What Is Discretionary Spending?:
Discretionary spending is that part of the U.S. Federal Budget that is negotiated between the President and Congress each year as part of the budget process. That means it can be changed, increased or even (theoretically) reduced to zero if Congress so desires. That's because the Constitution gave Congress the authority to raise and spend money for the federal government. The President's budget is a recommendation, and a description of his priorities. Find out more about Discretionary Fiscal Policy.
The Discretionary budget does not include Social Security, Medicare and Medicaid. These are in the Mandatory budget. These programs have already been authorized by an Act of Congress. The budget simply estimates how much it will cost to provide certain benefits.
The FY 2015 Discretionary budget must not exceed the cap of $1.01463 trillion set by the Bipartisan Budget Act. It allows $522.272 billion for defense, and $492.356 billion for all other discretionary programs. The President's FY 2015 budget complies with the Budget Act.
However, the Budget Act allows some adjustments. With those, the total Discretionary budget is $1.186 trillion. Here's the breakout of the major spending areas:
- Department of Defense (DoD): $495.6 billion for the base budget. The President also requested $85.4 billion to wind down the War in Afghanistan. It's funded by Overseas Contingency Operations and is outside the Budget Act.
- Health and Human Services - $73.7 billion.
- Education - $68.6 billion.
- Veterans Administration - $65.3 billion.
- State Department - $42.6 billion.
- Homeland Security - $38.2 billion.
- Housing and Urban Development - $32.6 billion.
- Energy Department - $27.9 billion (includes $11.7 billion for the National Nuclear Security Administration).
- NASA - $17.5 billion.
- Justice Department - $27.3 billion (includes $17.6 billion for the FBI and cybersecurity)
- Transportation - $14 billion.
- Treasury - $12.4 billion.
- Interior - $11.5 billion.
- For all other agencies, see Office of Management and Budget, FY 2015, Summary Tables, Table S - 5 and Table S-11.
5 Discretionary Budget Myth Busters
Here's the three biggest myths regarding cutting the budget deficit.
Myth #1: Just stop sending aid to foreign countries.
Fact: The U.S. spends $20.1 billion on foreign aid. Even if all of it were cut, that wouldn't do much to reduce spending. (Source: USAID, FY 2015 Budget Request)
Myth #2: Defense spending should be increased, even if other programs must be cut.
Fact: Military spending is already 70% of the discretionary budget. That's because many defense functions are in other agencies' budgets: FBI and Cybersecurity ($17.6 billion), National Nuclear Security Administration ($11.7 billion), State Department ($42.6 billion), Homeland Security $38.2 billion. These total $175.4 billion. When added to the Defense department budget, and the OCO, the total is $738.8 billion.
Myth #3: If we reduce military spending, the world will think we are weak.
Fact: The U.S. military budget is greater than those of the next 10 largest spenders combined. The second biggest spender, China, only spent $166 billion, while our bitter enemy, Russia, spent $90.78 billion. Our greatest ally, UK, spent $60.8 billion -- less than 10% of what the U.S. did. (Source: SPIRI, Trends in World Military Expenditure, 2012)
Myth #4: Military spending creates jobs.
Fact: Defense spending is not the best way to create jobs. A UMass-Amherst study found that $1 billion in military spending created 8,555 jobs. The same amount spent on public transit created 19,795 construction jobs. For more, see Unemployment Solutions.
Myth #5: The best way to balance the budget is cut entitlement spending.
Fact: It's true that entitlement programs, such as Social Security, Medicare, Medicaid and welfare are the biggest portions of the budget, and they are growing. However, they can't be cut without an Act of Congress, since they aren't discretionary programs. That means a majority of Congress would have to agree to change the laws that enabled them. Article updated April 5 ,2014
Understand the Current Federal Budget:
- Economic Report of the President
- Current Federal Budget Breakdown
- Revenue and Taxes
- Current Deficit