Income & Spending Details -The IRS lays it all out
As required by law, in every Form 1040 instruction booklet there's a section that shows where our federal government gets its money and where it is spent. As taxpayers it makes sense to know this information. Here is the data for the government's fiscal year ending September 30, 2023, as reported by the IRS in the 2024 instruction booklet for Form 1040:
Observations
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Annual deficit spending remains a consistent problem. No matter where you fall on the political spectrum, annual deficits cannot be sustained. Fortunately the annual deficit of $1.694 trillion is lower than the pandemic deficit of $3.129 trillion in fy 2020, but it must all still be paid back. The largest spending bucket continues to be social programs that includes Social Security, Medicare and Retirement benefits (62% of all outlays).
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Government borrowing costs more. With interest rates going up the past couple of years, a couple of things is happening. First, those who save are now being rewarded for this financial behavior with higher interest rates on their savings. But this interest rate increase is now costing borrowers more and the government is one of the biggest borrowers out there. Fully 11% of outflows is used to pay interest on the debt. This is up from 5% in 2020. That means an additional 6% of government spending is not available to work to solve current needs versus a short three years ago.
- Solutions to money problems are the same for everyone. When you have a money problem, you either bring in more money, spend less, or some combination of the two. The same is true for our federal government.
More to come
With recent tax changes the impact on the deficit is sure to become more problematic, especially if interest rates remain high. None of this situation is set to improve until the will to reduce the debt is on everyone's mind. And that is why it is a legal mandate for the IRS to publish this chart in the Form 1040 instructions in order for all taxpayers to receive an update on the situation at least once every year.
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