Federal Spending

In 2015, the budget for the federal government was $3.8 trillion dollars. Federal spending is divided into three groups: discretionary spending, mandatory spending, and interest on debt.

Discretionary spending is the portion of the budget that Congress decides on each year. In 2015 Congress assigned $1.1 trillion in discretionary spending. More than half of that discretionary spending is allocated to the Military.

Mandatory spending is spending that is outside the annual appropriations process. Social Security and Medicare account for over 85 percent of mandatory spending.

Many mandatory programs are determined by eligibility rules. For example, Congress does not decide how much money it will spend on Social Security each year. Instead it sets standards for determining who is eligible to receive benefits from the program, and benefit levels for people who are eligible.

There is another type of federal spending that operates a little differently. These are called tax breaks or“tax expenditures” that Congress writes into the federal tax code. Congress gives certain tax breaks so it can promote specific activities they deem beneficial to society. Tax breaks are expected to cost the federal government $1.2 trillion in 2015, which is more than all discretionary spending in the same year.

So the next time you hear about how much money our government spends, remember our money goes into different government pockets, some are deeper and more important than others.