What Did the Government Budget for Mandatory Programs in FY 2010?:
The Office of Management and Budget (OMB) predicted that mandatory Spending would be $2 trillion in FY 2010. This was 57% of that year's U.S. Federal Budget. The largest
mandatory budget items were Social Security and Medicare, as follows:
- Social Security - $715 billion
- Medicare - $451 billion
- Medicaid - $275 billion
- All other mandatory programs - $590 billion. These programs include Food Stamps, Unemployment Compensation, Child Nutrition, Child Tax Credits, Supplemental Security for the Blind and Disabled, Student Loans, and Retirement/Disability programs for Civil Servants, the Coast Guard and the Military
Most of the Budget Went Toward Mandatory Programs:
The Mandatory budget was 52.6% of the total Federal budget. It was almost three times as much as the military budget, and 1 1/2 times the discretionary budget. Reducing the mandatory budget was one reason President Obama asked for health care reform. (Source: OMB FY 2010 Budget, Table S-2).
Actual FY 2010 Mandatory Spending:
The OMB reveals actual FY 2010 spending two years later, in the FY 2012 budget. Since the Mandatory budget is really just an estimate of mandated spending, the OMB usually does a good job of estimating it.
In fact, Mandatory spending was $1.954 billion. Here's the breakdown:
- Social Security - $705 billion.
- Medicare - $446 billion.
- Medicaid - $273 billion.
- Other mandatory programs - $644 billion.
What About TARP?:
In FY 2009, the government spent $151 billion on TARP. In FY 2010, an additional $45 billion was budgeted to bail out mostly community banks who were in danger of failing under too many subprime mortgages. However, $110 billion was paid back by the large banks, actually adding revenue. That's because the banks did not want the government to be part owners. Some of the banks insisted they didn't need the funds.
Many people are angry that their tax dollars went toward bailing out banks. However, this short-term emergency solution avoided a deeper recession by convincing panicked banks that the government would not let them fail.
How Mandatory Spending Affects the Economy:
With over half the entire budget dedicated to mandatory programs, the Federal government was restricted in spending on programs to revive the economy, such as education, business loans and even infrastructure. In the long run, the high level of mandatory spending means rigid and unresponsive fiscal policy, as the government's hands are tied unless it continues to increase the U.S. debt. This is a relentless drag on economic growth.
