In American

public finance Public finance refers to the monetary resources available to governments and also to the study of finance within government and role of the government in the economy. Within academic settings, public finance is a widely studied subject in man ...

, discretionary spending is

government spending Government spending or expenditure includes all government consumption, investment, and transfer payments. In national income accounting, the acquisition by governments of goods and services for current use, to directly satisfy the individual or ...

implemented through an

appropriations bill An appropriation bill, also known as supply bill or spending bill, is a proposed law that authorizes the expenditure of government funds. It is a bill that sets money aside for specific spending. In some democracies, approval of the legislature ...

. This spending is an optional part of

fiscal policy In economics and political science, fiscal policy is the use of government revenue collection ( taxes or tax cuts) and expenditure to influence a country's economy. The use of government revenue expenditures to influence macroeconomic variab ...

, in contrast to

social program Welfare spending is a type of government support intended to ensure that members of a society can meet Basic needs, basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specifically to social ...

s for which funding is mandatory and determined by the number of eligible recipients. Some examples of areas funded by discretionary spending are

national defense National security, or national defence (national defense in American English), is the security and defence of a sovereign state, including its citizens, economy, and institutions, which is regarded as a duty of government. Originally conceived ...

foreign aid In international relations, aid (also known as international aid, overseas aid, foreign aid, economic aid or foreign assistance) is – from the perspective of governments – a voluntary transfer of resources from one country to another. The ...

education Education is the transmission of knowledge and skills and the development of character traits. Formal education occurs within a structured institutional framework, such as public schools, following a curriculum. Non-formal education als ...

and

transportation Transport (in British English) or transportation (in American English) is the intentional Motion, movement of humans, animals, and cargo, goods from one location to another. Mode of transport, Modes of transport include aviation, air, land tr ...

United States discretionary spending

In the United States, discretionary spending refers to optional spending set by appropriation levels each year, at the discretion of Congress. During the

budget process A budget process refers to the process by which governments create and approve a budget, which is as follows: * The Financial Service Department prepares worksheets to assist the department head in preparation of department budget estimates * The A ...

, Congress issues a

budget resolution The United States budget process is the framework used by Congress and the President of the United States to formulate and create the United States federal budget. The process was established by the Budget and Accounting Act of 1921, the Congr ...

which includes levels of discretionary spending, deficit projections, and instructions for changing

entitlement programs An entitlement is a government program guaranteeing access to some benefit by members of a specific group and based on established rights or by legislation. A "right" is itself an entitlement associated with a moral or social principle, while an ...

and tax policy. After setting discretionary spending levels, both the

House Appropriations Committee The United States House Committee on Appropriations is a committee of the United States House of Representatives that is responsible for passing appropriation bills along with its Senate counterpart. The bills passed by the Appropriations Co ...

and

Senate Appropriations Committee The United States Senate Committee on Appropriations is a standing committee of the United States Senate. It has jurisdiction over all discretionary spending legislation in the Senate. The Senate Appropriations Committee is the largest committ ...

divide the agreed-upon amount of discretionary spending into twelve suballocations for each of their twelve subcommittees. These subcommittees produce twelve annual appropriation bills for the next fiscal year. While these bills are subject to revision as they move through hearings, markups, Floor consideration, and

conference A conference is a meeting, often lasting a few days, which is organized on a particular subject, or to bring together people who have a common interest. Conferences can be used as a form of group decision-making, although discussion, not always d ...

, the level of discretionary spending remains constrained by the budget resolution. 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.

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).

United States mandatory vs. discretionary spending

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. 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 as

mandatory spending The United States federal budget is divided into three categories: mandatory spending, discretionary spending, and interest on debt. Also known as entitlement spending, in US fiscal policy, mandatory spending is government spending on certain p ...

. 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 the

Congressional Research Service The Congressional Research Service (CRS) is a public policy research institute of the United States Congress. Operating within the Library of Congress, it works primarily and directly for members of Congress and their committees and staff on a ...

, 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. 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 Welfare spending is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specifically to social insurance ...

and Major Health Programs."

References

{{Reflist Government spending

United States discretionary spending

United States mandatory vs. discretionary spending

See also

References