Federal Budget Process – Report by Gardner Magazine

Federal Budget Process and Spending – Gardner Magazine Reports

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Comprehensive Analysis of the Federal Budget Process and the Role of the Congressional Budget Office

Comprehensive Analysis of the Federal Budget Process and the Role of the Congressional Budget Office

Summary

The United States federal budget process is a complex, multi-stage framework governed by statutory requirements, notably the Congressional Budget Act of 1974. Central to this process is the Congressional Budget Office (CBO), a nonpartisan agency designed to provide the legislative branch with objective economic and budgetary analysis independent of the executive branch.

Federal spending is categorized into mandatory spending (approximately 60% of the budget), discretionary spending (approximately 27%), and net interest—the fastest-growing component. Revenue is primarily derived from individual income and payroll taxes. Budgetary enforcement is managed through both internal Congressional rules and statutory mechanisms like the Statutory Pay-As-You-Go Act of 2010 (S-PAYGO), which utilizes sequestration to maintain fiscal targets. While the process is intended to be annual, it frequently relies on continuing resolutions and reconciliation to manage shifting political priorities and fiscal challenges.

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I. The Congressional Budget Office (CBO): Mandate and Operations

Origins and Mission

Established by the Congressional Budget Act of 1974, the CBO was created to bolster the role of Congress in budget matters. It provides objective, nonpartisan information to support the budget process, offering a legislative alternative to the executive branch’s Office of Management and Budget (OMB).

Core Responsibilities

The CBO’s work is prioritized based on Congressional needs, primarily supporting the House and Senate Budget Committees. Other priority stakeholders include the Appropriations, House Ways and Means, and Senate Finance Committees. The agency’s primary functions include:

• Budget and Economic Projections: Producing the annual Budget and Economic Outlook, which provides “baseline” projections for the coming decade.

• Cost Estimates: Providing advisory estimates for nearly every bill approved by a full committee in either chamber.

• Technical Assistance: Offering thousands of informal updates and technical support during the legislative drafting stage.

• Reporting: Publishing dozens of reports annually on the economy, national security, and policy options.

Operational Principles

The CBO maintains institutional integrity through several strict adherence points:

• Nonpartisanship: The agency makes no policy recommendations. Employees are hired based on expertise regardless of political affiliation.

• Methodological Rigor: Analysts use complex computer models (microsimulation, macroeconomic, and regression) but supplement these with research and expert judgment to ensure estimates represent the middle of the distribution of potential outcomes.

• Transparency: CBO prioritizes transparency by releasing underlying data, computer code, and documentation for its models on platforms like GitHub.

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II. Federal Spending Categories

Federal outlays are divided into three distinct classes, each governed by different legal and procedural frameworks.

Spending Category	Definition	Key Components
Mandatory	Governed by permanent law; spending is “automatic” unless laws are changed.	Social Security, Medicare, Medicaid, SNAP, Veterans’ benefits.
Discretionary	Funding set annually through the appropriations process.	Defense, Education, Transportation, Homeland Security.
Net Interest	Payments on the national debt.	Interest on Treasury securities.

Mandatory Spending (Entitlements)

Mandatory programs account for roughly 60% of federal spending. Because they are governed by eligibility criteria (e.g., age, income) rather than fixed dollar amounts, spending fluctuates based on the number of eligible participants. The growth of Social Security, Medicare, and Medicaid is the primary driver of the increase in this category since the 1970s.

Discretionary Spending

Discretionary spending must be approved each fiscal year. Defense spending represents nearly half of this category. While discretionary spending accounted for two-thirds of the budget in the 1960s, it has fallen to approximately 27% as of 2024.

Net Interest

Net interest is currently the fastest-growing “program” in the federal budget. Driven by high debt levels and interest rates, it is projected to grow from 13% of the budget in 2024 to 23% by 2054.

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III. Federal Revenue and Taxation

The federal government finances operations primarily through taxes, which totaled $4.9 trillion (17% of GDP) in 2024.

Primary Revenue Sources

1. Individual Income Taxes: The largest source (approx. 50% of receipts). The system is generally progressive, with the top quintile of earners paying the vast majority of these taxes.

2. Payroll Taxes: The second-largest source, funding Social Security, Medicare, and unemployment insurance. For many lower-income earners, payroll taxes exceed their income tax liability.

