The largest block of federal spending — about 60% — is called “direct spending” because the outlays flow directly from legal obligations of the federal government established in authorizing laws. Direct spending is also referred to as “mandatory spending” because it is mandated by legal obligations written into law (such as Social Security benefits).
| Major Direct (Mandatory) Spending Programs
Sources: CBO, Update to Budget and Economic Outlook, 2024 to 2034 (June 2024), Table 1-4; and President’s FY 2025 Budget, Analytical Perspectives, Table 25-1, Outlays. |
FY 2024 Outlays ($ in billions, rounded) |
|
| Social Security Old-Age, Survivors, and Disability Insurance: pays benefits from payroll tax revenues to eligible retirees, workers with disabilities, dependents, and survivors. |
1,452 |
|
| Medicare: national health insurance for people 65 or/and older and people with eligible disabilities, funded by hospital insurance payroll taxes, general revenues, premiums, and copayments. | 903 | |
| Medicaid: a joint federal-state program, administered by states, providing health coverage to 79 million low-income Americans including children, adults, pregnant women, seniors, and people with disabilities. | 607 | |
| Veterans’ benefits: includes disability compensation and pensions, life insurance, vocational rehabilitation, toxic exposure benefits, and housing loans (see discretionary spending for VA healthcare). | 200 | |
| Student loans and other student financial assistance. | 175 | |
| Federal Civilian Retirement and Disability: includes the Civil Service Retirement System, the Federal Employee Retirement System, foreign service, Coast Guard, and retiree health benefits. | 127 | |
| Affordable Care Act: income-based health insurance subsidies for uninsured Americans and risk adjustment payments to stabilize premiums. | 125 | |
| Supplemental Nutrition Assistance Program: (SNAP, formerly Food Stamps) provides benefits to help people in low-income households purchase food. | 105 | |
| Earned Income, Child, American Opportunity and other tax credits (the “refundable portions” that exceed tax liability are mandatory outlays in the federal budget) | 99 | |
| Military Retirement: retiree, disability, and survivor benefits. | 78 | |
| Supplemental Security Income (SSI): guaranteed monthly income for low-income individuals who are aged, blind, or disabled (administrative expenses are see also discretionary spending). | 62 | |
| Family Support; Foster Care & Adoption Assistance: includes Temporary Assistance for Needy Families, Child Support Enforcement, the Child Care Entitlement to States, and other programs that benefit children. | 45 | |
| Unemployment Compensation (federal portion): outlays vary widely depending on current unemployment levels. | 36 | |
| Child Nutrition: national school lunch, school breakfast, and summer food service. | 33 | |
| Agriculture programs: federal crop insurance provides subsidized insurance to help farmers manage risks; and various commodity programs provide price and income support. | 31 | |
| Advancement of Commerce (including universal service fund, telecomm relay service, and small and minority business assistance). | 24 | |
| Children’s Health Insurance Program (CHIP): provides insurance coverage to families whose income, although modest, is too high to qualify for Medicaid. | 19 | |
| DoD Medicare-Eligible Retiree Health Care Fund (MERHCF): health benefits under TRICARE for military retirees after becoming eligible for Medicare. | 12 | |