 | The examples and perspective in this articlemay not represent aworldwide view of the subject. You mayimprove this article, discuss the issue on thetalk page, orcreate a new article, as appropriate.(February 2025) (Learn how and when to remove this message) |
| Public finance |
|---|
 |
InAmericanpublic finance,discretionary spending isgovernment spending implemented through anappropriations bill.[1] This spending is an optional part offiscal policy, in contrast tosocial programs for which funding is mandatory and determined by the number of eligible recipients.[2] Some examples of areas funded by discretionary spending arenational defense,foreign aid,education andtransportation.
In the United States, discretionary spending refers to optional spending set by appropriation levels each year, at the discretion of Congress.[3] During thebudget process, Congress issues abudget resolution which includes levels of discretionary spending,deficit projections, and instructions for changingentitlement programs and tax policy.[3] After setting discretionary spending levels, both theHouse Appropriations Committee andSenate Appropriations Committee divide the agreed-upon amount of discretionary spending into twelve suballocations for each of their twelve subcommittees.[3] These subcommittees produce twelve annual appropriation bills for the next fiscal year.[4] While these bills are subject to revision as they move through hearings, markups, Floor consideration, andconference, the level of discretionary spending remains constrained by the budget resolution.[4] Eventually, these twelve bills must be approved by the full Appropriations Committee, followed by both Houses of Congress. Once passed, the president either signs them, vetoes them, or allows them to become law by not signing them within ten days.[3]
In 2016, the U.S. federal government spent $1.2 trillion on U.S. discretionary spending. Of this $1.2 trillion, nearly half ($584 billion) was spent on national defense. The rest of U.S. discretionary spending was allocated for education, training, employment, and social services ($92 billion), as well as transportation ($91 billion), veterans' benefits and services ($68 billion), income security ($66 billion), health ($57 billion), administration of justice ($53 billion), international affairs ($52 billion), and other areas related to natural resources, the environment, science, space, and technology ($122 billion).[5]
In 1962, U.S. discretionary spending made up 47.2% of total U.S. spending, remaining the largest component of federal spending until the mid-1970s.[6] From this time forward, however, discretionary spending levels as a share of total federal spending has decreased significantly. This is largely due to the rapid growth of entitlement spending, also known asmandatory spending.[6] As more participants become eligible for entitlement programs, mandatory spending automatically increases. This trend is projected to continue in the future. In fact, according to theCongressional Research Service, over the next decade, mandatory spending is projected to reach 14% of GDP, while discretionary spending is projected to continue getting smaller, eventually reaching 5% of GDP.[7] The Congressional Research Service projected that by 2022, discretionary spending's share of the economy would be "equal to or less than spending in each of the two largest categories of mandatory programs,Social Security andMajor Health Programs."[7]
{{cite book}}:|work= ignored (help)