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U.S. Federal Budget - Discretionary Spending

By Kimberly Amadeo, About.com

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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. It includes everything that is not in the mandatory budget, which are programs required by law to provide certain benefits, such as Social Security and Medicare. (See Federal Budget - Mandatory Spending)

2009 Discretionary Budget Spending:

Discretionary spending in FY 2009 is $1.3 trillion, or 32.5% of total spending. More than half ($666 billion) is what the OMB calls Security spending: the Department of Defense and "overseas contigency programs."

The rest ($613 billion) is non-security spending. These totals include $267 billion from the Economic Stimulus Package, which will be spent in FY 2009 and FY 2010. The largest departments are: Education ($122.2 billion), Transportation ($118.6 billion), Health and Human Services ($102.5 billion),Energy ($65.1 billion), and Housing and Urban Development ($53.7 billion). (Source: OMB,Table S-4; Table S-7)

2010 Discretionary Budget Spending:

The FY 2010 Federal Budget proposes an 7% increase in discretionary spending to $1.37 trillion. This is due to a 13% increase in non-Security spending to $695 billion. This increase does not include the Stimulus Bill funding. (Source: OMB Table S-4)

Security spending increases 1% to $673 billion. This includes $130 billion for overseas contingency operations, which means increased troops in Afghanistan and a slow wind-down in Iraq. (Source: OMB, Defense Department Budget)

How Does the Discretionary Budget Affect the U.S. Economy?:

In FY2009 and FY2010, the stimulus package has increased spending in transportation, housing and human services. Many of these programs were created as part of the New Deal to provide a safety net for those who had been demolished by the Great Depression of 1929. The 2010 budget is a return to Depression economics. This increased spending will restore the economy to a healthy 3.2% growth rate by 2011.

Still, a large portion of the discretionary budget is used for security related purposes. The $673 billion security budget represents 4.5% of total estimated GDP for FY2010. This will decrease to $604 billion by 2012, only 3.6% of projected GDP.(Source: OMB,Table S-8)

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