved its budget proposal prepared by Committee Chairwoman Patty Murray. It planned to spend just $91 billion more than the House budget. However, the two budgets were miles apart in philosophy, so the next step was never taken. That would have formed a Congressional Conference Committee to create a budget that was agreeable to both. (Source: Prime Policy Plan, "FY 2014 Budget Process.")

September 28 - 30, 2013 - The House submitted a continuing resolution to defund Obamacare. The Senate rejected it, and submitted a resolution that funded Obamacare. Neither budget passed, so the government shut down on October 1, 2013. 

October 16, 2013 - Obama signed Congressional bill authorizing funding until January 15, 2014, allowing time for the Congressional Conference Committee to propose a joint budget. 

December 15, 2013 - Deadline for the Conference Committee to agree on a FY 2014 budget. If no agreement was reached by January 15, 2014, then the second round of sequestration would have kicked in.

January 16, 2014 - Congress approved the Bi-Partisan Budget Act. 

President's FY 2014 Budget Summary

Here's a summary of the FY 2014 budget, compared to what was actually spent (as recorded in the FY 2016 budget).

 

Revenue. The Federal government expected to receive $3.034 trillion in revenue, but instead received $3.021 trillion. Income taxes contributed 46 percent, payroll taxes were 34 percent, corporate taxes were 11 percent, and the remaining 9 percent came from excise taxes, estate taxes, interest on Federal Reserve deposits and other miscellaneous sources. Tax Freedom Day occurred on April 18. That's how long each taxpayer worked to pay for all Federal revenue collected.  (Source: Office of Management and Budget, FY 2016 Budget Summary Tables,Table S-5) 

Total Spending. The OMB estimated the Federal government would spend $3.78 trillion. Instead, the cuts from sequestration kicked in. Since government spending is a component of GDP, these spending cuts slow economic growth. This is very risky at this phase in the business cycle, which is just starting to expand after the 2008 financial crisis.

As a result, $3.506 trillion was spent.

The mandatory budget consumes sixty percent of total spending. The OMB estimated that $2.308 trillion would be spent on Social Security and other benefits. Actual spending was $2.156 trillion.This spending was already approved by Congress, so this portion of the budget is an estimate. This is the portion of the budget that tea party Republicans were most opposed to, but they didn't have the votes in Congress to change it. The only portions affected by sequestration were Medicare provider payments and the unemployment trust fund. Here's the budget breakdown:

  • Social Security -- $860 billion budgeted, and $845 billion was spent. Currently 100 percent paid for by payroll taxes.
  • Medicare --$524 billion budgeted, $505 billion spent. Only 57 percent funded by payroll taxes and premiums.
  • Medicaid --$304 billion budgeted, $301 billion spent.
  • All other -- $497 billion budgeted, $504 billion spent. These include programs like Food Stamps, Unemployment Compensation, and Supplemental Security for the Disabled, the Affordable Care Act and TARP.

Interest on national debt are not part of the mandatory budget, but the payments must be made. If they aren't, then the United States has defaulted on its debt. There was $223 billion budgeted and $229 billion spent. (Source: "Table S-5, FY 2016 Budgets," OMB.)

The discretionary budget must comply with the Bipartisan Budget Act, which approved $1.012 trillion for discretionary programs.  Here's the budget compared to what was actually spent in the major departments:

Department Spending (in billions)
DepartmentBudgeted (from FY 2014 Budget)Actual (From FY 2016 Budget)
Department of Defense    $520.5   $496.1
Health and Human Services      $78.3     $79.8
Education      $71.2     $67.3
Veterans Affairs      $63.2     $63.3
Homeland Security      $39.3     $39.2
Energy Department      $34.0     $27.2
    (National Nuclear Security              Administration)        $11.2       $11.2
Housing and Urban Development     $33.1     $34.2
Justice Department     $27.4     $27.3
State Department (includes Foreign Aid)     $46.9     $42.9
NASA     $17.6     $17.6

In addition, the Allocation Committee added $85.1 billion in Overseas Contingency Operations  to pay for the Afghanistan War and another $6.7 billion for other emergency funding such as disaster relief and wildlife suppression. This is outside the Budget Act. As a result, actual discretionary spending was $1.350 trillion.

Many discretionary programs were closed for 16 days thanks to the government shutdown in October. It's difficult to tell from this major budget report how much was actually saved.

Total military spending was $746.8 billion. That includes the DoD base budget ($496.3 billion), the OCO spending ($85.1 billion). It should also include $165.4 billion to fund other departments that support our nation's defense, such as Homeland Security ($39.8 billion), the Veterans Affairs ($63.3 billion), the State Department ($42. 9 billion), the FBI ($8.246 billion) and the NNSA ($11.2 billion). 

Deficit

The FY 2014 deficit was $485 billion, much less than the proposed deficit of $744 billion. To compare U.S. budget deficits through history, see U.S. Deficit by Year and Deficit by President. 

Compare to Other U.S. Federal Budgets: