FY 2020 Federal Budget: Trump’s Budget Request
Compare Congress’ Enacted Budget to Trump’s Request
The fiscal year 2020 federal budget outlines U.S. government revenue and spending from Oct.1, 2019, through Sept. 30, 2020. The Office of Management and Budget estimated that revenue will be $3.706 trillion. That's less than the planned spending of $4.79 trillion and will create a $1.083 trillion budget deficit.
Income taxes, at $1.8 trillion, contribute 49% of FY 2020 government revenue. Payroll taxes, including Social Security and Medicare, are $1.3 trillion, or 35%. Corporate taxes add $265 billion, contributing just 7%. President Donald Trump's tax plan lowered that from 9% in FY 2016.
The remaining $319 billion in revenue comes from excise taxes ($95 billion), customs duties ($92 billion), interest on Federal Reserve deposits ($73 billion), estate taxes ($20 billion), and other miscellaneous sources ($39 billion).
Federal spending is budgeted at $4.79 trillion in FY 2020. Government spending has three components: discretionary, mandatory, and interest on the debt.
Discretionary spending is the part of the budget that Congress appropriates funds for each year.
There are three stages in the discretionary budget.
- The president's budget request. The president proposes what he would like Congress to appropriate.
- The Congressional appropriation. It typically uses the president’s request as a guideline.
- The actual spending that occurs.
For FY 2020, discretionary spending will be $1.438 trillion. Here is the breakdown for the top 10 largest departments:
- Defense: $633 billion
- Health and Human Services: $106 billion
- Veterans Affairs: $93 billion
- Education: $72 billion
- Housing and Urban Development: $57 billion
- Homeland Security: $48 billion
- State: $48 billion
- Energy: $39 billion
- Justice: $32 billion
- NASA: $23 billion
Defense spending is, by far, the largest component of discretionary spending. For 2020, Congress allocated $633 billion to the Department of Defense (DoD), six times more than the next largest agency. That's just the base budget. There's also an Overseas Contingency Operations (OCO) fund and Emergency funding in addition to the base budget.
There are also many other agencies, such as Homeland Security, that have a role in defending America. Some of them also receive OCO and Emergency funds. To really understand U.S. military spending, these must all be added up.
In FY 2020, Congress allocated $71 billion in OCO funds and $8 billion in emergency funds for the DoD. When added to the DoD base of $633 billion, it totals $712 billion.
The other agencies that protect our nation include: Veterans Affairs ($93 billion), Homeland Security ($48 billion), the State Department ($48 billion), the National Nuclear Security Administration in the Department of Energy ($17 billion), and the FBI and Cybersecurity in the Department of Justice ($10 billion). That totals $216 billion.
Some of these agencies also receive OCO funds of $8 billion.
When all these costs are added together, the true cost of defense is $936 billion, as shown below:
- DoD Base: $633 billion
- DoD OCO and Emergency: $79 billion
- Other Support Agencies: $216 billion
- Support Agencies OCO and Emergency: $8
The mandatory budget estimates how much it will cost to provide certain federal benefits. These include Social Security, Medicare, and Medicaid. All mandatory programs were authorized by previous Acts of Congress. For that reason, the mandatory budget is an estimate, not an appropriation, meaning Congress can't change benefit payments as part of the normal budget process.
A new Act of Congress is required to change spending on mandatory programs such as Social Security and Medicare.
The budget office estimates FY 2020 mandatory benefits will cost $2.975 trillion.
- Social Security: $1.092 billion. Payroll taxes fund 100% of the cost.
- Medicare: $694 billion. Payroll taxes and premiums fund more than half.
- Medicaid: $447 billion. Paid out of the general fund.
- All Other: $743 billion. This includes food stamps and Supplemental Security Income. Most are paid out of the general fund. Payroll taxes partially fund Unemployment Compensation. The Affordable Care Act and the Troubled Asset Relief Program are self-funded.
Interest on the Debt
Interest payments on the national debt will be $376 billion. That's the interest the Department of the U.S. Treasury must pay to holders of Treasury notes. Even though the debt keeps rising, the interest payments remain moderate. That's because interest rates remain low.
The U.S. budget deficit is how much more the federal government spends than it receives in revenue each year. The FY 2020 deficit is projected to be $1.083 trillion. That's the largest deficit since FY 2011.
The difference is that spending was high in 2011 to combat the 2008 financial crisis. Tax receipts also dropped due to the recession, decreasing revenue. While revenues are expected to be the highest in U.S. history in FY 2020, Congress increased the deficit to pay for record-high levels of military spending.
The White House. “A Budget for America’s Future.” Table S-4. Page 112. Accessed Feb. 28, 2020.
The White House. “A Budget for America’s Future: FY 2021.” Table S-8. Page 123. Accessed Feb. 28, 2020.
The White House. “A Budget for America’s Future: FY 2021." Table S-8. Page 124. Accessed Feb. 28, 2020. https://www.whitehouse.gov/wp-content/uploads/2020/02/budget_fy21.pdf