What is the Federal Budget?
An image of the countryside near Cooperstown, New York.
I had heard that Switzerland sent the federal budget to all citizens. I always thought this was a great idea. Of course, the federal budget is complex, so people do not easily understand it. However, I always felt that having the numbers would make people more conscious of the decisions that the politicians are making.
It turns out that Switzerland does not do this, but I still think it’s a good idea, so I am going to do it here. I asked Google AI to generate a summary of the budget's contents. This is what I asked for: “Can you summarize the United States federal budget for 2025, as well as calculate the spending per citizen? Can you also define who you are, including as citizens?”
The Response
In fiscal year (FY) 2025, the U.S. government spent $7.01 trillion, while revenue was $5.23 trillion, resulting in a deficit of $1.78 trillion. The calculated spending per citizen is approximately $20,028. For this calculation, the term "citizen" is defined as the total U.S. population, including all residents, not just those with legal citizenship.
Summary of the 2025 federal budget
Spending ($7.01 trillion):
Mandatory spending: This includes major programs like Social Security and Medicare.
Social Security: 23% of total spending.
Medicare: 14% of total spending.
Discretionary spending: This covers annually approved budgets, such as for defense and other areas.
Defense: $895.2 billion.
Non-defense: $710.7 billion.
Net interest: This covers interest payments on the national debt, which exceeded defense spending in FY2025.
Net interest: 14% of total spending.
Revenue ($5.23 trillion):
Individual income taxes: 50.7% of total revenue.
Social Security and Medicare taxes: 33% of total revenue.
Corporate taxes: These have been a decreasing portion of overall revenue.
Other revenue: This includes customs duties, excise taxes, and various fees.
Deficit ($1.78 trillion):
The $1.78 trillion deficit is the amount by which the government's spending exceeded its revenue in fiscal year 2025.
Spending per citizen calculation
To calculate the spending per citizen, the total FY2025 spending is divided by the estimated U.S. population for 2025.
Variables:
Total Spending = $7.01 trillion
Estimated Population (mid-2025) = 347.28 million
Calculation:
$7,010,000,000,000 (Total Spending) / 347,280,000 (Estimated Population) ≈ $20,028 (Spending per person)
Definition of "citizen" for this calculation
For the purposes of this per-capita spending calculation, the term "citizen" refers to the entire population residing in the United States, including non-working individuals, infants, and non-citizens. This approach is standard for calculating per-capita metrics, and it differs from definitions used for taxation or voting purposes
Social Security
I also asked the AI to expand on social security with this question: “How many people are receiving social security, and how much does each person receive on average?”
The Response
As of mid-to-late 2025, approximately 74.5 million people in the U.S. receive Social Security benefits. The average monthly payment varies depending on the type of beneficiary, with a retired worker receiving around $2,008 per month as of August 2025.
Number of Social Security recipients
Recent data from the Social Security Administration (SSA) shows the total number of beneficiaries:
August 2025: Over 74.5 million Americans received benefits from programs administered by the SSA.
April 2025: 73.9 million people were receiving Social Security benefits, which included retired workers, disabled workers, survivors of deceased workers, and their families.
The number of beneficiaries can vary slightly depending on whether Supplemental Security Income (SSI) recipients are included. For example, as of April 2025, over 7.4 million people received SSI payments, with about one-third of them also receiving Social Security.
Average monthly benefit payments
The average monthly Social Security payment in 2025 differs by beneficiary type, reflecting individual earnings histories and the age at which they claim benefits.
Here are the average monthly payments for different types of beneficiaries in 2025:
Average retired worker: $2,008.31 (August 2025).
Average for all recipients: $1,864.87 (August 2025).
Disabled workers: $1,582.95 (August 2025).
Non-disabled widows/widowers: $1,865.74 (August 2025).
Married couples (both receiving benefits): $3,089 (2025 estimate).
Factors that affect monthly payments
An individual's actual benefit amount can be higher or lower than the averages due to a number of factors:
Earning history: Benefits are calculated based on your 35 highest-earning, inflation-adjusted years.
Age at which benefits are claimed: Claiming benefits before your full retirement age results in a permanently reduced monthly amount, while waiting until age 70 results in a larger check.
Annual cost-of-living adjustments (COLA): Payments are adjusted annually to keep up with inflation. The COLA for 2025 was 2.5%
Discretionary Spending
I also asked for clarification on discretionary spending: “Can you give a summary of the discretionary spending?”
