[A Citizen's Guide to the Federal Budget]
[1. What is the Budget?]
[From the U.S. Government Printing Office, www.gpo.gov]


 
1. What Is the Budget?

The Federal budget is:

 a plan for how the Government spends your money.

What activities are funded? How much does it spend for defense, 
national parks, the FBI, Medicare, and meat and fish inspection? 

 a plan for how the Government pays for its activities.

How much revenue does it raise through different kinds of taxes-- 
income taxes, excise taxes, and social insurance payroll taxes? 

 a plan for Government borrowing.

If revenues are greater than spending, the Government runs a surplus. 
When there is a surplus, the Government can reduce the national debt. 

 something that affects the Nation's economy.

Some types of spending--such as improvements in education and 
support for science and technology--increase productivity and raise 
incomes in the future. 

Taxes, on the other hand, reduce incomes, leaving people with less 
money to spend.

 something that is affected by the Nation's economy. 

When the economy is doing well, people are earning more and 
unemployment is low. In this atmosphere, revenues increase and the 
deficit shrinks. 

 an historical record.

The budget reports on how the Government has spent money in the 
past, and how that spending was financed. 

The 2000 Budget is a document that embodies the President's budget 
proposal to Congress for fiscal 2000, the fiscal year that begins on 
October 1, 1999. It reflects the President's priorities and proposes to 
protect the budget surplus until Social Security is reformed.

The Federal budget, of course, is not the only budget that affects the 
economy or the American people. The budgets of State and local 


[[Page 2]]

        Chart 1-1.  Government Spending as a Share of GDP, 1998





       Total Government spending accounts for about one-third of 
     the national economy. Federal spending is about two-thirds of 
                   this amount, or 20 percent of GDP. 

governments have an impact as well. While Federal Government spending 
was a little less than 20 percent of the Gross Domestic Product (or GDP, 
which measures the size of the economy) in 1998, State and local 
governments spending was about another nine percent (see Chart 1-1). 

State and local governments are independent of the Federal Government, 
and they have their own sources of revenue (taxes and borrowing). But 
the Federal Government supplements State and local revenues by making 
grants to them. Of the $989 billion that State and local governments 
spent in 1998, $230 billion came from Federal grants.

As shown in Chart 1-2, compared to six other industrialized nations, 
the United States allocates the smallest share of its GDP to government 
spending (Federal, State, and local combined).



[[Page 3]]

        Chart 1-2.  Total Government Outlays as a Percent of GDP







      The United States allocates a smaller portion of its GDP to 
                government than any other nation shown.