Deep Dive Into The Federal Government's Budget And The History Of US National Debt

During earlier periods of our most recent financial crisis, Quanta Analytics spent most of its time tracking and monitoring changes in the Banking Industry and setting up QA’s process for continually monitoring that industry. With much of that work complete and in place, QA has turned its attention toward the Federal Budget and the Federal Deficit.

There are some things that are just “too important not to understand” and our Federal Government Budget process that has lead to our substantial National Debt is one of those things.

In this Overview presentation Quanta Analytics will show and explain, using 50 years of Federal Government Budget history, what all the “hub-bub” regarding the Federal Budget and National Debt is about.

Additional details regarding the Federal Budget are presented in follow-up presentations associated with this one. 

The financial information appearing in this presentation is obtained from the historical tables regarding the Budget of the U.S. Government as presented in the Financial Report of the United States provided through the Financial Management Service.

50-Year History of Federal Government Receipts and Outlays (1962-2012)

Revenues and Outlays Compared to U.S. GDP

50-Year History of Federal Government Revenues as a Percentage of GDP (Plotted against the 50-year average of 18.1%)

The first graph in this series shows that although Federal Revenues have varied in relation to the GDP at different times in our history, on average they have been at levels representing 18.1% of our GDP.

50-Year History of Federal Government Revenues as a Percentage of GDP (Plotted against the 50-year average of 20.8%)

The second graph in this series shows that although Federal Outlays have varied in relation to the GDP at different times in our history, on average they have been at levels representing 20.8% of our GDP.

Looking at Accumulated Deficits Resulting from 2.7% GDP Gap Between Federal Revenues and Outlays

50-Year History of Federal Government Accumulated Result of Total Deficit Spending (1962-2012)

50-Year History of Federal Government Deficit Spending—Actual versus Hypothetical Cases (1962-2012)

Comparing the Budget Deficit to the National Debt

50-Year History of Federal Government Actual Deficit Spending versus Actual National Debt (1962-2012)

50-Year History of Federal Government Amount of National Debt We Owe Security Security (1962-2012)

Comparing the National Debt Against GDP

50-Year History of National Debt as a Percentage of GDP (1962-2012)

The first graph in this series, shows how the relationship between our National Debt and our GDP has changed over the last 50 years.

80-Year History of National Debt as a Percentage of GDP (1930-2010)

The second graph goes back even further, and shows how that relationship changed over the last 80-years.

Hopefully, by looking at the two graphs separately we can begin to gain a better scope on our current American problem.

Comparing the National Debt Against GDP

50-Year History of Federal Government Receipts Showing Percentage by Type (1962-2012)

Federal Revenues or Taxes

Of the three options available (raising taxes, reducing spending, or growing our GDP) to manage our debt in relation to our GDP, raising taxes always seems to be the option of last choice. It's better to increase taxes by growing our economy (GDP) than it is to raise tax rates themselves. Even so, QA feels that it is important to understand the history and relative source of the revenues used to cover Govt expenditures.

The previous graph showed this and indicates the following:
-- Individual income taxes represent the source for approximately 45% of all federal revenues;
-- Social security payments represent the source for approximately 35% of all federal revenues;
-- Corporate taxes represent the source for approximately 10% of all federal revenues; and together
-- Excise (e.g. alcohol, tobacco, highway trust funds, etc.) and Other (e.g., estate, customs) taxes represent the source for the remaining 10% of all federal revenues.

The previous graph also shows that between 1962-1982 as the relative amount of Federal Revenues associated with Social Security grew to become somewhat of a steady level of 35% all revenues, they did so while the relative proportion of Corporate and Excise taxes fell during that same period.

Now assuming we cannot raise taxes to help tackle the growing Budget Deficit problem in America, then we have to look toward expenditures. The next graph shows expenditures by Government function.

50-Year History of Federal Government Outlays Showing Percentage by Outlays by Type (1962-2012)

Federal Expenditures or Outlays

Federal Budget Summary

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