Government Spending

Purpose

To produce or purchase goods and services needed to fulfill social and economic objectives.

Definition

Money spent by the public sector on the acquisition of goods and provision of services such as education, healthcare, social protection, and defense.

Impact on GDP

Can artificially prop up reported GDP growth, potentially masking private sector slowdown.

Funding Sources

Federal revenues and borrowing.

Federal Debt (Current)

$35 trillion

Federal Spending FY2024

$6.75 trillion (US Treasury Fiscal Data)

Impact on Interest Rates

Contributes to high long-term interest rates.

Federal Spending FY2024 (CBO Estimate)

$6.9 trillion, amounting to 24% of GDP (Congressional Budget Office, June 2024 estimates)

Primary Categories of Federal Spending

Mandatory and Discretionary spending, plus interest payments on federal debt.

2024-01-01

2024-06-01

Over 2 million + professionals use CFI to learn accounting, financial analysis, modeling and more. Unlock the essentials of corporate finance with our free resources and get an exclusive sneak peek at the first module of each course. Start Free Start Free What is Government Spending? ---------------------------- Government spending refers to money spent by the public sector on the acquisition of goods and provision of services such as education, healthcare, social protection,and defense. [...] Public spending enables governments to produce goods and services or purchase goods and services that are needed to fulfill the government’s social and economic objectives. Over the years, we’ve seen significant changes in the role and size of governments around the world. [...] What is Government Spending? Sources of Government Spending Purposes of Government Spending Types of Spending Government Borrowings Additional Resources Government Spending =================== Money spent by the public sector on the acquisition of goods and provision of services Written byCFI Team Read Time 3 minutes

The federal government spends money on a variety of goods, programs, and services that support the economy and people of the United States. The federal government also spends money on the interest it has incurred on outstanding federal debt. Consequently, as the debt grows, the spending on interest expense also generally grows. [...] The federal government spends money on a variety of goods, programs, and services to support the American public and pay interest incurred from borrowing. In fiscal year (FY) 2024, the government spent $6.75 trillion, which was more than it collected (revenue), resulting in a deficit. [...] Federal government spending pays for everything from Social Security and Medicare to military equipment, highway maintenance, building construction, research, and education. This spending can be broken down into two primary categories: mandatory and discretionary. These purchases can also be classified by object class and budget functions.

In fiscal year 2024, the federal government spent $6.9 trillion, amounting to 24 percent of the nation’s gross domestic product (GDP), according to the June 2024 estimates of the Congressional Budget Office (CBO). About nine-tenths of the total went toward federal programs; the remainder went toward interest payments on the federal debt. Of that $6.9 trillion, almost $4.9 trillion was financed by federal revenues. The remaining amount was financed by borrowing. (Note: In this analysis, the [...] While critics often raise concerns about “government spending” in the abstract, it is important to determine whether the actual public services and investments that government programs provide are valuable. Federal revenue is used to pay for these services and investments. Consequently, when thinking about the costs that taxes impose, those costs should be weighed against the benefits the nation receives from the expenditure of those funds. ### Appendix

_The federal government spent $2.4 trillion from January through April 2025 – up $166 billion from January through April 2024, according to__new estimates__from the Congressional Budget Office (CBO). Tax receipts in April pushed borrowing for the first four months of the year $5 billion lower than last year._ _CBO estimates the U.S. borrowed $1.1 trillion in the first seven months of Fiscal Year (FY) 2025._ [...] _The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:_ CBO’s estimates make clear that we are continuing to spend more in 2025 than we did last year. Since the beginning of 2025, the federal government has spent $2.4 trillion -- $166 billion more than in the same four months of 2024. Because of strong tax receipts in April 2025, the deficit is down a modest $5 billion in the first four months of this year compared to last year.