 Mandatory SpendingMandatory spending covers outlays controlled by laws other than appropriations acts. Almost all such spending is for “entitlements,” for which expenditures depend on individual eligibility and participation; they are funded at whatever level needed to cover the resulting costs. Mandatory spending has grown from about 31 percent of the budget in 1962 to 61 percent in 2019 (figure 2). This is largely because of new entitlements, including Medicare and Medicaid (both of which started in 1965), the earned income tax credit (1975), and the child tax credit (1997). In addition, rapid growth of both the elderly and the disabled populations has contributed to increased Social Security and Medicare spending. Show Nearly 60 percent of mandatory spending in 2019 was for Social Security and other income support programs (figure 3). Most of the remainder paid for the two major government health programs, Medicare and Medicaid. Discretionary SpendingDiscretionary spending covers programs that require appropriations by Congress. Unlike mandatory spending, both the programs and the authorized levels of spending require regular renewal by Congress. The share of the budget going for discretionary spending has fallen from two-thirds in 1962 to about 30 percent now. More than half of FY 2019 discretionary spending went for national defense, and most of the rest went for domestic programs, including transportation, education and training, veterans’ benefits, income security, and health care (figure 4). About 4 percent of discretionary spending funded international activities, such as foreign aid. Debt ServiceInterest on the national debt has fluctuated over the past half century along with the size of the debt and interest rates. It climbed from 6.5 percent of total outlays in 1962 to more than 15 percent in the mid-1990s, fell to 6.1 percent in 2015, but climbed back to 8.4 percent by 2019 (figure 2). Since 2016, historically low interest rates have held down interest payments despite the national debt reaching a peacetime high of nearly 80 percent of GDP in 2019. But interest payments as a share of outlays are projected to rise because of projected increases in both the national debt and interest rates. Updated May 2020Data Sources Congressional Budget Office. 2020. “Budget and Economic Outlook: Fiscal Years 2020 to 2030,” Appendix E: Historical Budget Data. Washington, DC: Congressional Budget Office. Office of Management and Budget. 2018. Historical Tables. Table 8.1, “Outlays by Budget Enforcement Act Category: 1962–2025,” Table 8.5, “Outlays for Mandatory and Related Programs: 1962–2025,” and Table 8.7, “Outlays for Discretionary Programs: 1962–2025.” The budget is more than just a tally of numbers. It also expresses the policy priorities of our government. Each year, the President and the Congress have the opportunity to set priorities for the federal government, determining how much to spend through appropriations for annually funded programs as well as reviewing entitlement programs and the tax code. In 2022, federal spending is projected to total $5.9 trillion — about one-fifth of the economy and $188,000 for each person living in the United States. That spending can be divided into three categories: mandatory, discretionary, and interest. Mandatory SpendingPrograms governed by provisions of permanent law are referred to as “mandatory.” Put another way, spending on most mandatory programs are essentially on “autopilot” unless policymakers change the laws governing the program. Many programs that provide benefits to individuals are classified as mandatory spending, such as Social Security, Medicare, and Medicaid. Those programs are also often referred to as "entitlements" because individuals who meet the programs’ eligibility requirements are "entitled" to benefits. Mandatory spending covers programs in six major areas:
TWEET THIS Lawmakers do not provide specific funding levels for mandatory spending. Instead, they specify who is eligible for benefits as well as the type and level of benefits that each person can receive. For example, the unemployment insurance program has eligibility criteria that, once met, allow an individual to receive a certain level of benefits. Total spending on the program depends on the number of people who file for unemployment, not on a fixed amount of funding set by lawmakers. The term "mandatory" doesn’t mean that lawmakers are powerless to alter this spending. Elected officials can at any time adjust the eligibility criteria and benefit formulas that determine spending on mandatory programs, as they did with Social Security in 1983. However, if Congress and the President take no action, the current formulas and criteria for benefits generally remain in place year after year, and the spending flows as specified by law without interruption. Over time, spending for mandatory programs has increased more quickly than most other programs — primarily because of growth in Social Security, Medicare, and Medicaid. In 1970, only 31 percent of the federal budget was spent on mandatory programs, while the rest funded an array of discretionary programs and net interest. CBO states that in 2021, 66 percent of federal spending went to mandatory programs. TWEET THIS Discretionary SpendingDiscretionary spending is determined on an annual basis by Congress and the President through enactment of appropriations. As opposed to the "automatic" nature of mandatory spending, discretionary spending must be revisited each year. There are 12 separate appropriation bills that are supposed to be shepherded annually through Congress by the appropriations committees. Defense spending represents more than half of all discretionary spending. Other major activities funded through appropriations include homeland security, education, transportation, research, food safety, science and space programs, disaster assistance, environmental protection, public housing, and federal law enforcement. TWEET THIS In the 1960s, two-thirds of total federal spending went to fund discretionary programs. In 2022, discretionary spending is projected to be about 30 percent of the budget. Over the next decade, it will decrease to a historically low level relative to the size of our national economy. TWEET THIS Net InterestThe third major category of spending is interest on the national debt. Interest rates have been low for more than a decade, but are starting to rise as a result of high inflation. As a result, interest costs will soon be the fastest-growing “program” in the federal budget — exceeding the rate of growth of both Social Security and Medicare. Under current law, CBO projects that net interest costs will grow from 6.9 percent of the budget in 2022 to 13.4 percent in 2032, and to 23.9 percent in 2052. As a share of economy, that equates to 1.66 percent of gross domestic product in 2022, 3.33 percent in 20322, and 7.22 percent in 2052. What is mandatory spending in the federal budget?Mandatory spending is simply all spending that does not take place through appropriations legislation. Mandatory spending includes entitlement programs, such as Social Security, Medicare, and required interest spending on the federal debt. Mandatory spending accounts for about two-thirds of all federal spending.
Which of the following is an example of federal mandatory spending quizlet?Mandatory spending (also called non-discretionary spending) is authorized by permanent law. An example is Social Security. The President and Congress can change the law to change the level of spending on mandatory programs—but they don't have to do so.
Which of the following is an example of mandatory spending?Outlays for the nation's three largest entitlement programs (Social Security, Medicare, and Medicaid) and for many smaller programs (unemployment compensation, retirement programs for federal employees, student loans, and deposit insurance, for example) are mandatory spending.
What is mandatory spending quizlet?Mandatory spending is defined as those areas of the federal budget that must be enacted each year by law and are not dependent on annual review by committees of congress.
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Which of the following is a correct example and explanation of mandatory spending within the federal budget?
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