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An Overview of the President’s FY 1996 Budget

1 min readBy: Arthur P. Hall, Ph.D.

Download Special Report No. 44

Special Report No. 44

Executive Summary The Clinton administration has released its fiscal 1996 budget into a political environment in which Congress is seriously considering a constitutional amendment to require a balanced budget by the year 2002. The administration’s projected level of mandatory spending and the resulting high level of projected annual deficits reveals the challenge that federal lawmakers face in their quest for a balanced budget.

Mandatory federal spending will consume about 71 percent of the federal budget by the year 2000. Indeed, President Clinton’s Bipartisan Commission on Entitlement and TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. Reform reports, based on current projections, that mandatory spending “will consume all tax revenue collected by the Federal government” in the year 2012.

The budget category known as “mandatory spending” is the driving force behind the perpetual increases in federal government spending and the budget deficits. Mandatory spending primarily consists of so-called entitlement programs and the interest payments that the federal government must make on its outstanding debt.

Federal government entitlement programs, as opposed to “discretionary” programs, amount to all federal benefits payable to individuals, institutions, and state and local governments that do not require annual re-authorization by Congress. The payments made by the programs, like Social Security, Medicare, Medicaid, and Welfare, are available to anyone – regardless of overall cost – that meets the statutory requirements of the spending program.