Federal finances include the revenues, assets, expenditures, and debt owned or held by the central government. The federal government is responsible for budgeting of these finances and provision of public services such as education, health, security, and environmental issues. Government spending constitutes a critical area when accessing the efficiency in the allocation of the federal funds. Taxes form one of the important avenues through which the government raises its money. The federal government collects taxes from three distinct sources: individual income taxes, which approximately amounts to 47% of the total tax revenue. Payroll taxes amounts to 34% whereas the business income taxes amount to 11% of the total tax revenue. The federal finance department ought to clearly outline how the government uses the taxpayers’ money. The government expenditure usually dictates the financial budget in given year.
The question of fair allocation arises and whether different projects should be funded equally. Another issue is whether there should be proportional allocation among states or should allocation be based on the funds collected from a state. It is evident that some fundamental projects that touch the lives of most citizens do not receive a fair share of economic pie. For instance, HIV prevention is one of the major economic issues that require serious attention than what is currently done. A lot of tax payer’s money is used in maintaining HIV-infected citizens, where less money could be spent on prevention (Kaplan & Merson, 2002).
United States citizens strive to understand how the federal government spends the vast budget amount allocated to them every fiscal year. For instance, during the 2015 fiscal year, the federal government had a budget worth $3.8 trillion. The federal government breaks down its spending into three groups: discretionary spending, mandatory spending, and interest on debts (Berman, 2015). Discretionary spending is the percentage of the federal budget that the Congress arrogates every fiscal year. This spending represents about a third of the total federal budget (Price, 2015). In the 2015 fiscal year, $1.11 trillion were allocated towards discretionary spending. In 2013, a total of $1.7 billion was used to fund several arts and humanities programs. These programs do not provide much benefit that may exceed their costs. Therefore, if funding cannot be obtained from other sources, then major programs in the economy with higher priority should be funded first. On the overall discretionary spending, the biggest share of 53.71% was allocated towards military related programs. This constitutes one-third of total allocation implying than other departments share the remaining small percentage.
Military related programs such as military training and procurement of weapons should be given the first priority when it comes to discretionary spending. Though other programs like education require government attention, beneficiaries of national security constitute the entire population; hence, the principle of priority must apply since the government is always operating on a deficit budget.
More than $70 billion is allocated annually for Federal research and development. However, almost half of this amount is spent on activities such as evaluation and testing of aircraft and weapons systems in the Defense Department, nuclear weapons in the Department of Energy, evaluations and missions operations in the National Aeronautics and Space Administration (‘Determining Principles’, 1995). These activities, though are important do not involve the creation of new knowledge and development of new technologies. Thus, it is clear that tax payer’s money is used in projects that do not conform to what is stated as Federal research and development.
Mandatory spending is the percentage of the budget that Congress legislates independent of the annual allocation process. It mainly entails federal spending on entitlement programs such as Social Security and Medicare. Other spending programs under mandatory spending include unemployment insurance, assistance for needy families, Supplemental Security Income, some veterans’ benefit, federal employee retirement and disability, and Supplemental Nutrition Assistance Programs.
In the fiscal year 2015, $2.45 trillion was allocated towards mandatory spending. The appropriation for funds to different spending programs raises controversy as to which program should receive more than the other. Prioritizing these programs requires critical analysis and public consultations.
Twenty-four percent of the total federal budget in 2015 fiscal year was deployed towards social security. It also provided monetary benefits to 10.8 million disabled workers and their dependents. Families of both retired and deceased workers also receive social security benefits. Savings by the retiring workers should be distributed throughout their retirement life and used for their maintenance. People with disability need to be taken care of, but the government should state the degree of disability so that only those who are totally disabled enjoy benefit to avoid misuse of tax payer’s money.
The health insurance programs received $938 billion in the 2015 fiscal year. The programs accounted for twenty-five percent of the total federal budget. Two-thirds of the total funds allocated to health insurance programs went to Medicare while the remaining one-third supported the other three programs. Again, this shows great inequality in funds appropriation. The government should formulate a separate scheme where people contribute towards insurance benefits. This initiative will cut on government expenditure hence make more funds available for other development projects.
Safety net programs were allocated about 10% of the total federal budget for the fiscal year 2015. These programs ought to have received a higher allocation since it is used to help families and individuals facing hardships, keeping them out of poverty (Larrison et al., 2015).
Moreover, about 19% of the total federal budget is used to fund other programs such as benefits for federal veterans, non-security International among others. About $223 billion was allocated towards interest on the national debts. The federal government makes periodic interest payments on all the liquidity borrowed to finance past deficits. Debt financing requires a critical analysis, and the government should ensure that the public needs are taken care of from funds collected outside the major revenue source so that tax payer’s money is used in the fairest and appropriate way.
In conclusion, it is clear that taxes form a core source of government revenue. Taxpayers will resent whenever their money is put to wrong uses. Various departments will complain if they feel unfairly treated in matters of fund allocation. Therefore, the government has to formulate a well-harmonized method of allocating funds. Overall, federal governments allocate the highest portion of the budget funds towards social security, defense, and major health programs.
References
Berman, L. (2015). The office of management and budget and the presidency, 1921-1979. United States: Princeton University Press
Determining Principles for Allocating Federal Funds - Allocating Federal Funds for Science and Technology - NCBI Bookshelf. (1995). Retrieved from http://www.ncbi.nlm.nih.gov/books/NBK45560/
Kaplan, E. H., & Merson, M. H. (2002). Allocating HIV-Prevention resources: Balancing efficiency and equity. , 92(12), . Retrieved from http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1447350/
Larrison, C. R., Hack-Ritzo, S., Koerner, B. D., Schoppelrey, S. L., Ackerson, B. J., & Korr, W. S. (2011). Economic grand rounds: State budget cuts, health care reform, and a crisis in rural community mental health agencies. Psychiatric Services, 62(11).
Price, T. (2015, April 13). H.Con.Res.27 - 114th congress (2015-2016): Establishing the budget for the United States government for fiscal year 2016 and setting forth appropriate budgetary levels for fiscal years 2017 through 2025. Retrieved March 16, 2016, from https://www.congress.gov/bill/114th-congress/house-concurrent-resolution/27
