In American public finance, discretionary spending is government spending implemented through an appropriations bill. This spending is an optional part of fiscal policy, in contrast to social programs for which funding is mandatory and determined by the number of eligible recipients. Some examples of areas funded by discretionary spending are national defense, foreign aid, education and transportation.
United States discretionary spending
In the United States, discretionary spending refers to optional spending set by appropriation levels each year, at the discretion of Congress. During the budget process, Congress issues a budget resolution which includes levels of discretionary spending, deficit projections, and instructions for changing entitlement programs and tax policy. While these bills are subject to revision as they move through hearings, markups, Floor consideration, and conference, the level of discretionary spending remains constrained by the budget resolution.
United States mandatory vs. discretionary spending
In 1962, U.S. discretionary spending made up 47.2% of total U.S. spending, remaining the largest component of federal spending until the mid-1970s. From this time forward, however, discretionary spending levels as a share of total federal spending has decreased significantly. This is largely due to the rapid growth of entitlement spending, also known as mandatory spending. The Congressional Research Service projected that by 2022, discretionary spending's share of the economy would be "equal to or less than spending in each of the two largest categories of mandatory programs, Social Security and Major Health Programs."