The Response
Discretionary spending for fiscal year (FY) 2025 totaled $1.606 trillion, a 1% increase over the previous fiscal year. Unlike mandatory spending, which is on autopilot, Congress must formally approve all discretionary spending through annual appropriations bills. The total is divided between defense and non-defense spending and often includes additional funds for emergencies.
Defense discretionary spending
Base defense spending for FY 2025 is capped at $895 billion by the Fiscal Responsibility Act of 2023. The Department of Defense (DoD) makes up the largest portion of the defense budget.
This funding covers:
Military personnel: Pay, benefits, and training for active-duty and reserve forces.
Operations and maintenance: Day-to-day operations, equipment maintenance, and military base operations.
Procurement: Acquiring new and modernizing existing weapons systems, including aircraft, ships, missiles, and armored vehicles.
Research and development: Testing technology, engineering, and prototyping for advanced weaponry.
Nuclear weapons: Activities conducted by the Department of Energy.
Non-defense discretionary spending
The base non-defense discretionary budget for FY 2025 is capped at $711 billion. An additional $145.1 billion was approved for emergency and disaster spending, which is exempt from the caps.
This funding supports a wide range of government functions, such as:
Education: Funding for federal aid programs for schools and students, including Pell grants.
Transportation: Funding for highways, bridges, airports, air traffic control, and other infrastructure.
Veterans' benefits: Healthcare services for veterans, accounting for nearly 90% of discretionary health spending.
Scientific research: Funding for agencies like the National Institutes of Health (NIH) and the National Science Foundation (NSF).
International affairs: Foreign aid and diplomatic programs.
Law enforcement and border security: Funding for various federal law enforcement agencies.
Environmental protection: Funding for programs that protect natural resources and the environment.
Housing assistance: Support for public housing and homeless programs.
Disaster relief: Funding to assist states with recovery efforts.
Debt
I also asked for clarification on where the government gets money from. “Who finances the debt?”
The Response
The U.S. federal debt is financed by a variety of entities, both domestic and foreign, who buy U.S. Treasury securities. As of August 2025, the national debt totaled $38 trillion. The debt can be broken down into two main categories: debt held by the public and intragovernmental debt.
Debt held by the public
The largest portion of the U.S. debt is held by a diverse group of private investors and entities outside of the federal government.
Domestic investors:
The Federal Reserve: The Federal Reserve is the largest domestic holder of U.S. debt, owning about 13% as of mid-2025. It buys and sells Treasury securities to influence the money supply and interest rates.
Mutual funds, pension funds, and insurance companies: These institutional investors hold a large share of the debt, with mutual funds alone holding approximately $4.4 trillion as of March 2025.
State and local governments: They invest in Treasury securities, often through pension funds, holding about $1.7 trillion as of March 2025.
U.S. citizens and corporations: Individual investors and U.S. businesses also purchase Treasury securities.
Foreign investors:
Foreign governments and investors: Foreign entities hold approximately one-third of the publicly held U.S. debt, viewing it as a safe investment.
Key foreign holders: The top foreign holders of U.S. debt as of mid-2025 are
Japan
($1.13 trillion) and the
United Kingdom
($779.3 billion), followed by
China
($765.4 billion). Foreign holdings of U.S. debt have generally decreased as a share of the total public debt since the early 2010s.
Intragovernmental debt
This type of debt accounts for approximately 20% of the total national debt and represents money that the government owes to itself. It is held in various government trust funds, and the Treasury Department borrows against the surplus funds in these accounts.
Social Security Trust Funds: The Old-Age and Survivors Insurance Trust Fund is the largest holder of intragovernmental debt, holding about $2.4 trillion as of August 2025.
Federal retirement funds: This includes funds for federal employees and military personnel.
Other government trust funds: These include Medicare, the Highway Trust Fund, and others.
How the debt is financed
To cover annual budget deficits, the U.S. Treasury Department borrows money by selling marketable securities. These include:
Treasury bills: Short-term securities with maturities of one year or less.
Treasury notes: Intermediate-term securities with maturities of 2 to 10 years.
Treasury bonds: Long-term securities with maturities of 20 or 30 years.
Treasury Inflation-Protected Securities (TIPS): Securities that protect investors from inflation.
These securities are auctioned to investors, with interest paid at regular intervals. In effect, financing the debt relies on the willingness of investors, both domestic and foreign, to lend money to the U.S. government in exchange for a reliable, low-risk return