3. Corporate Income Taxes: Taxes on corporate profits, typically accounting for 10% of total revenue.

4. Excise Taxes and Customs Duties: Taxes on specific goods (tobacco, fuel) and tariffs on imports.

Tax Expenditures

Commonly referred to as “spending in disguise,” tax expenditures are provisions like credits, deductions, and exclusions that allow taxpayers to reduce their liability. In 2024, these totaled nearly $1.9 trillion—exceeding the spending of any single federal agency. They are often less transparent than direct spending because they do not require annual approval.

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IV. The Federal Budget Process and Enforcement

The budget process is an annual cycle involving the President, federal agencies, and both chambers of Congress.

The Annual Cycle

• President’s Budget: Submitted by the first Monday in February, this proposal outlines administration priorities.

• Budget Resolution: The House and Senate develop a broad framework to reconcile spending and revenue plans. This is a concurrent resolution, not a law.

• Appropriations: Twelve separate bills written by Appropriations Committees to fund discretionary programs.

• Reconciliation: A powerful procedural tool that allows for expedited consideration of certain tax and spending changes, notably avoiding the Senate filibuster.

• Continuing Resolutions (CRs): Temporary stopgap measures used to fund the government if regular appropriations are not enacted by the October 1 fiscal year start.

Statutory Enforcement: S-PAYGO

The Statutory Pay-As-You-Go Act of 2010 (S-PAYGO) aims to control the deficit by requiring that new legislation affecting mandatory spending or revenues does not increase the net deficit.

• Scorecards: OMB maintains 5-year and 10-year scorecards to track the budgetary effects of legislation.

• Sequestration: If a scorecard shows a positive balance (a deficit increase) at the end of a Congressional session, OMB must trigger sequestration—a mandatory cancellation of budgetary resources to offset the increase.

• Exemptions: Social Security and the Postal Service are classified as “off-budget” and are generally excluded from S-PAYGO scorecards.

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V. Financial Reporting and Accountability

The Department of the Treasury and the CBO provide various reports to ensure transparency and accuracy in federal financial operations.

Key Treasury Publications

• Combined Statement of Receipts, Outlays, and Balances: The official publication of federal budgetary results. All other reports must agree with this statement.

• Financial Report of the United States Government: A comprehensive audited view of the government’s financial position, prepared with the OMB and audited by the GAO.

• Monthly Treasury Statement (MTS): A monthly summary of receipts and outlays based on agency reporting.

CBO Analytical Products

The CBO evaluates its own performance by periodically publishing reports on the Accuracy of CBO’s Baseline Projections and its Economic Forecasting Record. These reports compare past projections with actual outcomes to identify factors that caused patterns or turning points to be missed.

Evolution of Analysis

The CBO continues to evolve its methods to meet modern Congressional needs, including:

• Dynamic Analysis: Examining how legislative proposals affect the economy, which in turn affects the budget.

• Long-Term Projections: Extending budget windows to 30 years to capture the effects of demographic shifts and rising healthcare costs.

• Administrative Actions: More explicitly showing how judicial or executive branch actions affect the budget baseline.

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The Great American Paper Trail: A Journey Through the Federal Budget

The Great American Paper Trail: A Journey Through the Federal Budget

1. Introduction: The Budget as a National Roadmap

Imagine the United States is embarking on a massive, year-long national road trip. Every great journey needs a plan: where are we going, what are our priorities, and how do we pay for the gas? The federal budget is that plan. It isn’t just a dry spreadsheet; it is a National Roadmap that reflects the country’s values and tells us which “destinations”—like healthcare, education, or defense—we value most.

To understand the scale of this journey, consider that in 2024, the federal government spent $6.8 trillion. That is roughly 25% of the entire U.S. economy, or about $20,100 for every person in the country. However, the road is getting steeper: because of an aging population, rising healthcare costs, and inflation, the government has less flexibility today than it did decades ago.

The government’s spending is divided into three distinct lanes:

• Mandatory Spending (The Autopilot): These are programs like Social Security and Medicare. Laws dictate who is “entitled” to these benefits, so the money flows automatically. The “So What?”: This now makes up about 60% of the budget, meaning more than half of our “fuel” is already spent before the trip even begins.

• Discretionary Spending (The Steering Wheel): This is the part of the budget where lawmakers have the most “choice,” but it must be approved every year. It covers everything from the military to national parks. The “So What?”: This category is shrinking as a share of the total budget, leaving less room for new investments.

• Net Interest (The Borrowing Toll): This is the cost of carrying the national debt. Driven by higher interest rates, it is now the fastest-growing part of the budget—growing even faster than Social Security. The “So What?”: Every dollar spent on interest is a dollar that can’t be spent on schools, roads, or technology.

