Discretionary Spending
Twenty-six percent of federal spending is called “discretionary spending,” because the amount of spending flows from annual discretionary funding decisions by the House and Senate Appropriations Committees.
Discretionary spending has been a steadily declining portion of the federal budget. In 1968, discretionary spending was two-thirds of the budget; a decade later it was less than half; by 1998 it had dropped to a third, and currently it is about 27%, as shown in the figure above. The main reason for this shift is the growth of entitlement programs and other direct (mandatory) spending, principally, Social Security, Medicare and Medicaid.
The $1.74 trillion of discretionary spending is allocated annually among agencies and programs in 12 detailed appropriations bills drafted by the 12 subcommittees of the House and Senate Appropriations Committees. Often, by the end of the budget process, the 12 annual bills are grouped together in larger “omnibus bills,” but they all start out as separate bills drafted and considered by the respective 12 subcommittees. (The claims that the details of omnibus bills are “sprung” on Members of Congress at the last minute are untrue; Congress begins work on each of the 12 components of omnibus bills in full public view in early spring.)
The subcommittees responsible for the 12 annual appropriations bills are: Agriculture-Rural Development-FDA; Commerce-Justice-Science; Defense; Energy-Water; Financial Services and General Government; Homeland Security; Interior-Environment; Labor-Health and Human Services-Education; Legislative Branch; Military Construction-Veterans Affairs; State-Foreign Operations; and Transportation-HUD. See Appropriations.com for tracking of the 12 annual spending bills.
The 12 annual appropriations bills are negotiated under two broad subcategories: defense discretionary spending and non-defense discretionary spending (NDD).
Defense Discretionary Spending
Defense discretionary spending is $849 billion in projected outlays for FY 2024, or 12% of total outlays. It is funded by the Defense Appropriations bill and other bills that fund military construction and atomic energy.
U.S. defense spending has increased significantly over the last two decades. In FY 2023, alone, defense appropriations increased by 10% while projected outlays increased by seven percent. However, evaluating the extent of defense increases depends on which metrics are used—outlays, spending as a percent of the economy, or comparison with defense expenditures of other nations:
- Defense discretionary outlays have increased from $295 billion in FY 2000 to an estimated $822 billion in FY 2024—a 58% increase after adjusting for inflation.
- However, as a percentage of the economy, measured as Gross Domestic Product (GDP), defense outlays averaged 4.2% of GDP between 1974 and 2023, and is projected to be far less, 2.9% of GDP in FY 2024.
- Nevertheless, compared to other countries, U.S. defense spending is more than the defense budgets of the next 9 countries combined (in order of spending, China, India, Saudi Arabia, Russia, the UK, Germany, France, Japan, and S. Korea.
Ultimately, each of these metrics must be evaluated within the context of strategic national defense priorities and rapidly evolving international security challenges in Europe, the Middle East, and the Indo-Pacific. Following are the major categories of U.S. defense spending.
|
Defense Spending Category |
FY 2024 Outlays |
| Operations and Maintenance (O&M): including equipment operating costs; recruiting and training; base operations; facilities maintenance; utilities; civilian labor; travel; logistics services; and defense health programs. | 323 |
| Military Personnel, Active and Reserve Forces: pay and allowances of officers, enlisted personnel, cadets and midshipmen, permanent change of station travel, inactive duty, and active duty training, retirement and health benefits, enlistment, reenlistment and affiliation bonuses, special and incentive pay. | 170 |
| Procurement: acquisition of aircraft, ships, combat and support vehicles, satellites and their launch vehicles, weapons, munitions, and all capital equipment. | 148 |
| Research, Development, Testing and Evaluation (RDT&E): basic research for all branches of the military, as well as the development of prototype weapons and equipment. | 137 |
| Atomic Energy Defense Activities: responsibilities for U.S. nuclear weapons are shared by the Departments of Energy and Defense. | 33 |
| Military Construction and Family Housing | 16 |
| Defense-related spending at other Departments | 12 |
| Note: Most of the roughly $100 billion in national intelligence and military intelligence spending is included within the accounts of the defense budget, most likely concentrated in O&M and Personnel. | |
Non-Defense Discretionary (NDD) spending
Non-defense discretionary spending is $917 billion in projected outlays for FY 2024 or 14% of total outlays. NDD is funded by the 11 non-defense appropriations bills.[1] Non-defense discretionary spending has been trending downward, except for temporary increases due to the Great Recession and COVID-19 response efforts.
