How to Calculate Public Savings: Formula, Example, and Sources

To calculate public savings, subtract government purchases and transfer payments from tax revenue for the same fiscal period: Public Savings = T − G − TR. A positive result is a budget surplus; a negative result is a deficit. Using the Congressional Budget Office’s projections for federal fiscal year 2026, that works out to roughly $5.6 trillion in revenue minus $1.9 trillion in government purchases minus $4.5 trillion in transfer payments, or about −$0.8 trillion before interest on the debt is counted.

The Formula and Its Three Variables

The Bureau of Economic Analysis defines government saving in the National Income and Product Accounts as current receipts minus current expenditures.¹ The version taught in macroeconomics courses breaks that into three components you can pull directly from published data.

T is tax revenue. This is every dollar the government collects from individuals and businesses. At the federal level, T includes individual income taxes, corporate income taxes, payroll taxes, and excise taxes on goods like fuel and tobacco. It also includes non-tax revenue such as customs duties, fees, and lease payments on government-owned land and resources.²

G is government purchases. This is spending where the government receives a good or service in return: military equipment, federal employee salaries, highway maintenance, national park operations. G is funded through annual appropriation acts and corresponds roughly to what CBO calls discretionary spending.³

TR is transfer payments. This is money sent to individuals without any good or service coming back. Social Security benefits, Medicare and Medicaid payments, and unemployment insurance are the largest examples.⁴ Transfers fall under what CBO labels mandatory spending.

A Worked Example Using FY 2026 Federal Data

Here is the calculation with the CBO’s projections for federal fiscal year 2026.³

Step 1. Find T. Total federal revenues are projected at approximately $5.6 trillion, combining individual income taxes, corporate income taxes ($404 billion), payroll taxes, customs duties ($418 billion), and smaller streams.

Step 2. Subtract G. Discretionary spending, covering defense and non-defense purchases, is projected at roughly $1.9 trillion. That leaves $3.7 trillion.

Step 3. Subtract TR. Mandatory spending on Social Security, Medicare, Medicaid, and similar programs is projected at about $4.5 trillion. Taking that off the running total gives −$0.8 trillion.

Federal public savings for FY 2026, using the textbook formula, is roughly negative $800 billion. That figure represents the government’s contribution to (or drain on) the pool of savings available for private investment.

Where to Pull the Three Numbers

You do not need to estimate any component. Federal figures are published in several places, and mixing periods is the fastest way to get a meaningless answer, so pull all three from the same reporting window.

The Daily Treasury Statement, published by the Bureau of the Fiscal Service, gives a daily snapshot of receipts, outlays, and the operating cash balance.⁵
The Monthly Treasury Statement breaks receipts and outlays into detailed categories and is typically released on the eighth business day of the following month.⁵
The CBO’s annual Budget and Economic Outlook projects revenues, spending, and deficits for the coming decade and splits outlays into discretionary, mandatory, and net interest.³

Reading the Result

Positive Public Savings

A positive number means the government took in more in taxes than it spent on purchases and transfers during the period. The government becomes a net lender in financial markets. Those surplus funds can pay down existing debt or accumulate as reserves, and the government is not competing with private borrowers for capital.

Negative Public Savings

A negative number means spending exceeded revenue. To cover the gap, the Treasury issues securities: bills (maturing in weeks to a year), notes (2 to 10 years), and bonds (20 to 30 years).⁶ Each carries interest obligations that add to future costs.

The federal government has been in negative territory for most of the last two decades. Debt held by the public is projected to reach 101 percent of GDP in 2026 and 120 percent by 2036, surpassing the previous record of 106 percent set just after World War II.³

Where Interest on the Debt Fits In

The textbook formula covers the core fiscal relationship between revenue, purchases, and transfers, but real budgets carry a fourth cost: interest on existing debt. For FY 2026, CBO projects net interest of roughly $1.0 trillion, or about 3.3 percent of GDP.³ Interest is not a purchase of goods or services and is not a transfer based on eligibility, so it does not slot neatly into G or TR. It is servicing past borrowing.

Add that $1.0 trillion to the $0.8 trillion shortfall from the textbook formula and total outlays exceed revenue by about $1.8 trillion, which lines up with CBO’s projected deficit of 5.8 percent of GDP for 2026. Economists distinguish between the total balance (revenue minus all expenditures, including interest) and the primary balance (revenue minus everything except interest). The primary balance isolates current fiscal decisions from the inherited cost of past deficits and is a better gauge of whether today’s tax and spending policies are sustainable on their own.⁷

Comparing Public Savings Across Years

Running the formula for a single year gives you a nominal figure in that year’s dollars. Comparing 2010 to 2026 without adjustment misleads, because a dollar bought more in 2010. To put figures on the same footing, divide each year’s nominal result by the GDP deflator for that year, using a consistent base year. The result is real public savings, with price-level distortion stripped out.

The simpler approach is to express each year’s public savings as a percentage of GDP. CBO’s projected 2026 deficit of 5.8 percent of GDP is directly comparable to the 50-year average of 3.8 percent with no deflator math required.³ Percentage-of-GDP is the more common format in policy discussions because it accounts for both inflation and growth at once.

State and Local Governments

The formula works the same way for state and local governments, but the data lives elsewhere. The Bureau of Economic Analysis tracks state and local government saving in NIPA Table 3.3, splitting receipts and expenditures into tax receipts, consumption expenditures, transfer payments, and interest.⁸ As of the fourth quarter of 2025, net state and local saving was approximately $3.3 billion, reflecting current receipts of about $3.6 trillion against current expenditures of about $4.3 trillion. The Census Bureau’s Annual Survey of State and Local Government Finances provides comprehensive figures across all 50 states and the District of Columbia.⁹

One wrinkle at the state level: 49 states have at least one statutory or constitutional balanced budget requirement. Those rules typically apply only to operating budgets and often exclude capital projects and pension obligations, so a “balanced” state budget does not automatically mean public savings is zero or positive.

1
Bureau of Economic Analysis. NIPA Handbook – Chapter 2: Fundamental Concepts
2
U.S. Treasury Fiscal Data. Government Revenue
3
Congressional Budget Office. The Budget and Economic Outlook: 2026 to 2036
4
Social Security Administration. Understanding the Benefits
5
U.S. Department of the Treasury. Receipts and Outlays
6
TreasuryDirect. About Treasury Marketable Securities
7
International Monetary Fund. Guidelines for Fiscal Adjustment – How Should the Fiscal Stance Be Assessed
8
Federal Reserve Bank of St. Louis. State and Local Government Current Receipts and Expenditures
9
United States Census Bureau. Annual Survey of State and Local Government Finances