Just like any road trip, someone has to draw the first version of the map. That task falls to the President.

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2. The First Draft: The President’s Budget Proposal

The journey begins with the President’s Budget Proposal, usually submitted in early February. While it is a massive document, it is important to remember it is essentially a “wish list.” It represents the Administration’s vision, but it is a starting point for discussion rather than a final law.

To help navigate these trillions of dollars, two different “referees” provide data. The Executive branch uses the Office of Management and Budget (OMB), while Congress relies on its own nonpartisan “truth-teller,” the Congressional Budget Office (CBO).

Feature	Office of Management and Budget (OMB)	Congressional Budget Office (CBO)
Who They Work For	The President (Executive Branch)	The Congress (Legislative Branch)
Primary Goal	To implement the President’s policy priorities and budget vision.	To provide objective, nonpartisan data and cost estimates.
Legal Power	Assists in implementing the budget.	Advisory only. CBO provides the data, but Budget Committees enforce the rules.

Once the President presents this initial map, the “power of the purse” moves to the legislative branch, where the real negotiation begins.

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3. Setting the Speed Limits: The Congressional Budget Resolution

After receiving the President’s proposal, the House and Senate Budget Committees take the wheel. Their job is to create a Budget Resolution. Before they decide on new spending, they look at a “baseline projection” from the CBO—a “current path” forecast showing where the budget is headed over the next 10 years if no laws change.

To reach a final agreement, Congress follows these steps:

1. Drafting Separate Maps: The House and Senate Budget Committees create their own separate budget plans with different priorities.

2. Reconciling the Route: The two chambers must negotiate to merge their plans into one.

3. The Concurrent Resolution: By April 15, they aim to pass a joint agreement.

Crucial Note: A Budget Resolution is not a law. It is an internal “roadmap” for Congress only; it does not go to the President for a signature, and it doesn’t actually spend a single dime. It simply sets the broad “speed limits” for how much can be spent in the next stage.

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4. Packing the Suitcase: The Appropriations Process

With the broad limits set, we reach the Appropriations Process. This is where Congress decide how to pack the “suitcase” of Discretionary Spending.

Because this is such a massive task, the Appropriations Committees in the House and Senate act as “specialized packing experts.” They divide the suitcase into 12 compartments (subcommittees). Each expert handles one specific area:

• The Defense Compartment: The largest area, representing nearly half of all discretionary spending.

• The Non-Defense Compartments: 11 other sections covering specialized needs like Education, Transportation, Science, and Homeland Security.

Critical Deadline: All 12 of these funding bills must be signed into law by October 1—the official start of the federal fiscal year.

If the suitcase isn’t packed by October 1, the “car” can’t leave the driveway, and the government risks a shutdown. To keep moving, Congress often uses “shortcuts.”

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5. Navigation Shortcuts: Reconciliation and Continuing Resolutions

When the budget process hits a roadblock or a deadline, lawmakers use two primary “emergency” tools.

• Reconciliation: Think of this as a “policy tune-up.” It is a special legislative shortcut that allows the Senate to pass changes to spending or taxes with a simple majority (51 votes), avoiding the 60-vote requirement needed to end a filibuster.

• Continuing Resolutions (CRs): If the 12 appropriations bills aren’t finished by October 1, Congress can hit the “pause button.” A CR keeps the government running at its current spending levels for a short time while they finish the real work.

Budget Speed-Tools

Tool	Purpose	Frequency of Use
Reconciliation	To adjust existing spending or revenue to meet the Budget Resolution’s targets.	Used periodically for major, specific policy changes.
Continuing Resolution	To provide temporary “stopgap” funding and avoid a government shutdown.	Has become the norm over the past few decades.

Even with these shortcuts, the government uses a “GPS” to ensure it doesn’t wander off its fiscal path.

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6. The Toll Booths: Scorekeeping and S-PAYGO

As new laws are passed, the CBO and OMB act as a GPS, calculating the cost of the route in real-time. This is called Scorekeeping. To prevent the deficit from spiraling, Congress follows “rules of the road”:

• Statutory Pay-As-You-Go Act (S-PAYGO): This rule says if you pass a law that increases the deficit, you must pay for it by cutting spending or raising revenue elsewhere.

• Off-Budget Lanes: Interestingly, some of the biggest lanes on the road—Social Security and the Postal Service—are considered “off-budget” and don’t count toward the S-PAYGO toll.

