debt, taxesI imagine this is a simple question, but I didn’t find the question listed on SE\E.
I’m looking at a wiki page for the US Federal Budget and see they’re broken down by Mandatory and Discretionary spending. Mandatory programs listed include:
The list of discretionary items is far too long to repro here.
Now I know that we make employee & employer contributions to many of the mandatory items with employee payroll, so my question is, are each of these adequately funded before the government decides what to do with federal income tax dollars?
What I’m getting at is, when we debate what the government allocates income tax dollars towards, should those program even figure in to the discussion? If so, I imagine none of them contributes to national debt or the on-going budget deficits… is that right?
I hope that’s this is a clear and understandable question. Thanks!
The designation of Mandatory versus Discretionary has more to do with the legislation and process used to create the program rather than how it is funded. Mandatory spending (also called Direct spending) is established by authorizing legislation and does not require annual appropriation legislation to allocate money. Discretionary spending programs require appropriation legislation each year to allocate money to them.
So the answer is, "Yes, income taxes pay for some mandatory legislation, but it's a bit more complicated than that." Mandatory programs are generally provided with a funding mechanism, such as the payroll tax associated with Social Security programs. However, as with the current situation with Medicare, some programs become underfunded despite a provided funding mechanism, and then usually rely on general funds to make up the difference. General fund money is comprised, for the most part, of income, corporate and excise taxes. Sometimes, Congress will pass reforms of mandatory programs which alter their funding mechanisms and remove the need for this.
If you're interested in more detail on how these things work, the budget Analytical Perspectives document (albeit very long) has a chapter on "Budget Concepts" which may be helpful to you. In addition, a text such as Allen Schick's The Federal Budget: Politics, Policy, Process is quite informative.
Not all mandatory spending is accounted for with specific tax levy’s.
A few major Items that are mandatory spending covered by general income tax:
Military and Government Payroll
Maintenance costs for Government Buildings
Servicing of Debt
In addition this year Social Security will expend more than they take in. While there is a ledger that is the Social Security Trust fund the actual funding for the trust has been used to cover spending during times where that was not the case. As such this year tax revenue other than SS Tax revenue will be used to cover the balance left from SS Tax - SSI Payments. Were that specific line item payment comes from will be difficult to determine.
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