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What Categories make up the Federal Budget?

1)    Mandatory Spending: Primarily benefit programs for which laws set eligibility rules and benefit formulas, i.e. social security, Medicare, Medicaid, unemployment compensation, SNAP, federal civilian and military retirement, some veterans benefits

2)    Discretionary Spending: Spending lawmakers control through annual appropriations. Nearly half is for defense spending, the other half is for programs such as educations, health, housing, transportation, etc...

3)    Revenue/Taxes: Funds collected from the public; i.e. individual income taxes, payroll taxes, corporate income taxes, excise tax, estate and gift taxes, customs duties, etc...

Importantly, spending and revenue make up the budget. Often times it is misunderstood that spending is the budget or that is used as a shorthand. But when you're thinking of the budget, it's a good exercise to acknowledge that there are revenue and spending are deeply connected and interwoven.

Congressional Budget Office 2016

Congressional Budget Office 2016

This is also why we strongly encourage nonprofits to be engaged in the discussions around tax policy!