• Sequestration: This is the ultimate penalty. If the “toll” isn’t paid and the deficit increases, Sequestration occurs—an automatic cancellation of budget resources. It’s like the government “running out of gas” and having its keys taken away automatically because the rules were broken.

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7. Conclusion: The Final Receipt

The budget cycle concludes with the Combined Statement of Receipts, Outlays, and Balances. This is the official “final receipt” issued by the Treasury, detailing exactly what was collected (receipts) and what was spent (outlays).

Ultimately, the federal budget is a reflection of political will. It is a document that translates the values of 330 million people into a single plan. Navigating it requires leadership, negotiation, and a constant eye on the road ahead.

Check for Understanding: 3 Key Takeaways

• The Three Lanes: Can you name the three categories of spending and explain why “Net Interest” is currently the fastest-growing part of our journey?

• The Referee: Why is the CBO’s nonpartisan and advisory status so important for the “referee” role in a divided Congress?

• The Internal Roadmap: Why does a “Budget Resolution” not require the President’s signature, and how does it differ from an “Appropriations Bill”?

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The U.S. Federal Budget: A Foundational Guide to Spending and Revenue

The U.S. Federal Budget: A Foundational Guide to Spending and Revenue

1. Introduction: The Budget as National Priority

The federal budget is more than a mere ledger of receipts and outlays; it is a profound expression of our national policy priorities. It represents the collective decisions of elected leaders on how to tax, spend, borrow, and invest. Ultimately, the budget defines the size of the federal government and its specific role in the national economy, acting as a blueprint for the nation’s fiscal and economic future.

The “So What?”: Why the Budget Matters to You Understanding the federal budget is a critical competency for college students as future taxpayers and voters. The choices made within this document determine the health of the economic and fiscal landscape you will inherit—influencing everything from the availability of student loans to the long-term sustainability of the social safety net.

While the budget acts as a comprehensive plan, it relies on the government’s ability to generate revenue. In 2024, total federal receipts reached 4.9trillion∗∗(approximately176.8 trillion in total spending. To understand the “spending squeeze” currently facing the nation, we must first examine where this money originates.

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2. Where the Money Comes From: Federal Revenue Sources

The federal government finances its operations primarily through taxes. The U.S. system is structured to be generally progressive, meaning that higher-income taxpayers typically pay a larger share of their income in taxes.

Revenue Source	Description & Significance
Individual Income Taxes	The largest source of revenue, averaging 8% of GDP (ranging historically from 6% to 10%). It accounts for roughly half of all federal receipts.
Payroll Taxes	Contributions from employers and employees (6.2% for Social Security; 1.45% for Medicare). Social Security is capped at $176,100 in wages for 2025, while high earners pay an additional 0.9% Medicare surtax.
Corporate Income Taxes	Taxes on profits. While the federal statutory rate is 21%, the average rate is 26% when state/local taxes are included. Exemptions and deductions often lower the effective rate for many firms.
Excise & Other	Targeted taxes on specific goods (tobacco, fuel, alcohol) and customs duties (tariffs on imports).

Key Concept: Tax Expenditures (“Spending in Disguise”) In 2024, the tax code included $1.9 trillion in tax expenditures—special credits, deductions, and exemptions like the mortgage interest deduction. These are often called “spending in disguise” because they function as subsidies through the tax code rather than direct checks. They often receive less scrutiny than regular spending and can distort economic decisions.

The collection of these taxes provides the capital for three distinct spending “buckets,” each governed by different rules of law and political process.

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3. The Three Pillars of Federal Spending

Federal spending in 2024 totaled $6.8 trillion, or roughly 25% of the U.S. economy. This spending is partitioned into three categories:

1. Mandatory Spending

    ◦ Core Mechanism: Programs established by permanent law that do not require annual approval, essentially operating on “autopilot.”

2. Discretionary Spending

    ◦ Core Mechanism: Funding that must be debated and approved annually by Congress and the President through the appropriations process.

3. Net Interest

    ◦ Core Mechanism: The unavoidable cost of servicing the national debt, which is currently the fastest-growing category in the budget.

While these categories provide a framework, the balance between them has shifted dramatically: Mandatory spending has climbed from 40% of the budget in the 1970s to 60% today, significantly altering the flexibility of federal policy.

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4. Mandatory Spending: The “Autopilot” Programs

Mandatory spending is determined by eligibility and benefit formulas rather than fixed dollar amounts set by lawmakers. This means that if more citizens meet the legal criteria for a program (due to aging or economic shifts), the spending flows automatically.

