Discretionary Spending Is Good Spending, Too

Budget Cuts Here Aren’t Likely to Be Easy or Painless

Policymakers are eager to ax these funds, write Michael Ettlinger and Michael Linden, but cutting them is unlikely to be easy or painless.

The National Park Service is one of many agencies and programs operating as a result of discretionary spending. (AP/National Park Service Archives)
The National Park Service is one of many agencies and programs operating as a result of discretionary spending. (AP/National Park Service Archives)

Interactive: What Is Non-Defense Discretionary Spending?

The way policymakers of both political parties talk about axing “non-defense discretionary spending” you’d think it involved government payments to the devil himself. The president’s 2011 budget proposes capping “non-security” discretionary spending. The Senate recently barely voted down two different proposals that would have imposed serious cuts. And Rep. Paul Ryan’s (R-WI) conservative vision for the budget would impose the most severe cuts of all.

With all this attention on a specific part of the budget, it must be a big slice of the federal spending pie full of programs that nobody likes, have no purpose, and could easily be cut back, right? Wrong. That’s not to say that this type of spending isn’t going to be on the table in these challenging fiscal times—but we shouldn’t kid ourselves that cutting it will be easy, painless or, in most cases, good for the nation.

What is non-defense discretionary spending anyway?

Discretionary spending is one of two major categories in the federal budget—the other is “mandatory” spending. Discretionary spending is funding that has to be reset each year by Congress. Mandatory spending, on the other hand, is funding that does not require any specific action by Congress to be spent. Mandatory spending includes programs such as Social Security, Medicare, and agricultural subsidies where the amount the government spends is dictated by laws that set up formulas—sometimes laws passed many years ago. Government employees calculate the amounts to be paid out, or review the calculations of applicants, according to the formulas and send out the checks. Congress doesn’t have to budget the money each year—it’s automatic. Mandatory spending, which also includes interest payments that government makes on the federal debt, will equal roughly two-thirds of the entire federal budget this year, with discretionary spending taking up only one-third.

The discretionary spending that Congress has to approve every year when it makes the federal budget is further divided into two major categories: defense and non-defense. About 58 percent of all discretionary funding will be defense related. Non-defense discretionary funding, then, is less than half of the discretionary category, which is itself only one-third of the total federal budget. In other words, non-defense discretionary funding makes up only 15 percent of this year’s federal budget.

Why are lawmakers so focused on this relatively slim slice of the federal budget?

Well, perhaps it’s because the individual components of non-defense discretionary spending don’t enjoy the same wide support of much larger programs such as Social Security, Medicare, and defense spending. Not getting the love, however, doesn’t mean that non-defense discretionary spending as a category lacks the virtue of its better-known brethren in the federal budget. All of the hundreds of smaller programs that fall into this category were put there for a reason and most use taxpayer dollars for purposes that most people would agree are useful, important, and worthwhile. These are programs that would be missed if they were gone.

The single largest non-defense discretionary program is the Veteran’s Health Administration, which delivers free and low-cost health care to more than 8 million veterans. The National Institutes of Health is also entirely supported by discretionary funding. So are the Federal Bureau of Investigation, the Drug Enforcement Agency, and the whole federal prison system. Federal aid to local school districts comes from the discretionary pot, as does the budget for the Food and Drug Administration. The National Park System operates because of discretionary funding, which puts it in the same company as the United States Coast Guard, the Transportation Safety Administration, and the Farm Service Agency.

None of these programs should be exempt from careful review to ensure that they are spending those discretionary dollars in the most efficient and effective manner possible. But the activities paid for with non-defense discretionary dollars are mostly quite valuable and there’s no question that reducing them would harm the quality of the programs and services they fund. Even just “freezing” spending—leaving it at a constant level for several years—would take a bite since a freeze in dollars means a cut in service due to population growth and inflation, as well as expanding needs specific to particular categories of spending. The sheer variety of non-defense discretionary programs means that severe cuts in this area would be immediately and dramatically felt by nearly every American all over the country.

Unfortunately, the very breadth and depth of the various functions paid for with discretionary funding allows some people to pick out a few tiny programs that they don’t like and pretend that they are representative of the entire category. The National Endowment for the Arts, for example, is a perennial target of conservative ire. But even if you agree that the federal government should not be funding the arts, discontinuing the NEA would have no discernable impact on overall federal spending. The NEA’s budget is only 0.03 percent of all non-defense discretionary funding and just 0.005 percent of the total federal budget! That’s the equivalent of saving a nickel on a $1,000 purchase.

This is emblematic of why non-defense discretionary spending is the first to be attacked. It’s a well-trod political path: proclaim your virtue in opposing large budget deficits, call for substantial cuts in non-defense discretionary spending, pick some tiny program that the broad public doesn’t much care about as an example, and, if challenged, deny you’re going to cut things such as the Federal Aviation Administration and Department of Veterans Affairs. The problem with this formula is that there are far more dollars spent on popular agencies such as the FAA and VA than on easy targets such as the National Endowment for the Arts. The numbers just aren’t there to really reduce spending by cutting less popular programs.

Besides, even the less popular programs aren’t necessarily all that unpopular. The volume of the attacks on the National Endowment for the Arts gives the impression that it’s a big deal in the budget. But people might think that support for the arts is worth 0.005 percent of government spending if they knew that was all it was.

Non-defense discretionary spending is just 15 percent of the federal budget and yet it funds hundreds of valuable programs and services across a wide range of important areas. Non-defense discretionary programs reach every person in the country through health care research, highway maintenance and construction, airport security, and pollution cleanup, to name just a few. Take a look at our new interactive tool to explore this poorly understood portion of the federal budget and decide for yourself if slashing non-defense discretionary spending is as painless as some would have us believe.

Interactive: What Is Non-Defense Discretionary Spending?

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Michael Ettlinger

Vice President, Economic Policy

Michael Linden

Managing Director, Economic Policy