The federal budget is a plan for how the government will spend and allocate its money for a specific fiscal year. It includes estimates of revenue (how much money the government expects to receive from taxes, fees, and other sources) and expenditures (how much money the government plans to spend on various programs, services, and obligations).
Here are some key components:
Revenue: This includes income from taxes (like income tax, corporate tax, and social security contributions), as well as other sources such as fees, licenses, and grants.
Expenditures: This covers all government spending, which is typically divided into mandatory spending (such as Social Security, Medicare, and interest on the national debt) and discretionary spending (which includes defense, education, and infrastructure).
Deficit/Surplus: If expenditures exceed revenue, the government runs a deficit and must borrow money to cover the shortfall. If revenue exceeds expenditures, there's a surplus, which can be used to pay down debt or fund other initiatives.
Debt: Over time, the federal budget affects the national debt, which is the total amount of money the government owes. Persistent deficits contribute to an increase in the national debt.
The federal budget is proposed by the President and then reviewed and modified by Congress before being passed into law. The process involves various stages, including the drafting of the budget proposal, hearings and revisions, and final approval.