As a percent of GDP, non-defense discretionary spending was 4.4 percent in FY 2010 and fell to 3.1 percent of GDP by FY 2017. Due to the COVID-19 pandemic response, NDD rose to 4.3 percent of GDP in FY 2020, but fell to 3.9 percent in FY 2021, 3.6 percent in FY 2022, 3.4 percent of GDP in FY 2023 and is likely to be about the same in FY 2024.[2] Following is an overview of major NDD programs.
| Major Non-Defense Discretionary Programs | FY 2024 Estimated Outlays $ in billions (rounded)[3] |
| Veterans Healthcare (see mandatory spending for other VA programs) | 128 |
| Housing Assistance (including: public housing; rental assistance; and housing for rural, Native, disabled, elderly, and homeless Americans. |
66 |
| Highways (outlays are discretionary with obligation limitations set by the Appropriations Committees; see § 16.04) |
62 |
| Disaster Relief (FEMA) | 51 |
| Law Enforcement Activities (including Federal Bureau of Investigation; Drug Enforcement; Alcohol, Tobacco, Firearms; Secret Service; Customs and Border Protection; Immigration & Customs Enforcement; Tax Enforcement) | 49 |
| National Institutes of Health (medical research and innovation) | 46 |
| Elementary, Secondary and Vocational Education (not including special education) | 44 |
| International Development and Humanitarian Assistance | 37 |
| Airports and Airways (air traffic control, airport infrastructure, research and development) | 24 |
| NASA (space exploration-Moon and Mars; earth and solar science; tracking asteroids,and comets; and aeronautics) | 24 |
| Community and Regional Development | 22 |
| Higher Education (see mandatory spending for direct loans) | 20 |
| General Science and Research (National Science Foundation and Dept. of Energy Science and Research) |
19 |
| International Security Assistance | 18 |
| Mass Transit | 18 |
| Prosecution, Civil Litigation, and Judicial Activities | 17 |
| Advancement of Commerce (standards, trade, small and minority businesses) | 16 |
| Marine Safety and Transportation | 16 |
| Conduct of Foreign Affairs (embassies, international orgs, etc.) | 15 |
| Water Resources (infrastructure, flood prevention) | 15 |
| Community Development | 15 |
| Children and Family Services (Head Start; foster care; child support; Native communities; early childhood; homeless youth; refugees; trafficking |
15 |
| Special Education (for children with disabilities as required by the Individuals with Disabilities Education Act) | 14 |
| Energy (rural electrification, petroleum reserves, clean-up, electricity & power marketing, nuclear energy, renewable energy, fusion research, cybersecurity) | 14 |
| Veterans Administration Admin. Expenses | 14 |
| Tax Administration | 12 |
| Environmental Protection: Pollution and Hazardous Substances | 11 |
| Agriculture (Animal/plant inspection, agricultural research, marketing assistance (see mandatory spending for price supports and income stabilization programs)) | 11 |
| Public Health and Social Services Emergency Fund | 11 |
| Federal Prisons | 9 |
| Substance Abuse and Mental Health Services Administration | 9 |
| Centers for Disease Control and Prevention (CDC) | 9 |
| Medicare Administrative Expenses | 9 |
| Indian Health Service | 8 |
| Health Resources and Services Admin. (services for low-income, HIV patients, pregnancies, children, rural communities, transplant patients, health workforce) | 8 |
| Training and Employment | 8 |
| Refugee and Entrant Assistance | 8 |
| Law Enforcement and other Criminal Justice Assistance for States, Cities | 7 |
| Air Transportation Security | 7 |
| NOAA (National Oceanic and Atmospheric Administration): storm warnings, weather forecasts, climate monitoring, coastal restoration) |
7 |
| Child Care Block Grant | 7 |
| Legislative Branch | 7 |
| Social Security Admin. Expenses | 6 |
| Nutrition Assistance for Women, Infants, and Children (WIC) | 5 |
| Low Income Home Energy Assistance (LIHEAP) | 5 |
| Supplemental Security Income (SSI) Admin. Expenses | 5 |
| Railroads | 4 |
| Food and Drug Administration (FDA) food and drug safety | 4 |
| Unemployment Insurance Administrative Expenses | 4 |
| Foreign Information and Exchange Programs | 2 |
| Smithsonian and Library of Congress | 2 |
| Aging Services | 2 |
| Food Safety and Inspection | 1 |
| Occupational and Mine Safety and Health | 1 |
| AmeriCorps (enrolls more than 200,000 individuals each year to serve with nonprofits and community organizations across America) |
1 |
[1] Portions of the Energy-Water and Military Construction-VA appropriations bills are defense spending.
[2] [Off.] of Mgmt. & Budget, Exec. [Off.] of the President, Budget of the United States Government, Fiscal Year 2025, Historical Tables, Table 8.4 (2024); and Cong. Budget Off., The Budget and Economic Outlook: 2024 to 2034 (2024).
[3] Source for projected FY 2023 outlays: President’s FY 2025 Budget, Analytical Perspectives, Table 25-1, Outlays.