US public companies are required to file an annual 10-K report with a summary of finances, key metrics, risk factors, and more. This report uses the 10-K format to cover these same topics for US federal, state, and local governments combined. It is intended to foster a more constructive and reasoned public debate by providing an authoritative and comprehensive set of data from government sources. USAFacts compiled the information, but it's up to you to judge whether government is efficient and effective.
As shareholders in this democracy, taxpayers deserve transparency in government spending. This year’s 10-K report provides something we haven’t seen before as a nation: a local, state, and federal accounting of expenditures and revenues in the first year of the pandemic. This document has 10 years of data from more than 90,000 different government entities, but due to the slow nature of reporting, the state and local financial data is already three years old. Still, the numbers here illuminate how the nation responded to COVID-19 — and how spending hit unprecedented levels.
This 10-K has the hard numbers on how deficit spending changed over the pandemic and the quandary both governments and the American people could be in regarding Social Security. It’s also a key document to consult given the current debate over the debt ceiling — a heated discussion that could benefit from some cooler, data-driven perspectives.
Combined government spending rose 31% from 2019 to 2020, from $6.7 trillion to $8.8 trillion, outpacing both inflation and population growth. At the same time, rather than increasing revenue to cover this spending, combined government receipts fell by $13 billion to $5.7 trillion total. The combined deficit ballooned from $960 billion to $3.1 trillion.
While we don’t have recent combined local and state numbers, the federal deficit remains above pre-pandemic levels. It has, however, fallen since its 2020 high of $3.1 trillion. In fiscal year 2022, the federal government spent $6.4 trillion but took in $5 trillion. That’s a $1.4 trillion deficit. While the results of fiscal year 2023 remain to be seen, President Biden released his requested FY 2024 budget last month. It plans for higher spending and taxes compared to pre-pandemic levels, but the projected $5 trillion in revenue doesn’t come near the planned $6.9 trillion in spending.
Is this sustainable? Personally, I believe that deficits on top of deficits aren’t viable long-term. And as the Federal Reserve raises interest rates, the cost of borrowing, and therefore deficits, becomes higher. Something should balance over time, but that’s my position. Some say the government should never spend more than it collects. Others say the government is not a person and has different obligations, so it’s not apples to apples to compare its spending habits to those of a person. Use the numbers here and decide for yourself the steps the country should take going forward.
Mandated spending for Medicare, Social Security, and other major federal programs don’t need annual reauthorization. They’ll run as established unless Congress changes them. But the likelihood of Congress doing that isn’t very high, for a variety of reasons.
As covered in this report, mandatory spending, including spending on the federal debt, accounted for 75% of federal expenditures in fiscal year 2020.
Mandatory spending in fiscal year 2022 included $755 billion on Medicare; Medicaid and CHIP, $609 billion (including transfers to state and local governments); other programs to help lower-earning Americans such as the Supplemental Nutrition Assistance Program (SNAP) and the earned income tax credit were $583 billion. Plus, the overall amount to be spent was unknown at the beginning of the year. Annual spending on SNAP and unemployment insurance, among other programs, depends on the number of people who qualify and claim benefits.
Then there’s discretionary spending, the commitments to which lawmakers must reevaluate annually: what program spending to renew, modify, or cut and by how much. Defense was the biggest category of discretionary spending in fiscal year 2022, totaling $766 billion.
Then there’s the biggest mandatory spending program of all: Social Security. The program was 19% of all federal spending for the past fiscal year, amounting to $1.2 trillion. Social Security has a trust fund that is supported by a portion of the payroll tax. Yet the tax only generated $1.1 trillion for Social Security in fiscal year 2022. Social Security old-age and disability benefits are rising faster than incoming revenues; this 10-K notes that the trust fund could be depleted as early as 2031.
An empty trust fund and insufficient receipts to cover expenditures could trigger a conflict between two federal laws. The Congressional Research Service has advised that under the Social Security Act, beneficiaries would still be entitled to their full scheduled benefits. Even if the program paid timely but reduced payments, recipients could take legal action to claim the balance of their benefits. Yet the 139-year-old Antideficiency Act prohibits the government from spending more than it has available, so the Social Security Administration would not have legal authority to pay benefits on time. It’s not clear what would win out, but civilians and lawmakers alike need to have substantive discussions about how reduced funding could affect them — and have those conversations soon.
We can’t have this discussion without talking about government debt. This 10-K notes that total debt held by the public (including debt held by state and local governments) hit $22.9 trillion in 2020, up 22% from 2019. The federal government owes more than 85% of this debt. Federal debt alone held by the public increased from $15.7 trillion in 2019 to $22.4 trillion in 2022. That’s a 43% increase.
Congress last raised the debt ceiling in 2021. The United States hit that limit, $31.4 trillion, on January 19. The Treasury has used extraordinary measures to help pay federal obligations since then, with the Treasury Secretary declaring a debt issuance suspension period to hold some payments. That means, among other things, delaying investing in civil service and Postal Service retirement funds.
There’s a looming argument in Congress about whether to raise the ceiling. This debate, though, isn’t about whether we should cover expenses already incurred. Rather, it’s about whether raising the debt ceiling should be conditional on addressing the deficit. The nonpartisan Government Accountability Office cautions that failing to raise the limit could prompt an unprecedented default on Treasury securities — generally considered the world’s safest government debt. A US default could trigger a financial crisis, throw the nation into a recession, and send ripple effects throughout the global economy.
Still others argue that the government should have a balanced budget and, moreover, when the government owes a lot of money, it must pay more interest over time. Continuing to raise the debt ceiling means more debt interest to pay off, while that money could be going to many other programs or reducing taxes.
USAFacts doesn’t have a side, but we want people to have a debate. Data for such discussions can be hard to verify — which is why this 10-K exists.
Americans should also keep an eye on and an ear out for how the end of two COVID-19 emergency orders could impact spending. The Trump administration declared a public health emergency in January 2020 and a national emergency in March 2020 in response to COVID-19. This allowed, among other things, for Medicaid to continue covering low-income people who might have fallen off of coverage under normal circumstances. Biden signed a resolution to end the national COVID-19 pandemic emergency on April 10, 2023 and the public health emergency will end on May 11, 2023.
As of last December, there were 85.3 million people enrolled in Medicaid, and combined government spending on the program grew from $626.9 billion in 2019 to $748 billion in 2021. All Medicaid enrollees will have to requalify for benefits once the emergency order expires. This will no doubt come with an administrative burden. Medicaid officials are calling it the largest health coverage transition event since the Affordable Care Act’s first open enrollment. Millions of people who had coverage during the pandemic could find they no longer qualify. And the Department of Health and Human Services estimates that 6.8 million people could lose Medicaid coverage due to administrative reasons, despite being eligible.
The public emergencies also temporarily expanded SNAP eligibility, leading to 15% more monthly recipients between 2019 and 2022. The average monthly benefit also increased 79% due to additional funding. Some states ended emergency SNAP allotments even earlier, but they officially ended nationwide last month. At the time the benefits ended, approximately 41 million people were getting nutritional — or food stamp — benefits.
All the above only touches the surface of what’s contained in this 10-K. The data in this report tees up how we, as a nation, find ourselves at this moment. It’s an example of how government data can and should be made accessible to the public and can be used to inform timely policy debates. USAFacts will always push for US governments, from federal to local, to work towards providing up-to-date and transparent numbers. In a time of disagreement, we hope Americans can use this data spanning different presidential administrations to stand on the same factual footing, even if they debate how to take the next step.