Your Guide to America’s Finances (2024)

FAQs

What are America's main sources of income? ›

The primary sources of revenue for the U.S. government are individual and corporate taxes, and taxes that are dedicated to funding Social Security and Medicare. This revenue is used to fund a variety of goods, programs, and services to support the American public and pay interest incurred from borrowing.

Federal Borrowing

The federal government borrows money from the public by issuing securities—bills, notes, and bonds—through the Treasury. Treasury securities are attractive to investors because they are: Backed by the full faith and credit of the United States government. Offered in a wide range of maturities.

CBO: U.S. Federal spending and revenue components for fiscal year 2023. Major expenditure categories are healthcare, Social Security, and defense; income and payroll taxes are the primary revenue sources.

Nearly half of mandatory spending in 2022 was for Social Security and other income support programs such as the Child Tax Credit, food and nutrition assistance, and federal employee benefits (figure 3). Most of the remainder paid for the two major government health programs, Medicare and Medicaid.

The individual income tax has been the largest single source of federal revenue since 1944, and in 2022, it comprised 54 percent of total revenues and 10.5 percent of GDP in 2022 (figure 3). Individual income tax revenue in 2022 was the highest ever recorded.

In other words, most Americans report earning labor income, and most of their income comes from labor, as most of the American economy is made up of labor compensation. In total, more than 130 million tax filers in 2020 reported $8.4 trillion in wage income—66 percent of total income.

All values are adjusted to 2023 dollars. As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).

The United States pays interest on approximately $850 billion in debt held by the People's Republic of China. China, however, is currently in default on its sovereign debt held by American bondholders.

Why History Shows the United States Will Not Grow Out of Its Debt. The United States is approaching record levels of debt. Debt held by the public totaled 97 percent of gross domestic product (GDP) at the end of 2022 and is on track to exceed its previous all-time high, which occurred just after World II, by 2029.

In 2023, major entitlement programs—Social Security, Medicare, Medicaid, Obamacare, and other health care programs—consumed 50 percent of all federal spending. Soon, this spending will be larger than the portion of spending for all other priorities (such as national defense) combined.

When was the last time the US had a surplus? ›

The terms “national deficit”, “federal deficit” and “U.S. deficit” have the same meaning and are used interchangeably by the U.S. Treasury. A surplus occurs when the government collects more money than it spends. The last surplus for the federal government was in 2001.

Social Security: In 2023, 21 percent of the budget, or $1.4 trillion, will be paid for Social Security, which will provide monthly retirement benefits averaging $1,836 to 48.6 million retired workers.

It began rising at a fast rate in the 1980's and was accelerated through events like the Iraq Wars and the 2008 Great Recession. Most recently, the debt made another big jump thanks to the pandemic with the federal government spending significantly more than it took in to keep the country running.

The three biggest categories of expenditures are: Major health programs, such as Medicare and Medicaid. Social security. Defense and security.

Overall, housing accounted for the largest share (33.3 percent), followed by transportation (16.8 percent), food (12.8 percent), personal insurance and pensions (12.0 percent), and healthcare (8.0 percent). Each of the remaining categories contributed less than 5.0 percent of total expenditures.

Like most other developed nations, the U.S. economy is largely based on services. Service-based industries, including professional and business services, real estate, finance, and health care, make up the bulk (70%) of U.S. GDP.

In the United States, individual income taxes (federal, state, and local) were the primary source of tax revenue in 2022, at 45.3 percent of total tax revenue.

The American economy is fueled by high productivity, well developed transportation infrastructure, and extensive natural resources. Americans have the highest average household and employee income among OECD member states. In 2021, they had the highest median household income.