Budget Terms

Discretionary Spending

Discretionary spending is what the President and Congress must decide to spend for the next fiscal year through annual appropriations bills. Examples include money for such programs as the FBI, the Coast Guard, housing, education, space exploration, highway construction, defense, and foreign aid.

Excise Taxes

Excise taxes apply to various products, including alcohol, tobacco, transportation fuels, and telephone service.

Gross Domestic Product (GDP)

GDP is the standard measurement of the size of the economy. It is the total production of goods and services within the United States.

Mandatory Spending (Non-discretionary Spending)

Mandatory spending (also called non-discretionary spending) is authorized by permanent law. An example is Social Security. The President and Congress can change the law to change the level of spending on mandatory programs—but they don't have to do so.

Budget Resolution

The budget resolution is the annual framework within which Congress makes its decisions about spending and taxes. This framework includes targets for total spending, total revenues, and the deficit, as well as allocations, within the spending target, for discretionary and mandatory spending.

Deficit

The deficit is the difference produced when spending exceeds revenues in a fiscal year.

National Debt

When revenues do not cover the costs of government spending, the government borrows money to finance this deficit. The total it has borrowed over the years, but not repaid, is the national debt.

Balanced Budget

A balanced budget occurs when total revenues equal total outlays for a fiscal year.

Surplus

A surplus is the amount by which revenues exceed outlays.

Appropriation

An appropriation is an act of Congress that enables federal agencies to spend money for specific purposes.

Entitlement

An entitlement is a program that legally obligates the federal government to make payments to any person who meets the legal criteria for eligibility. Examples include Social Security, Medicare, and Medicaid.

Deficit Spending

Deficit spending occurs when the government's revenues do not cover the cost of all its spending and it borrows money to finance its programs, using that borrowed money to pay for items in the budget.

OMB

Part of the Executive Office, the Office of Management and Budget assists the President in the development and implementation of the federal budget.

Revenue

Revenues include the collections that result from government activity, such as taxes. They do not include collections that result from the government's business-like activities, such as the entrance fees at national parks. Business-like collections are subtracted from total spending to calculate outlays for the year.

Fiscal Year

The fiscal year is the government's accounting period. It begins October 1 and ends on September 30. For example, fiscal year 2010 ends September 30, 2010.

Social Insurance Payroll Taxes

This tax category includes Social Security taxes, Medicare taxes, unemployment insurance taxes, and federal employee retirement payments.