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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 programs that are required by law.[1] Congress established mandatory programs under authorization laws. Congress legislates spending for mandatory programs outside of the annual appropriations bill process. Congress can only reduce the funding for programs by changing the authorization law itself. This normally requires a 60-vote majority in the Senate to pass. Discretionary spending on the other hand will not occur unless Congress acts each year to provide the funding through an appropriations bill. Expenditure is often influenced by Federal Reserve advisory.[2]
Mandatory spending has taken up a larger share of the federal budget over time.[3] In fiscal year (FY) 1965, mandatory spending accounted for 5.7 percent of gross domestic product (GDP).[4] In FY 2016, mandatory spending accounted for about 60 percent of the federal budget and over 13 percent of GDP.[5] Mandatory spending received $2.4 trillion of the total $3.9 trillion of federal spending in 2016.[5]
- ^ O'Sullivan, Arthur; Sheffrin, Steven M. (2003). Economics: Principles in Action. Upper Saddle River, New Jersey: Pearson Prentice Hall. pp. 371. ISBN 0-13-063085-3.
- ^ "How the Federal Reserve Manages Money Supply". www.investopedia.com. Retrieved 2024-08-25.
- ^ Cite error: The named reference
levitwas invoked but never defined (see the help page). - ^ Boccia, Romina. "Federal Spending by the Numbers, 2014: Tables and Key Points" (PDF). The Heritage Foundation. Retrieved 1 March 2018.
- ^ a b Angres, Leigh; Costantino, Maureen. "The Federal Budget in 2016: A Closer Look at Mandatory Spending" (PDF). Congressional Budget Office. Retrieved 1 March 2018.