It's #FiscalFriday! The U.S. Federal Budget is broken into two parts: mandatory and discretionary spending. Today we look at the difference between these two spending items. This is an important base when it comes to knowledge of our budget.
Mandatory spending is spending on certain programs required by existing law. In other words, this money must be paid every year. Mandatory spending includes Social Security, Medicare, Medicaid, the Affordable Care Act and interest on our national debt.
Discretionary spending is spending Congress can adjust on a yearly basis. Think of it this way: politicians can spend at their discretion. Examples of discretionary spending are the Department of Defense (DoD), Health and Human Services, Veterans Administration, State Department, Homeland Security, etc. While half of our Discretionary budget goes to defense, remember Discretionary spending is only 29 percent our total budget.
So what's the problem? 71 percent of our 2015 budget is Mandatory. Of our Discretionary spending, half goes to defense. That leaves only 14.5 percent of our budget for everything else.
In other words, the more we spend on Mandatory programs, the less we have for Discretionary. As Mandatory spending grows, it crowds out *discretionary* necessities and hinders our long-term economic growth.