US public deficit

The US public deficit is what keeps the us government debt growing, the deficits results from the gap between income and spending of the government. Below you can see how the income and spending of the US developed since 1925. You see recently there was a small phase before the year 2001 where there was no deficit because the income was greater then the spending, in most other times there were more outlays then receipts. And since the financial crisis you can see how the gap has widenend because receipts went back und outlays grew much larger.

US budget: income and spending since 1925

In the graphic above you can hardly compare the values prior to the 80s, so we take a different view at the problem and look at the relation between income and spending:

US budget spending in relation to income

Here you see how many dollars the government spends from each dollar that comes in. 100% means every incoming dollar gets spended, 150% would mean that 1.5$ get spended (and that equals 0.5$ need to be lended).

The worst ratios can be observed in the times of great recession around 1930 and WW2 in the 40s, where the government spended up to 300%. However in the 1950s this quickly fell back to an 1:1 ratio. You can see there has hardly been a phase of surplus, a deficit of about 10% is common. Now since the finanical crisis the ratio between income and spending went worse again, it peaks now at 175%.

Now what are the sources of the governments income? Lets look at the absolute values in the graphic below:

US tax income sources absolute

We see that most of the income comes from individuals or social insurance or retirement receipts. Only a small portion comes from corporate taxes. And since the crisis, the income from both individual and corporation taxes has declined strongly.

US government income relative

If we look at the relative distribution of income, we see more clearly how it has changed during the times. We see that the individual income tax part has kept constant during the ages, but the social insurance and retirement receipts have grown strongly, while the corporation tax part has increased.

Now how is the money spended?

We see in the graphic above that the spending proportions have also changed in time. You see that the national defense budget was very high during WW2 and the cold war, but is now on a low level. The net interest was higher in the 80s then now, probably because the yield rate was so at the beginning of that decade, currently the net interest is relativly low. Now the biggest and growing part of spending is the human resources field.

We see that human resources consists mainly of social and income security which where the major parts until the 70s, since then medicare and health have taken over and are growing bigger.

Sources: US department of treasury, congressional budget office, reports of the white house