American American(s) may refer to: * American, something of, from, or related to the United States of America, commonly known as the "United States" or "America" ** Americans, citizens and nationals of the United States of America ** American ancestry, pe ...

public finance Public finance is the study of the role of the government in the economy. It is the branch of economics that assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achiev ...

, 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 ...

implemented through an

appropriations bill An appropriation, 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 is ne ...

. 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 variabl ...

, in contrast to

social program Welfare, or commonly social welfare, 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 refe ...

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, 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 as protection against military attac ...

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. Ai ...

education Education is a purposeful activity directed at achieving certain aims, such as transmitting knowledge or fostering skills and character traits. These aims may include the development of understanding, rationality, kindness, and honesty ...

and

transportation Transport (in British English), or transportation (in American English), is the intentional movement of humans, animals, and goods from one location to another. Modes of transport include air, land ( rail and road), water, cable, pipelin ...

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, 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 Congress ...

which includes levels of discretionary spending, deficit projections, and instructions for changing entitlement programs 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 Commi ...

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 of two or more experts to discuss and exchange opinions or new information about a particular topic. Conferences can be used as a form of group decision-making, although discussion, not always decisions, are the main p ...

, 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. 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. By 2022, the Congressional Research Service projects that discretionary spending's share of the economy "will be equal to or less than spending in each of the two largest categories of mandatory programs,

Social Security Welfare, or commonly social welfare, 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 specifical ...

and Major Health Programs."

References

{{Reflist Government spending

United States discretionary spending

United States mandatory vs. discretionary spending

See also

References