Have you ever wondered where your taxes go? Or why are other countries so concerned about how the United States spends its money? The U.S. federal budget is more than just numbers; it’s a powerful tool that reflects our national values and priorities. It determines the outlook for your school districts and the facilities and quality of care at your local health clinic. In addition to national spending, it has an impact on millions of people outside of America. This article explains how the United States budget works, the government’s spending priorities for 2024, and the importance of participating in public spending. 

Examining the U.S. Federal Budget

The federal budget is the government’s yearly financial plan. It outlines how much money will be collected (revenue) and how it will be spent (expenditure). U.S. federal spending is broadly divided into two categories: mandatory spending and discretionary spending. 

• Mandatory Spending includes health and social programs like Social Security, Medicare, and Medicaid, which consume a significant portion of the budget and reflect the nation’s commitment to supporting public welfare and ensuring a safety net for millions of Americans. 
• Discretionary spending is decided through an annual appropriations process. This process determines the budget’s allocation to defense, education, and infrastructure, some of the most significant components.

Top Spending Priorities in 2024

In the 2024 federal budget, the United States government prioritized several key areas, including allocations to healthcare, Social Security, national defense, and interest on the national debt, reflecting the government’s commitment to citizen well-being, national security, and financial obligations.

• Healthcare: A significant portion of the budget was allocated to healthcare, totaling $2.68 trillion (27.68%). This includes $1.58 trillion (16.34%) for Medicare, which provides essential medical services to elderly and disabled Americans, and $1.1 trillion (11.34%) for broader health-related expenditures, such as Medicaid, public health programs, and research.
• Social Security: Social Security received $1.54 trillion (15.91%), providing financial support to retirees, disabled individuals, and survivors, and ensuring economic stability for millions.
• National Defense: National defense was allocated $1.36 trillion (14.03%), supporting military operations, defense infrastructure, and veterans’ benefits to maintain national security.
• Net Interest on the National Debt: The government allocated $1.15 trillion (11.87%) to net interest payments, a substantial component of the budget due to rising interest rates and increased federal borrowing.

The government allocated a total sum of $9.7 trillion as expenditure in the 2024 budget, carefully balancing sustaining essential social programs, ensuring national security, and addressing the nation’s financial obligations.

Source: usaspending.gov

In 2024, the U.S. government focused most of its budget on five major areas highlighted in the table below. 

Top Spending Categories in the 2024 Budget

Spending Category	Amount	% of the Total Budget
Medicare	$1,582,650,103,296	16.34%
Social Security	$1,541,027,236,655	15.91%
National Defense	$1,358,253,371,219	14.03%
Net Interest	$1,149,557,674,231	11.87%
Health	$1,098,419,579,301	11.34%

Examining U.S. Foreign Aid

In addition to domestic investments, the U.S. government allocates a small portion of its budget to preventing war, fostering international stability, and forming strategic alliances with other nations. This allocation toward other countries is known as foreign aid, and it reflects America’s values of caring for the needy and protecting democracy and human rights. Although foreign aid represents just around 1.2% of the federal budget, it plays a powerful role in promoting global stability, economic development, and humanitarian relief. In 2024, U.S. foreign aid is estimated to remain in the range of $40–$50 billion, with funding directed through agencies like the U.S. Agency for International Development (USAID) and the Department of State, which facilitate diplomatic efforts, disaster relief, and economic support for developing nations.

Key programs include funding for HIV/AIDS prevention, vaccinations, and disaster response efforts. For decades, the United States has provided substantial military assistance to Israel in the form of Foreign Military Financing (FMF). Israel uses the FMF to purchase defense equipment, enhance its security capabilities, and maintain its military edge in a volatile region. Despite its modest size, foreign aid is a strategic tool that helps advance U.S. values and foster global partnerships.

The Global Importance of the US Budget

The U.S. federal budget is more than a domestic financial document; it is a statement of priorities with real-world implications for millions across the globe. For international partners and development organizations, consistent U.S. funding means continued support for education, health, infrastructure, and democratic institutions. Conversely, changes or delays in U.S. spending can stall progress in already vulnerable regions.

The Federal Funding Freeze: Implications for Global Development

In 2024, political disagreements and concerns about rising inflation prompted a temporary federal funding freeze. This delayed critical budgetary decisions and created uncertainty across multiple sectors, both at home and abroad.

Internationally, these delays strain programs that depend on timely U.S. support. One historical example is the aftermath of Hurricanes Irma and Maria in 2017, when recovery efforts were hindered by U.S. aid delays to Puerto Rico. The Government Accountability Office (GAO) later found that the delay in disbursing funds exacerbated the hardships of affected communities. Prolonged budget talks could result in cuts to humanitarian aid, education initiatives, and global health campaigns, undoing hard-won progress in many regions.

As the world becomes more interconnected, the U.S. budget stands as both a national and international blueprint. The US government must strike a balance between upholding its commitments overseas and safeguarding its citizens at home. Transparent and sustainable budget policies strengthen American society and reinforce the country’s leadership in promoting peace, prosperity, and development around the world.

 

Abiola Afolabi, the International Growth Lead at BudgIT, writes from Chicago, IL.