Key Concept: Entitlements Programs like Social Security, Medicare, and Medicaid are “entitlements” because any individual who meets the legal eligibility requirements is legally “entitled” to benefits, and the government is obligated to pay.

The “Unchangeable” Myth: While these programs run automatically, they are not unchangeable. Congress can—and has—adjusted them. For example, the 1983 Social Security adjustment changed eligibility ages and benefit structures to ensure the program’s solvency. Without such active legislative intervention, however, the formulas remain in place year after year.

This automatic growth creates a sharp contrast with the programs that require an annual “thumbs up” from lawmakers to survive.

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5. Discretionary Spending: The Annual Debate

Discretionary spending is the portion of the budget that lawmakers actively control through the appropriations process. Despite being the focus of most political debates, this category is being “squeezed”: it has fallen from two-thirds of the budget in the 1960s to just 27% in 2024.

Features of Discretionary Spending:

• Annual Approval: Funding expires every fiscal year (October 1). If new bills aren’t passed, Congress must use “Continuing Resolutions” (CRs) as stopgaps to avoid government shutdowns.

• Defense Dominance: National defense accounts for nearly half of all discretionary funding.

• Non-Defense Services: This includes education, transportation, space exploration (NASA), and environmental protection.

As mandatory obligations and interest costs rise, the portion of the budget available for these “investments” in the future continues to shrink.

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6. Net Interest: The Cost of Borrowed Money

Net interest is the third major category, representing payments to those who have loaned money to the government. Driven by rising debt and higher interest rates, it is now growing faster than both Social Security and Medicare.

• Growth Projection: Net interest is projected to nearly double as a share of the budget, reaching 23% by 2054.

• The Debt Accumulation: As the gap between revenue (17% of GDP) and spending (25% of GDP) persists, the interest burden increases.

!!! FISCAL WARNING: The Scale of Interest !!! The U.S. now spends more than $2.6 billion every single day just on interest payments. This represents a massive transfer of resources that cannot be used for infrastructure, research, or education.

Tracking these complex projections is the responsibility of a unique, nonpartisan agency within the legislative branch.

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7. The Role of the Congressional Budget Office (CBO)

Established by the Budget Act of 1974, the CBO provides the objective, impartial information necessary for the Congressional budget process. Its chief responsibility is to support the Budget Committees, offering an alternative to the projections provided by the Executive Branch.

Primary Functions of the CBO:

• Baseline Projections: The CBO produces an annual Budget and Economic Outlook assuming that current laws will generally remain in place. This “baseline” serves as the benchmark for all proposed changes.

• Cost Estimates: The CBO “scores” nearly every bill approved by a committee to show its 10-year fiscal impact.

• Nonpartisan Objectivity: The CBO makes no policy recommendations. Its reports are advisory; the Budget Committees are responsible for actually enforcing budget rules.

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8. Conclusion: A Student’s Cheat Sheet

To understand the fiscal tradeoffs defining the U.S. economy, keep these distinctions in mind:

Feature	Mandatory Spending	Discretionary Spending
Approval Frequency	Permanent / Autopilot	Annual Appropriations
Primary Examples	Social Security, Medicare, Medicaid	Defense, Education, Transportation
Budget Trend	Growing rapidly (40% → 60% share)	Decreasing relative to GDP (66% → 27% share)
Primary Driver	Aging population and health costs	Yearly political choices and votes
Flexibility	Requires changing permanent law	Subject to annual debate and “Squeeze”

Achieving a sustainable economic future requires more than high-quality data from the CBO; it requires political leadership and a willingness to make difficult fiscal tradeoffs. As interest and mandatory costs dominate the budget, the choices made today will define the role of government for the next generation.

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Inside the Black Box: 5 Surprising Realities of How Washington Actually Spends Your Money

Inside the Black Box: 5 Surprising Realities of How Washington Actually Spends Your Money

In a city defined by partisan shouting and the constant thrum of political theater, the quietest room in Washington might actually be its most influential. It is a small office of just 275 people—a mix of economists, demographers, and engineers—tasked with holding the yardstick for a $6.8 trillion federal economy.

This is the Congressional Budget Office (CBO). Created by the 1974 Budget Act, the CBO was designed as a nonpartisan antidote to the executive branch’s information monopoly. Most Americans view the federal budget as a series of active, yearly choices made by the people we elect. The reality, however, is far more counter-intuitive. Much of our national spending has effectively been outsourced to a massive, self-sustaining machine that rarely requires a new vote.

