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What is federal debt?
Federal debt is the accumulation of the federal government annual budget deficit. It is the total amount of money that the United States federal government owes to its creditors
- https://www.investopedia.com/updates/usa-national-debt/
What is federal deficient ?
Federal deficient is the amount the United States government spending is bigger than the money it gets from taxes in a particular year
-https://dictionary.cambridge.org/us/dictionary/english/federal-deficit
Federal Surplus or Deficit
The graph shows the federal surplus in millions of dollars from 1970 up to 2019. The gray columns shown in the graphs are recessions that happened in the United States. In the 1970's that is when the economic was transitioning into a recession. The oil crisis occurred in 1973 oils was doubled, and the high price the government was spending on the Vietnam War. This led to high unemployment. In 1975 the recession ended then after the economic was able to be stable for a while. Around the early 1980's the Iran / Energy crisis occurs it lasted for 18 months. Iran exported oil at lower volumes, driving prices more higher. The U.S. government used a tighter monetary policy to control the high inflation. Fast forward to the 1990 another recession occurs which is caused by the Gulf war which lasted for eight months. The resulted was that there was an increase in the price of oil. Which caused manufacturing trade sales to decline. There was buyout of United Airlines set off a stock market crash. After the 90's you see stability in the economy until 2001 when 9/11 occurred. The 9/11 recession for 8 months. The fall of the dotcom bubble and the 9/11 attacks added to the recession of 2001. After the recession it economy was able to be stable up until 2007 which the the the great recession occurred which lasted for 18 months. The fall of the housing bubble of the 2000’s and resulting record foreclosures and a financial crisis that threw markets worldwide into a disaster. Oil prices spiked to record highs by mid 2008 and then crashed, devastating the U.S. oil industry. Which resulted in a huge deficient As you can see in the graphs there been periods of time where a recession has occurred but the economy was able to recover from it. After 2008 the economy was able able to stay stable
Federal Surplus or Deficit as Percent of Gross Domestic Product
This graph shows federal surplus or deficit as percent of gross domestic product from 1970 up till 2019. The graph shows the percentage of the U.S. economy which is the federal budget. The gray columns are the recessions that had occurred. During those recessions there was a decrease in the percent of gross domestic product. There was a decrease in 1970- 1975, 1980-1983, 1990-1991, 2001 and 2008. In 1975 you see the percent of gross domestic product go drop to -2.0 percent. In 1980 the percent dropped too -2.5 then in 1983 to dropped too -5.1 percent. In 1991 the percent dropped to - 4.5 percent. In 2000 the percent is at 0.0 percent. In 2008 the percent drastically drops too 10.0 percent. In 2008 the great recession occurred which collapsed world financial market, banking and real estate industries. This led into increases in home mortgage foreclosures worldwide and caused millions of people to lose their life savings, their jobs and their homes. The government can lower the deficient if they spend less on certain things like military some of the money can be used in other things. Also raise the taxes of the wealthy instead of raising the taxes on middle and low income people.
Federal Debt: Total Public Debt as Percent of Gross Domestic Product
The graph shows the total public debt as percent of gross domestic product from 1970 up to 2019. This graph measures the debt to gross domestic product ratio over a period of time. A low debt to gross domestic product ratio is positive which means that the economy is making enough profits and able to pay back the debt. A high debt to gross domestic product ratio is a negative sign which means that the economy is not flourishing. In the graph you see recessions occurring in the 70's, early 80's, early 90's, early 2000's and the mid 2000's. The biggest increase in GDP was in 2008 when the the great recession occurred. The percentage was 67% which is very high meaning that the economy is doing very bad and it would be a struggle to pay the debt. The public debt would increase even during the recessions because people are struggling during that time and people are going to to need government help if unemployment increases during that time. The United Sates total public debt increases overtime and what is occurring now in 2020 with the pandemic and over 30 million people unemployed the public debt would most definite increase.
Federal Surplus or Deficit Consumer Prince Index
The graph shows the inflation from 1970 up to 2019. Inflation increases the CPI which is the weighted average prices of different goods. The shows the consumer prices increasing at a steady pace. Even through the economic recessions that occurred during the time period between 1970 and 2019. During those recessions the output increased. In the 1970 the inflation rate increased cause of the rise of oil prices and the increase of unemployment rate. The economy was really suffering in the 1970's. In the 1980 to 1983 the inflation increase to be the result of the oil crisis that occurred previously and government overspending. In 2008 the inflation increased so much because of the recession that halted everything. After 2008 bailouts the economy was able to steadily become stable because as seen on the graph a recession has not occurred after that.
Where does the money come from?
Income taxes paid by individuals: $1.48 trillion, or 47% of all tax revenues.
Payroll taxes paid jointly by workers and employers: $1.07 trillion, 34% of all tax revenues.
Corporate income taxes paid by businesses: $341.7 billion, or 11% of all tax revenues
Where Do Federal Taxes Revenues Come from?
The three main sources of federal tax revenue are individual income taxes, payroll taxes, and corporate income taxes. Other sources of tax revenue includes excise taxes, the estate tax, and other taxes and fees. Half of all federal revenue comes from individual income taxes. Another 35 percent of revenue comes from payroll taxes, which are assessed on the wage or salary paychecks of almost all workers and are used to fund social security, medicare Hospital Insurance, and unemployment insurance. Payroll taxes as a whole are regressive, they collect a higher percentage of total earnings from lower-income workers than higher-income ones. Corporate income taxes make up about 6 percent of federal revenue, with the remaining 8 percent coming from excise taxes, estate taxes, and other revenue sources. Excise taxes are collected on the sale of certain goods (e.g., fuel, alcohol, and tobacco); they are intended to raise revenue and, in some cases, discourage consumption of the taxed product. These made up about 3 percent of federal receipts in 2018. The estate tax is a tax on assets such as cash, real estate, or stock that are transferred from deceased persons to their heirs. Estate tax revenues made up 0.7 percent of total federal receipts in 2018
-https://www.cbpp.org/research/federal-tax/policy-basics-where-do-federal-tax-revenues-come-from
What has happened to corporate taxes as percent of Federal Revenues over time?
About 48 percent of federal revenue comes from individual income taxes, 9 percent from corporate income taxes, and another 35 percent from payroll taxes that fund social insurance programs
-https://www.taxpolicycenter.org/briefing-book/what-are-sources-revenue-federal-government
Where does the money go?
The money goes to mandatory and discretionary spending account for more than ninety percent of all federal spending, and pay for all of the government services and programs on which we rely on.
-https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/
What is federal spending?
The federal budget is the government's estimate of revenue and spending for each fiscal year. The federal budget breaks down the expenditure of public funds for the upcoming fiscal year
-https://www.thebalance.com/what-is-the-federal-budget-3306305
What is discretionary and mandatory spending
Discretionary Spending is the portion of the budget that the president requests and congress appropriates every year. It represents less than one-third of the total federal budget, while mandatory spending accounts for around two-thirds. Mandatory spending is spending that congress legislates outside of the annual appropriations process, usually less than once a year. It is dominated by the well-known earned-benefit programs Social Security and Medicare. It also includes widely used safety net programs like the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), and a significant amount of federal spending on transportation, among other things.
-https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/
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