EXPENDITURES, FEDERAL

EXPENDITURES, FEDERAL. The Constitution of the United States provides, in Article I, Section 9, that "no money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time." There is no constitutional limitation on the amount of federal expenditures. Several efforts have been made to pass a balanced budget amendment, but all have failed. Although Congress is limited by the Constitution to taxing "to pay the Debts and provide for the common Defence and general Welfare of the United States," in practice it has been demonstrated that money derived by the federal government from taxation or borrowing may be spent for any purpose for which it has been made available by an act of Congress.

When the federal government began its operation under the Constitution, its functions were comparatively few and its expenditures small. As new functions were added and old functions were expanded, federal expenditures were vastly increased. Thus, in 1791—when money was spent only for the army, interest on the public debt, pensions, foreign relations, and the salaries of government personnel—the expenditures amounted to only $3, 097, 000. But in the fiscal year 2000—with tremendously increased amounts spent for the above purposes

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and great sums spent as well for such items as agricultural subsidies, social security, unemployment relief, space research and exploration, veterans' benefits, and education—the net expenditures totaled $1, 788, 045, 000, 000. Whereas the per capita expenditure in 1791 was only 76 cents, in 2001 it was in excess of $6, 000.

Wars have been the chief factor in causing federal expenditures to rise. The Civil War cost the federal government nearly $13 billion; World War I, $112 billion; and World War II, $664 billion. After each war in which the United States participated federal expenditures fell markedly but failed to drop even close to the prewar level. For example, federal expenditures in 1916, just before the United States entered World War I, amounted to $724, 413, 000. After a peak wartime output of $18, 939, 532, 000 in fiscal year 1919, annual expenditures never again fell below $3, 000, 000, 000, more than four times the prewar figure. During the Vietnam War (1962–1973) federal expenditures increased enormously, nearly tripling from approximately $87.8 billion in 1962 to $246.5 billion in 1973. Federal outlays increased to $268.3 billion the following year and never again fell below $300 billion.

The largest percentage of the federal budget since World War II has been allocated to national defense. However, even though the dollar output on national defense has soared ($50 billion in 1965 to $281.2 billion in 2000), the percentage of total national expenditures allocated to defense began to decrease long before the end of the Cold War in 1989–1990. From a height of 41.9 percent in 1965, defense spending sank to 29.4 percent of the national budget in 1974 to 15.1% in 2000). If defense spending was gradually reduced, the cost of the nation's indebtedness rose dramatically. In 1980, the national debt was $909 billion. From the early 1980s to the mid-1990s, the U.S. ran annual deficits in excess of $100 billion. For three consecutive years from 1998 to 2000, a robust economy and spending controls sent the budget briefly into the black, and the national debt was reduced slightly. But the combined effects of a recession in 2001 and the terrorist attacks of that year returned the government to a policy of deficit spending. By 2001, the national debt had ballooned to $5.8 trillion. Simply paying the interest on that debt cost the federal government $362.1 billion—making interest payments the government's largest single expenditure of the national debt (19.4 percent of its total outlays).

BIBLIOGRAPHY

Ippolito, Dennis S. Uncertain Legacies: Federal Budget Policy from Roosevelt through Reagan. Charlottesville: University Press of Virginia, 1990.

Kahn, Jonathan. Budgeting Democracy: State Building and Citizenship in America, 1890–1928. Ithaca, N.Y.: Cornell University Press, 1997.

Ott, David J., and Attiat F. Ott, Federal Budget Policy. Washington, D.C.: Brookings Institution, 1977.

Savage, James D. Balanced Budgets and American Politics. Ithaca, N.Y.: Cornell University Press, 1988.

Harold W.Chase/a. g.; a. r.

See alsoBusiness Cycles ; Debt, Public ; Defense, National ; Office of Management and Budget ; Reaganomics ; War Costs .