What’s Really In the US Federal Budget

News today that President Trump has asked every cabinet Secretary to cut 5% from their department’s expenses reminded us of how opaque the Federal budget can be. The name of each department may seem straightforward – Energy, Commerce and the like – but the places where the money actually goes is not. We pulled the August Monthly Treasury Statement and looked at the details.

Here is each department’s annual spend (estimated for 2018FY from the August YTD data) and the largest chunk of each budget:

Agriculture: $142 billion Largest piece: 69% goes to Food and Nutrition programs like SNAP (“food stamps”) and related initiatives.

Commerce: $8.7 billion Largest piece: 61% to the National Oceanic and Atmospheric Administration, essentially the nation’s weather service.

Defense (Military Programs): $602 billion Largest piece: 42% to “Operations and Maintenance” of the US armed forces. A further 18% goes to procurement of new weapons systems.

Education: $64 billion Largest piece: 66% to Federal Student Aid.

Energy: $26 billion Largest piece: 36% to maintain America’s nuclear weapons arsenal, and a further 21% to environmental cleanup of old plants and facilities. 57% in total.

Health and Human Services: $1,146 billion Largest piece: essentially 100% Medicare/Medicaid.

Homeland Security: $69 billion Largest piece: 48% to the Federal Emergency Management Agency (FEMA), which handles disaster recovery after hurricanes and other national emergencies.

Housing and Urban Development: $58 billion Largest piece: 49% public housing programs, mostly “Tenant Based Rent Assistance”. A further 20% for a similar expense category: “HUD Project-Based Rental Assistance”.

Interior: $14 billion Largest piece: 45% to Fish and Wildlife and Parks.

Justice: $35 billion Largest pieces: the FBI, at 25% and the Federal Prison System at 19%.

Labor: $41 billion Largest piece: 81% to pay for unemployment insurance.

State: $41 billion Largest piece: 44% to staff, maintain and secure US consulates and embassies around the world. A further 34% labeled “Global Health and Child Survival”, which is predominantly USAID.

Transportation: $77 billion Largest piece: 56% to maintain the nation’s highways.

Veterans Affairs: $186 billion Largest pieces: 49% “Compensation and Pensions” and 31% medical services.

Bottom line: going down this list, it is very hard to see how each Secretary will be able to shave 5% off their budgets. Look at every department outside of Defense with a +$50 billion budget: Agriculture, Education, Health and Human Services, Homeland Security, HUD, Transportation and Veterans Affairs. In each case, +50% of their budgets is for societal transfer/support outlays and/or emergency services.

In short, while the President’s request fits with the obvious need to rein in the Federal deficit it will be very difficult to accomplish without fundamentally altering the government’s role in American society and the nation’s economy.