Discretionary & Mandatory Spending

Discretionary spending is one of two types of spending in the federal budget and accounts for about 40% of the total (see the chart). This spending must be approved each year in appropriations bills which become part of the federal budget.

Typically about half of all discretionary spending is for the Defense Department. (There is additional military spending spread throughout other parts of the budget.)

The other half of discretionary spending pays for much of what we typically consider to be the central work of government: scientific and biomedical research; veterans’ medical care; NASA; national parks and forests; environmental Protection Agency, the Environmental cleanup and protection; federal law enforcement; Head Start; child care and other social services; job training; housing; low-income energy assistance; WIC (nutrition assistance for women, infants, and children); all the 13 cabinet departments: Departments of State, Treasury, Commerce, Health and Human Services, Energy, Agriculture, etc.; and foreign aid.

Mandatory spending accounts for the other 60% of federal expenditures. It pays for entitlement programs which are established by law and continue from year to year. Funding is available for all people who are eligible for the program and Congress does not need to appropriate the spending each year. Examples of entitlement programs include Social Security, veterans’ pensions, food stamps, Medicare, Medicaid, and the federal employees’ retirement program. The only way to change the cost of the program is to re-write the law to modify the eligibility criteria or the structure of the program (for example, cut benefits).

Abreviations in the chart:
EITC: Earned Income Tax Credit
SSI: Supplemental Security Income (for aged, blind, and disabled low-income people, not part of Social Security)
NASA: National Aeronautics and Space Administration
WIC: the Special Supplement Nutrition Program for Women, Infants, and Children