The Lie of Discretionary Spending

The size of the American economy is roughly $17 trillion. That’s a number so large as to be functionally meaningless to most people. How big is 17,000,000,000,000? Think about it this way: if you counted to 17 trillion at the rate of one number every second, it would take you longer than half a million years to finish. I’m not sure that helps… If you took 17 trillion $1 bills and placed them end to end, you would reach Saturn and still have enough left over for a return trip. Or, if you divided $17 trillion equally, every American would get about $54,000.

(Before you get too excited, $17 trillion also happens to be the size of the national debt.)

The federal government’s budget is, more or less, about a fifth the size of the American economy. That money goes towards paying for a variety of things: defense, social welfare programs (like Medicare and Social Security), roads, forest management, etc. Not surprisingly, much of our political debate centers on how to spend this money, as well as how much money to spend. Both politicians and the media are left with the daunting task of trying to make a $3.8 trillion budget understandable to average voters.

Unfortunately, none of those constituencies – the media, politicians, or voters – is known for being particularly number-savvy. In that kind of setting, people adopt mental shortcuts for thinking about unfathomable sums, and once these shortcuts get established, they’re hard to shake.

Quite possibly, the single most misleading shortcut we’ve taken in talking about the budget is the distinction between ‘discretionary’ and ‘non-discretionary’ spending. Briefly, discretionary spending is the money that Congress allocates every year for everything from the Coast Guard to the Congressional gift shop. Non-discretionary spending is what is spent on programs like Medicare and Social Security – funding for non-discretionary programs is authorized in bills that do not require yearly action.

Non-discretionary spending is often described as ‘mandatory’ spending. But that’s a meaningless verbal contrivance meant to insulate these programs from political scrutiny. The truth is that Congress, in all its wisdom (or lack thereof), has the obvious legal right to modify spending on anything. In fact, the courts have firmly established that nothing one Congress does can legally bind the hands of a future Congress – what Congress does, it can undo. Spending on non-discretionary items like Social Security is only mandatory in a purely political sense.

You see the same sort of politics at play when people refer to ‘non-defense discretionary spending’, which is an attempt to separate defense spending into a class of its own.

How we talk about these things matters. For example, here’s a graphic that made the rounds on social media and which has been covered in a number of outlets.

The center circle includes this text: "Unlike Social Security, Medicare, and Medicaid, which are mandatory spending, the discretionary budget reveals specific details about our national priorities." Whose national priorities, then, do Social Security, Medicare, and Medicaid represent?

The center circle includes this text: “Unlike Social Security, Medicare, and Medicaid, which are mandatory spending, the discretionary budget reveals specific details about our national priorities.” Whose national priorities, then, do Social Security, Medicare, and Medicaid represent?

It purports to show what the federal budget is spent on. One common response from people who saw this graphic was surprise at the amount of spending that goes towards defense: nearly half! Of course, that’s not true – it’s nearly half of the discretionary spending, but it’s only about a fifth of all federal outlays. That’s still a lot, but it’s also a lot less.

Here’s another example, when President Obama and the GOP faced off over the budget a few years back and adopted the sequester as a sort of compromise, the spending cuts that went into place only applied to discretionary spending. In other words, they ignored the nearly two-thirds of the budget that goes to ‘mandatory’ programs. And crucially, the ‘mandatory’ side of the ledger is where all the spending growth is happening. To the degree that America is facing future fiscal challenges, those challenges are the result of ballooning entitlement programs, not a growth in discretionary spending.

But since we call entitlement programs ‘mandatory’, our representatives in Washington agreed not to touch them and instead cut ‘optional’ programs instead – programs like meat inspection and law enforcement.

It would be disingenuous to suggest that there isn’t something special about spending on the basic safety net, but it’s downright wrong to call those programs mandatory. We live in a democracy; very few things are mandatory. And simply put, there’s no way to balance the budget without reforming entitlements – or dramatically increasing tax revenues. That’s not opinion as much as it is arithmetic. Unfortunately, it’s also dangerous ground – so politicians continue to mislead the public about what it will take to get our fiscal house in order.

Democrats find it hard to accept that fiscal discipline will require reigning in spending on Social Security, Medicare and the like, while Republicans don’t want to admit that most of what government does – Social Security, Medicare, and the like – are things that most Americans are really quite fond of.

Sorry, but tough luck.

The next time you hear someone tell you that what we need to do is eliminate the Department of Education (about 3% of national spending) or cut foreign aid (less than 1%) or stop giving money to Big Bird (much less than 1/10th of 1%), ask them if they have any ideas that are actually relevant.

Follow Pedro on Twitter @IamPedroA.

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