A New Budget Category: NSD—Non-Security Discretionary Spending

January 29, 2004

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Today, the Center for American Progress is releasing a new budget category called Non-Security Discretionary (NSD) spending. NSD is arrived at by taking total domestic discretionary spending and subtracting out defense, international and homeland security, and 9/11-related spending. It is an appropriate and fitting measure for the times; providing a clearer picture of spending patterns outside of those related to security and defense priorities, and presenting a holistic picture of our defense and security budget. Tracking NSD spending will:

• help inform the current debate by clarifying the magnitude by which different tax and spending policies are affecting the fiscal outlook; and
• provide a clearer sense of our overall defense and security budget, and inform the choices and tradeoffs within this area.

American Progress will continue to update this new budget category as new data become available.

NSD – Non Security Discretionary Spending as a Percent of GDP

Note: Total domestic discretionary spending is adjusted to include funding for discretionary transportation programs and to remove year-to-year distortions due to funding anomalies. In addition, supplemental appropriations for FY 2001 are included in FY 2002, in order to attribute them to the Administration under which they were enacted. These adjustments follow the methodology of a Center on Budget and Policy Priorities report from 12/31/03 – see annex to that report for more details.

* Domestic homeland security figures for 2001 to 2004 are preliminary estimates from the House Budget Committee Democratic Staff. For years prior to 2001, homeland security figures are estimates based on the Administration’s 2002 report "Securing the Homeland, Strengthening the Nation." Figures on Post-9/11 funding for NYC and airline relief are from Senate Budget Committee Democratic Staff, "What Has Caused Growth in Discretionary Spending?" (May 5, 2003).

It is clearly not the case, as suggested by some conservative think tanks, that Non Security Discretionary spending is a significant cause of the dramatic increases in our current and projected deficits.

• First, the overwhelming problem is the Administration’s explosive tax cuts. Assuming they are extended, President Bush’s tax cuts will be responsible for having increased the deficit by $3.3 trillion over the next ten years – $4.6 trillion including increased interest costs. In 2014 alone, the cost just in lost revenues will be $400-$428 billion, and more than $600 billion with interest costs.
• Second, the NSD spending measure makes clear that recent increases in domestic spending, while less significant than the tax cuts, have been overwhelmingly due to defense, homeland security, and other post-9/11 priorities. Overall funding for discretionary programs increased from 6.8% of GDP in 2001, before September 11 reshaped our priorities, to 8.1% of GDP in 2004. This is almost entirely attributable to increases in our defense, international, and homeland security budgets, which rose from 3.4% of GDP in 2001 to 4.7% in 2004. Outside these areas, NSD has been essentially flat, with funding only rising from 3.3% of GDP in 2001 to 3.4% in 2004.
• NSD is somewhat higher in the Bush Administration than it was in the Clinton Administration, but the increases are trivial in comparison to the magnitude of the Administration’s tax cut policies: The contribution of the tax cuts to the swing from projected surpluses to deficits in 2004, as measured by the Center on Budget and Policy Priorities, is 13 times as large as the contribution of this new definition of NSD spending.