Mandatory vs. Discretionary Spending

SOC Final Exam

What is the federal budget?

The total of the U.S. federal government’s planned spending and expected revenue

What are the 3 main categories of federal spending?

1. Mandatory Spending

2. Discretionary Spending

3. Net Interest on the debt

What is Mandatory Spending?

Government spending that is required by law, mainly for entitlement programs; the government must provide these benefits to all eligible citizens

Is mandatory spending optional for the government each year?

No, it is required by law and must be paid out regardless of the annual budget

What are some key programs included in mandatory spending?

• Social Security

• Medicare

• Medicaid

How significant is mandatory spending in the federal budget?

It makes up the vast majority of federal spending

Is mandatory spending fixed or does it change over time?

It is ongoing but likely to change as program costs and eligibility shift over time

What is discretionary spending?

Spending that Congress decides to fund each year through the appropriations process; it is not required by existing law

Who controls discretionary spending decisions?

The House and Senate Appropriations Committees, along with input from the Office of Management and Budget (OMB)

What is meant by “butter and guns” in budget discussion?

It refers to the trade-off between social spending (“butter”) and military/defense spending (“guns”)

Gives examples of discretionary spending programs

• Military/Defense spending

• Education (Pell Grants)

• Law enforcement

• Scientific research

• Public housing

• Administrative agency costs