Glossary
Plain-language definitions of federal budget and fiscal policy terms. Understanding these concepts makes it easier to follow debates about spending, taxes, and the national debt.
Appropriations
Legislation enacted by Congress that provides federal agencies with the legal authority to spend money. Annual appropriations bills fund about one-third of federal spending (discretionary programs). Without appropriations, agencies cannot operate — leading to government shutdowns when bills aren't passed on time.
Continuing Resolution
A temporary spending bill that funds the government at the previous year's levels when Congress hasn't passed regular appropriations bills by the start of the fiscal year (October 1). Continuing resolutions have become increasingly common, sometimes funding the government for months at a time.
Debt Ceiling
A statutory limit on the total amount of money the U.S. government is authorized to borrow. When the ceiling is reached, Treasury must use 'extraordinary measures' to avoid default. Congress must vote to raise or suspend the ceiling. It does not authorize new spending — it allows the government to pay for spending already approved.
Debt-to-GDP Ratio
The national debt expressed as a percentage of Gross Domestic Product (GDP). This ratio measures the size of the debt relative to the economy's ability to generate revenue to pay it off. A ratio above 100% means the debt exceeds one year's total economic output. The U.S. ratio is currently above 120%.
Deficit
The amount by which federal spending exceeds federal revenue in a given fiscal year. When the government spends more than it collects in taxes and other receipts, it must borrow to cover the difference — adding to the national debt. The opposite of a deficit is a surplus.
Discretionary Spending
Federal spending that Congress controls through the annual appropriations process. This includes defense, education, transportation, science research, and most other government operations. Discretionary spending makes up roughly 29% of the federal budget. Unlike mandatory spending, these programs must be re-funded each year.
Entitlement
A government program that provides benefits to all individuals who meet eligibility criteria established by law. Social Security, Medicare, and Medicaid are the largest entitlement programs. Spending is determined by the number of eligible recipients and benefit formulas, not by annual appropriations.
Fiscal Year
The federal government's 12-month accounting period, which runs from October 1 through September 30 of the following year. Fiscal Year 2026 (FY2026) began on October 1, 2025, and ends September 30, 2026. This differs from the calendar year, which is why budget discussions often reference fiscal years.
GDP (Gross Domestic Product)
The total value of all goods and services produced within the United States in a given period, typically measured annually or quarterly. GDP is the broadest measure of the U.S. economy's size and health. U.S. GDP is approximately $29 trillion, making it the world's largest economy.
Intragovernmental Debt
The portion of the national debt that the federal government owes to itself — specifically to government trust funds like Social Security, military retirement, and federal employee pensions. When these trust funds have surpluses, they invest in Treasury securities. This debt currently accounts for about 21% of total national debt.
Mandatory Spending
Federal spending that is required by existing law and does not go through the annual appropriations process. The major mandatory programs are Social Security, Medicare, Medicaid, and interest on the national debt. Mandatory spending accounts for roughly 71% of the federal budget and grows automatically based on eligibility and benefit formulas.
National Debt
The total amount of money the federal government owes to its creditors, accumulated over the entire history of the nation. It consists of public debt (owed to external investors, foreign governments, and the Federal Reserve) and intragovernmental debt (owed to government trust funds). The debt grows whenever the government runs a deficit.
Outlays
The actual payments made by the federal government. While budget authority is the permission to spend, outlays are the checks that get written. An agency may receive budget authority in one year but not make the actual payment until a later year. Outlays are the most accurate measure of what the government actually spent.
Per Capita
A measurement divided by the total population. When the national debt is expressed 'per capita,' it shows how much each American would owe if the debt were divided equally among all residents. This provides a more relatable way to understand large numbers — the current debt per capita exceeds $100,000.
Public Debt
The portion of the national debt held by entities outside the federal government — individuals, corporations, state and local governments, the Federal Reserve, and foreign governments. Public debt is the portion on which the government pays interest to external creditors. It currently makes up about 79% of total national debt.
Receipts
Money collected by the federal government, primarily through taxes. The main sources are individual income taxes (about 51% of revenue), payroll taxes for Social Security and Medicare (about 33%), and corporate income taxes (about 9%). Also includes excise taxes, estate taxes, customs duties, and fees.
Sequestration
Automatic, across-the-board spending cuts triggered when Congress fails to meet deficit-reduction targets. Established by the Budget Control Act of 2011, sequestration applies equal percentage cuts to most discretionary programs. It is designed as an enforcement mechanism to encourage Congress to reach budget agreements.
Surplus
The amount by which federal revenue exceeds federal spending in a given fiscal year. A surplus allows the government to pay down existing debt. The U.S. last ran a surplus from 1998 to 2001. The opposite of a surplus is a deficit.
Trust Fund
A fund established by law to hold receipts that are designated for specific purposes. The Social Security Trust Fund and Medicare Trust Fund are the largest. When these programs collect more in payroll taxes than they pay in benefits, the surplus is invested in Treasury securities. Projections indicate the Social Security trust fund will be depleted in the 2030s.