Entitlements / Mandatory Spending

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The Budget divides all spending into two broad categories:

Almost one-third of federal spending is called “discretionary spending,” because the amount of spending flows from annual funding decisions by Congress’ Appropriations Committees (and that is roughly divided between defense and non-defense programs).

Roughly two-thirds of the budget is called “mandatory spending,” because the amount of outlays flow from legal obligations of the federal government established in law.

Most mandatory spending is comprised of “entitlement programs” — where eligibility rules and benefit formulas determine annual outlays.

CBO:  Outlays for Mandatory Programs and Brief Descriptions – 2018 through 2028 

CBO: Mandatory Spending Infographic

The largest entitlement programs are:

  • Social Security:  $984 billion – 24% of the Budget
    Old-Age, Survivors, and Disability Insurance.

 

  • Medicare$583 billion – 14% of the Budget     
    (Gross Outlays of $707 b minus $124 b from premiums and other offsetting receipts)
    Medicare is national health insurance administered by the federal government for people 65 and over and disabled Americans. It is financed by payroll taxes, general tax revenues, premiums and copayments. The above number is total Medicare outlays.

 

  • Medicaid$383 billion – 9% of the Budget
    Medicaid, financed jointly by the federal and state governments, is administered by the states. It is the major health program for low-income Americans. A large portion of Medicaid pays for long-term care for low-income elderly.

Other Major Mandatory Spending Programs

FY 2018
Outlays
Federal Civilian Retirement (including annuitants’ health care) $102 billion
Veterans Benefits  $100 billion
Compensation, Pensions, and Life Insurance  ($83 billion)Other (primarily education subsidies) ($17 billion)
Note: Veterans Health Care is not an entitlement; funding levels are appropriated annually in the Mil.Con.-VA bill.
Earned Income Tax Credit (EITC) and Child Tax Credit $87 billion
Note:  Although these are “tax credits,” this amount — $87 billion — is considered “spending” because taxpayers are receiving “refunds” larger than their tax liabilities.  These are also known as “refundable tax credits.”
Food Stamps (now known as “SNAP”)  $69 billion
Highway and Public Transit Programs  $55 billion
Federal funding for Highways and Public Transit is a budgetary oddity since the spending authority is considered to be “mandatory spending” because it is provided in multiyear highway authorizing legislation; however, the outlays are considered to be “discretionary” since they are controlled by the Appropriations Committee.
Military Retirement $54 billion
Affordable Care Act (ACA) Subsidies   ACA Background $54 billion
Supplemental Security Income (SSI)   $51 billion
Temporary Assistance for Needy Families (TANF), Child Support Enforcement, Child Care Entitlement $32 billion
Unemployment Compensation  $30 billion
Child Nutrition $24 billion
Agriculture Programs $17 billion
Children’s Health Insurance Program (CHIP)  $16 billion

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