Review

The US Government is the largest and most active issuer of securities in the world. With debt levels currently more than $33 trillion, the US Government securities market is massive. Investors around the world fund the activities of our federal government.

Our federal government raises significant sums of capital to fund its various activities. The top recipients of federal spending are Social Security, Medicare/Medicaid (health-related spending), and Defense (military, National Guard, etc.). The federal government also spends massive amounts of money 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, which was the last point in time there was a federal surplus. Although the federal government has been deficit spending for nearly 20 years, it does bring in a large amount of money through taxes and other revenues. Income taxes and payroll taxes brought in roughly 83% of federal revenues in 2019. Other forms of revenue include excise taxes, estate taxes, gift taxes, and taxes on imports and exports (tariffs).

In this chapter, we’ll learn about the specific securities the US Government issues, how they influence the economy and suitability for their products.