Discretionary Spending: Prospects and History

Publication Date: April 2005

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Economics

Type:

Abstract:

Federal spending has changed, both in size and composition over the last 40 years. Total federal spending is now a larger percentage of the economy (as measured by gross domestic product -- GDP) than it was in 1965 (19.8% of GDP vs 17.2% of GDP). Mandatory spending (generally spending that result from laws other than appropriations acts, such as Social Security and Medicare), has grown substantially, both as a percentage of GDP and as a percentage of total spending to become, today, the largest component of federal spending. Mandatory spending, without significant changes to the programs composing it, will continue growing as a percentage of GDP and as a percentage of total outlays into the future.

Discretionary spending (generally outlays that result from the budget authority provided in appropriations acts, such as defense, education, and transportation), and in particular its defense spending component, has shrunk over the last 40 years. Defense spending in 1965 dominated the budget, making up 43.2% of total spending. Total discretionary spending was 65.8% of total outlays. In 1965, defense spending was 7.4% of GDP and total discretionary spending was 11.3% of GDP. By 2004, defense spending had fallen to 19.8% of total spending and 3.9% of GDP. Total discretionary spending had fallen to 39.1% of total spending and 7.8% of GDP.

Under President Bush's FY2006 budget proposals (February 2005) discretionary spending will continue falling as shares of total spending and of GDP over the next five years (if not longer). This report will not be updated.