Question

Explain the difference between mandatory spending and discretionary spending.

Answer 1

The federal budget process divides spending into two categories: Discretionary and Mandatory.

Discretionary spending is spending that is subject to the appropriations process, in which Congress establishes a new budget level each fiscal year. Mandatory spending is simply all spending that does not occur as a result of appropriations legislation.

Mandatory spending covers entitlement programs like Social Security and Medicare, as well as mandatory interest payments on the national debt. Mandatory spending accounts for almost two-thirds of all government spending.

Discretionary spending, on the other hand, will not take place unless Congress acts each year to pay it through an appropriations bill. In several aspects of the Congressional budget process, tax legislation is viewed as Mandatory spending.

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