Government Revenues & Expenditures in US

Government Revenues & Expenditures in US

Major Revenues Resources

Federal government has to earn in order to function and run the affairs of the state smoothly. Federal government earns from different resources out of which three are as follows:

Taxes

Fees and Charges

Business and other revenues

Taxes

This head of revenue generation includes Income taxes, Social insurance taxes and ad-valorem taxes. These categories also are sub divided into further categories.

Fees and charges

This head includes all the fees and charges which are levied by the federal government to provide certain services. This can further be divided into charges from health, education, transportation, natural resources, utilities and others.

Business and other revenues

This head of revenue generation includes all the sources in which the government investment in order to get favorable returns. The investment can be in different businesses, securities, bonds or others.

Relative Importance of These Categories

It cannot be said that a particular category is more important than another categories because each source of income has its own importance. For example if any of the categories is removed it will affect the overall economy. But there is relativism in importance of each other. If we look at taxes, we can see that according to http://www.gpo.gov/ United States federal state government revenue for fiscal year 2011 only Income taxes amounts to $1272.6 Billion which is more than fees and charges, business and revenues. Income from fees and charges was almost $0 and income from business and revenues was $ 82.5 Billion.

Major Revenues Resources

Federal government spends the revenue earned on their people so that they can progress and their lifestyle can become better. This basically maintains the standard of living of the people living in the states. The three major expenditures of government are on the following categories:

Pension

Health Care

Education.

Pension

A pension is an agreement for a sum of money to be paid on a regular basis to a person, following retirement from a service. Government also pay pension for sickness and also to disabled persons.

Health Care

In order to promote healthy environment the government spends their money on health care services. This includes research and development in the field of health, medical services to citizens, public health services etc.

Defense

Due to engagement in different types of ongoing wars US has to increase their budget on defense. Therefore now it is getting more of their budget than on education.

Relative Importance of These Categories

As in case of revenue there was nothing as very important or less important, same is the case with expenditure. Government cannot stop spending on one category instead government design their budget in such a way that can support the development of their people. Out of total spending of $3.6 trillion of the federal government had spent $0.9 trillion on health care, $0.8 trillion on pension and $0.9 trillion on defense.

Deficit Reduction Proposals

As Chief Economic Advisor to the President of the United States I would recommend the Social Security method of deficit reduction and lowering the discretionary spending. I will oppose Medicare plan and individual taxes ...