The US Government is the largest and most active issuer of securities in the world. With debt levels currently more than $33 trillion, the market for US Government securities is enormous. Investors around the world buy these securities, which helps fund the activities of the federal government.
The federal government raises large amounts of capital to pay for its programs and services. The largest categories of federal spending are Social Security, Medicare/Medicaid (health-related spending), and Defense (military, National Guard, etc.). The federal government also spends substantial amounts on veterans’ benefits, education, housing assistance, and transportation-related costs.
Deficit spending (borrowing more money than it brings in) has been the government’s funding method since 2001, the last time there was a federal surplus. Even though the federal government has relied on deficit spending for nearly 20 years, it still collects significant revenue through taxes and other sources. In 2019, income taxes and payroll taxes made up roughly 83% of federal revenues. Other revenue sources include excise taxes, estate taxes, gift taxes, and taxes on imports and exports (tariffs).
In this chapter, you’ll learn which securities the US Government issues, how those securities influence the economy, and when they may or may not be suitable investments.
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