To understand where your money really goes, you have to look past the floor speeches and peer into the mechanics of the “black box.” Here are five surprising realities of how the federal system actually functions.

1. The “Umpire” Has No Enforcement Power

The CBO is often called the “umpire” of the budget. When a major bill is proposed, everyone waits for the CBO “score”—the estimate of what that law will cost over the next decade. These scores can create or destroy a bill’s momentum in an instant. Yet, for all its influence, the CBO is strictly advisory.

The agency identifies the costs, but it cannot stop a bill from passing or block a spending increase. While lawmakers rely on this data to stay within fiscal bounds, they are technically free to ignore the umpire. The actual “police” work—using CBO data to enforce budgetary rules or targets—falls to the House and Senate Budget Committees, not the analysts who crunched the numbers.

“Those cost estimates are only advisory. They can—but do not have to—be used to enforce budgetary rules or targets. CBO does not enforce such budgetary rules; the Budget Committees do.”

2. 60% of the Budget is Running on “Autopilot”

The most persistent myth in American politics is that Congress sits down every year and decides how to spend $6.8 trillion. In truth, the vast majority of that money is spent before the first session of Congress even begins.

In the 1960s, two-thirds of the budget was “discretionary,” meaning it had to be approved annually. Today, that has flipped. Roughly 60% of the budget is “Mandatory Spending,” driven by permanent laws that govern programs like Social Security, Medicare, and Medicaid. These programs don’t wait for a vote; they flow automatically to anyone who meets the eligibility criteria. This “autopilot” system is the primary driver of federal spending growth, and it remains in place year after year unless policymakers gather the political will to change the underlying permanent laws.

“Programs governed by provisions of permanent law are referred to as ‘mandatory.’ Because mandatory programs do not require annual approval, such spending is essentially on ‘autopilot’ unless policymakers change the underlying laws governing the program.” — Peter G. Peterson Foundation

3. Tax Breaks are “Spending in Disguise”

There is a category of federal “spending” that is nearly twice the size of the entire defense budget, yet it rarely faces a single floor vote. These are “tax expenditures”—special deductions, credits, and exclusions that allow individuals and corporations to keep money they would otherwise owe.

In 2024, these provisions totaled $1.9 trillion. To put that in perspective, this “spending in disguise” exceeds the cost of any single federal agency or program, including Social Security. Even more startling is how concentrated these subsidies are: just eight tax expenditures account for $1.3 trillion—two-thirds of the total. Because these breaks are often linked to marginal tax rates, the benefits frequently skew toward those with higher incomes, yet they remain largely invisible in the national debate over “spending.”

4. The Fastest-Growing “Program” is Just Interest

While politicians argue over the cost of new initiatives, the fastest-growing item in the budget isn’t a program at all: it is Net Interest. Driven by decades of accumulated debt and rising interest rates, the cost of simply servicing our debt is growing faster than Social Security or Medicare.

The United States now spends more than $2.6 billion every day just on interest. This isn’t just a historical curiosity; it is a burgeoning crisis. By next year, net interest as a percentage of the economy is projected to exceed its post-World War II high of 3.2% of GDP. By 2054, the CBO projects that interest alone will consume 23% of the entire federal budget. We are increasingly paying for the past at the expense of the future.

5. Humans, Not Models, Make the Final Call

Because the CBO’s work is so data-heavy, there is a common assumption that the agency is a “black box” where computers generate the answers. In reality, the CBO relies on the professional judgment of specialists—demographers, engineers, and researchers—who must predict how humans will behave.

Models cannot always capture how a doctor will react to a new regulation or how a consumer will adjust to a new tax. Because of this, CBO analysts “routinely combine” model data with external research and human insight. To ensure this judgment remains objective, the agency utilizes a rigorous system of checks and balances, including a permanent Panel of Economic Advisers and a Panel of Health Advisers who provide external scrutiny before reports ever reach the public.

Conclusion: A System Designed for Complexity

The machinery of Washington is evolving. The CBO is currently building new analytical tools to model the long-term budgetary impact of climate change, infrastructure investment, and new obesity treatments. The “black box” is becoming more sophisticated because the challenges are becoming more complex.

However, we must ask ourselves: if $1.9 trillion is being spent “in disguise” through the tax code, and 60% of the budget is running on autopilot, is our national debate focusing on the right side of the ledger?

In a system where the majority of spending never sees a yearly vote, objective data is the only lever the public has left to hold the system accountable. Transparency is not just a bureaucratic goal—it is the only tool we have to ensure that the “autopilot” is heading in the right direction.

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