Federal Government's 2024 Budget: Where Did The Money Go?

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Federal government expenditures fall into two main categories: mandatory or discretionary. Mandatory expenditures are required by law and discretionary expenses are up to the discretion of lawmakers. Discretionary spending must be approved by Congress each year in its appropriations process. Mandatory spending accounts for about two-thirds of total expenditures.

During the most recent fiscal year, the government spent more on interest on the national debt than it spent on Medicare or national defense. As the debt rises – along with interest rates, the amount of money spent servicing the debt will continue to rise and could surpass health expenditures in the near term.

Spending during the pandemic was notably different. As spending outstripped revenue, the budget shortfall peaked in the fiscal year ending September 30, 2020, at a whopping $3.13 trillion. The shortfall fell to $1.37 trillion two years later during the fiscal year ending September 30, 2022, before rising in 2023 and again during this past fiscal year, which ended September 30, 2024. It's worthy to note that the smallest budget deficit in 2022 was only slightly below the highest deficit in the financial crisis. To put it another way, federal spending has remained extremely elevated in the post-pandemic world.

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