Spending Categories, Fiscal Solvency, and Deficit Management: Federal Spending Categories:

Spending Categories, Fiscal Solvency, and Deficit Management: Federal Spending Categories:

• Mandatory Spending:

• Required by entitlement laws; accounts for approximately 2/3 or 65% of the budget (e.g., Social Security, Medicare).

• Discretionary Spending:

• Annual funding approved via 12 appropriation bills (e.g., Defense, Education).

• Fiscal Terminology: National Debt:

• Cumulative sum of past deficits minus surpluses, approaching 40 trillion USD.

• Fiscal Terminology: Deficit:

• Annual expenditures exceed revenue.

• Fiscal Terminology:Surplus:

• Revenue exceeds expenditures.

• Shutdowns & Furloughs:

• Occur when budget bills or Continuing Resolutions (CRs) fail to pass before the new fiscal year; non-essential administrators face mandatory furloughs while elected officials continue receiving pay.

• Debt Alleviation Strategies:

• Cutting spending (entitlements, defense), raising revenue (tax rates/restructuring), or expanding GDP (infrastructure, trade, innovation).