What is the difference between discretionary and entitlement programs

Of course, even interest on the debt is not mandatory. It is, however, necessary if we want the government to continue to function. Email the webmaster econlib.

A valid email address is required to post comments on EconLog and EconTalk. What is Mandatory Spending? What is Entitlement Spending? Categories: Fiscal Policy. Joey Donuts Mar 18 at am. Floccina Mar 18 at pm. George Will said that only the interest in the debt is mandatory spending. I agree with him. David R. Henderson Mar 18 at pm. Floccina, Thanks. It also expresses the policy priorities of our government. Each year, the President and Congress have the opportunity to set priorities for the federal government, determining how much to spend through appropriations for annually funded programs as well as reviewing entitlement programs and the tax code.

That spending can be divided into three categories: mandatory, discretionary, and interest. Many programs that provide benefits to individuals are classified as mandatory spending, such as Social Security, Medicare , and Medicaid.

Lawmakers do not provide specific funding levels for mandatory spending. Instead, they specify who is eligible for benefits as well as the type and level of benefits that each person can receive.

For example, the unemployment insurance program has eligibility criteria that, once met, entitle an individual to receive a certain level of benefits. Total spending on the program depends on the number of people who file for unemployment, not on a fixed amount of funding set by lawmakers. Elected officials can at any time adjust the eligibility criteria and benefit formulas that determine spending on mandatory programs, as they did with Social Security in However, if Congress and the president take no action, the current formulas and criteria for benefits remain in place year after year, and the spending flows as specified by the law without interruption.

For example, the administrative expenses associated with running the Social Security Administration generally are funded with discretionary spending, but the benefit checks sent to retirees and disability recipients enrolled in Social Security programs are classified as mandatory spending.

The composition of the federal budget, specifically the split between mandatory and discretionary spending, is changing. In the s, the share of the federal budget dedicated to discretionary and mandatory programs averaged 44 and 56 percent, respectively.