Every year, the federal government spends trillions of dollars. For most Americans, the size of the national budget is hard to grasp. Here is a breakdown of how the government actually uses the money it collects from you.
About two-thirds of the budget is "mandatory," meaning the government is legally required to spend it based on existing laws. The biggest items here are Social Security, Medicare, and Medicaid.
This is the money Congress debates and votes on every year. It accounts for about one-third of the total budget. The largest portion of discretionary spending—about half—goes to National Defense. The rest pays for education, transportation, housing, and scientific research.
Because the government often spends more than it collects in taxes, it must borrow money. A significant portion of the annual budget (often several hundred billion dollars) goes just to paying the interest on that borrowed money.
Most federal money comes from individual income taxes and payroll taxes (which fund Social Security). Corporate taxes and miscellaneous fees make up the rest.