FY 2015 U.S. Federal Budget and Spending
Thank Sequestration for a Smaller Deficit in FY 2015
The Fiscal Year 2015 federal budget is the U.S. government spending and revenue from October 1, 2014, through September 30, 2015. Spending totaled $3.688 trillion but revenue was only $3.250 trillion. That created a $438 billion budget deficit.
On March 4, 2014, President Obama submitted the FY 2015 budget proposal to Congress. This was a month late according to the traditional budget process. But it didn't delay the rest of the budget schedule for the year.
On December 13, 2014, Congress passed its $1.1 trillion spending bill. It appropriated funding for the discretionary budget for the rest of FY 2015. But it only funded Homeland Security through February 2015. That was in protest of President Obama's executive actions on immigration.
Here is a breakout of the FY 2015 budget revenue and spending. It compares actual spending to the president's budget.
The federal government received $3.25 trillion in FY 2015. That was less than the president's estimate of $3.337 trillion. Income taxes contributed 47 percent. Payroll taxes for Social Security, Medicare, and unemployment insurance added 34 percent. Corporate taxes provided 11 percent.
The remaining 9 percent was divided among three areas. They are excise taxes and tariffs, earnings from the Federal Reserve's $4.4 trillion in securities holdings, and miscellaneous revenue.
Tax Freedom Day occurred April 24, 2015. That's the first day of the year that Americans have earned enough money to pay the nation's total tax bill for the year.
The government spent $3.688 trillion. That's much less than the $3.9 trillion estimated in the president's budget. One reason is sequestration limited discretionary spending to $1.1 trillion. Also, mandatory spending was less than estimated. Here's the rundown:
Mandatory – As usual, nearly two-thirds of the budget went toward mandatory programs. These were established by prior acts of Congress, so they can't be changed without another act. A total of $2.301 trillion was spent. That's lower than the $2.458 trillion budgeted.
- Social Security was the largest. It cost $882 billion, lower than the estimate of $896 billion. It's 100 percent paid for by payroll taxes, so it doesn't add to the deficit.
- Medicare was next at $540 billion. This was higher than the $526 billion first estimated. It's only 57 percent funded by payroll taxes and premiums.
- Medicaid cost $350 billion, more than the $336 billion budgeted.
- All other mandatory programs totaled $529 billion. These include food stamps, unemployment compensation, and supplemental security for the disabled. The Affordable Care Act and Troubled Asset Relief Program were added after their enabling acts were passed. This was less than the estimate of $659 billion.
Sequestration cut Medicare provider payments and the unemployment trust fund. They were the only mandatory programs affected.
Interest on the national debt was $223 billion. Lower interest rates meant that the Treasury didn't pay the budgeted $251 billion.
Discretionary – Discretionary spending must comply with the Bipartisan Budget Act. Congress approved $1.1 trillion for the 2015 discretionary budget. Here's the spending for the major departments:
- Department of Defense – $496.1 billion.
- Health and Human Services – $80.3 billion.
- Education – $66.9 billion.
- Veterans Affairs – $65.1 billion.
- Homeland Security – $39.9 billion.
- Energy Department – $27.4 billion. That includes $11.4 billion for the National Nuclear Security Administration.
- Housing and Urban Development – $30.4 billion.
- Justice Department – $26.3 billion.
- State Department – $40.9 billion.
- NASA – $18.1 billion.
Congress added $73.7 billion in Overseas Contingency Operations funding to pay for the Afghanistan War. It added $13.4 billion in emergency funding for disaster relief and other programs. OCO and emergency funding isn’t subject to sequestration or the discretionary budget limit.
The Bottom Line
Most of federal spending went to two areas. Combined, they totaled $3.416 trillion. The first was the mandatory budget of $2.612 trillion. Add $80.2 billion for Health and Human Services. That's the agency that administers mandatory programs like Medicare, Medicaid, and the ACA.
The second largest was military spending. It should also include the departments that support defense and OCO spending. That total came to $723.5 billion.
|Department||Budget (in billions)|
|National Nuclear Security Administration||$11.4|
|Subtotal without OCO||$659.2|
Subtract them from the $3.688 trillion budget and it leaves just $272 billion for the rest of the federal government. That includes tax collection, educating the labor force, and upholding the law. The federal budget measures America's true priorities.
The Office of Management and Budget estimated the president's budget deficit to be $583 billion. Instead, it came in at $438 billion. That's because spending was lower. A review of deficit by president reveals this was Obama's smallest deficit. A review of deficit by year reveals it was the smallest deficit since FY 2008. office