US Budget Glossary

Receipts are all revenue collected by the federal government: individual income taxes, payroll taxes for Social Security and Medicare, corporate income taxes, excise taxes, customs duties, estate and gift taxes, and miscellaneous collections including Federal Reserve remittances. Individual income and payroll taxes together supply the large majority.

Outlays are the payments the federal government actually makes during a fiscal year, as distinct from budget authority (permission to spend) or obligations (commitments to spend). Because large projects pay out over several years, outlays in any year reflect decisions made across many prior years.

Mandatory spending is governed by permanent law rather than annual appropriations — chiefly Social Security, Medicare, Medicaid, and other entitlement programmes. It continues automatically unless Congress changes the underlying statute, and it makes up roughly two-thirds of federal outlays.

Discretionary spending is set each year through the twelve regular appropriations bills, covering defence, transportation, education, scientific research, and most other federal agencies. It is the portion of the budget Congress actively votes on annually, and it is roughly a quarter of total outlays.

The federal deficit is the amount by which government outlays exceed receipts in a single fiscal year. It is financed by borrowing, which adds to debt held by the public. A year in which receipts exceed outlays produces a surplus instead — the US last ran one in fiscal 2001.

Deficit = Total Outlays − Total Receipts

Nearly every US state is required by its constitution or statute to balance its operating budget, unlike the federal government. The strictness varies: some states need only propose a balanced budget, others must end the year in balance. Capital projects are typically exempt and financed with bonds, which is why states carry debt despite the requirement.

Debt held by the public is the portion of federal debt owed to investors outside the federal government — individuals, corporations, state and local governments, the Federal Reserve, and foreign holders. It excludes intragovernmental holdings such as the Social Security trust funds, which is why it is smaller than gross federal debt and is the measure economists prefer.

Gross federal debt is the total outstanding debt of the US government: debt held by the public plus intragovernmental holdings — the Treasury securities held by federal trust funds such as Social Security and Medicare. Because those holdings represent money the government owes itself, most fiscal analysis focuses on debt held by the public instead.

Gross Federal Debt = Debt Held by the Public + Intragovernmental Holdings

The debt ceiling is a statutory cap on how much the US Treasury may borrow. Because Congress separately enacts the spending and tax laws that create borrowing needs, raising the ceiling authorises payment for obligations already incurred rather than approving new spending. When the cap binds, Treasury uses "extraordinary measures" to keep paying bills until Congress acts.

Net interest is the federal government's cost of servicing its debt, net of interest income it receives. It rises with both the stock of debt and prevailing interest rates, and unlike programme spending it purchases no current services — which is why a rapid climb in net interest squeezes the rest of the budget.

In state budgeting, the general fund is the main account for revenues not earmarked for a specific purpose — chiefly income and sales taxes — and it pays for schools, prisons, courts, and health programmes. It is the figure most state budget debates are about, and it is much smaller than all-funds spending, which also counts federal grants and dedicated funds.

All-funds spending is a state's total expenditure across every account: the general fund, federal grants (Medicaid is usually the largest), dedicated state funds such as fuel taxes for highways, and bond proceeds. It is the fairer basis for comparing state budgets, because states differ widely in how much they route outside the general fund.

Federal funds are the grants states receive from Washington, which typically make up around a third of state spending. Medicaid is by far the largest, with matching rates that vary by state income. Because the money is largely earmarked, a big federal-funds total does not imply broad state fiscal discretion.

A rainy day fund, or budget stabilisation fund, is a state reserve built up in strong years to cushion revenue shortfalls in downturns. Analysts usually measure it as a share of general fund spending — the number of days of operations it could cover — rather than in dollars, since state budgets differ enormously in size.

Federal trust funds — Social Security, Medicare Hospital Insurance, Highway — are accounting mechanisms that track dedicated revenues against dedicated spending. Their balances are held as special-issue Treasury securities, so "depletion" means the dedicated revenue no longer covers benefits at current rates, not that payments stop entirely.

Budget authority is the legal permission for a federal agency to incur obligations that will result in outlays. It is granted by appropriations acts or permanent law. Budget authority provided in one year may produce outlays across several later years, which is why the two figures rarely match.

Appropriations are the annual acts through which Congress funds discretionary government operations. Twelve regular bills cover the federal agencies; when they are not enacted by the start of the fiscal year on October 1, Congress must pass a continuing resolution or the affected agencies shut down.

A continuing resolution (CR) is stopgap legislation that funds government operations when regular appropriations have not been enacted, typically at the previous year's levels. CRs have become routine: agencies frequently operate under them for months, which complicates planning because new programmes generally cannot start under a CR.

A shutdown occurs when appropriations lapse and agencies must suspend non-excepted activities, furloughing employees. Work deemed necessary for safety of life or protection of property continues, as does mandatory spending such as Social Security payments, since those do not depend on annual appropriations.

Reconciliation is a fast-track legislative process that lets certain budget-related bills pass the Senate with a simple majority, bypassing the filibuster. Its scope is limited by the Byrd rule, which strips provisions whose budgetary effects are merely incidental to their policy aims. Major tax and spending laws are frequently enacted this way.

A CBO score is the Congressional Budget Office's official estimate of how a bill would change federal spending, revenues, and deficits over a ten-year window. CBO is nonpartisan and its scores are the standard reference in legislative debate, though they are projections and carry real uncertainty.

The baseline is a projection of federal spending, revenue, and deficits under current law — what would happen if no new legislation were enacted. It is the yardstick against which proposals are scored, so a "cut" often means a reduction relative to the baseline rather than an absolute decline in spending.

The US federal fiscal year runs from October 1 to September 30 and is named for the calendar year in which it ends — fiscal 2026 covers October 2025 through September 2026. Most states use a July-to-June year instead, and India uses April to March, so cross-country comparisons never cover identical periods.

Impoundment is the executive branch declining to spend funds Congress has appropriated. The Impoundment Control Act of 1974 restricts it: the President may propose rescissions, which lapse unless Congress approves them within 45 days, or brief deferrals. The Act was passed precisely to reassert congressional control of the purse.

Payroll taxes fund Social Security and Medicare, split between employee and employer. The Social Security portion applies only up to an annual wage cap, while the Medicare portion has no cap. Payroll taxes are the second-largest federal revenue source and are more regressive than the income tax because of that cap.