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Monday, April 4, 2011

Discretionary Budget Authority by Subfunction: An Overview

D. Andrew Austin
Analyst in Economic Policy

President Obama’s FY2012 budget submission was released on February 14, 2011. This report provides a graphical overview of historical trends in discretionary budget authority (BA) from FY1976 through FY2010, estimates for FY2011 spending, and the levels consistent with the President’s proposals for FY2012 through FY2016.

Discussions about the appropriate levels of spending for various policy objectives of the federal government have played an important role in congressional deliberations over funding measures for FY2011, and are expected to play a central role as Congress considers decisions affecting the FY2012 budget. As the 112
th Congress considers funding levels for FY2011, FY2012, and beyond, past spending trends may prove useful in framing policy discussions. For example, rapid growth in national defense and other security spending in the past decade has played an important role in fiscal discussions. The sharp increases in federal spending on education, energy, and other areas funded by the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) have been noted in recent budget debates. This report may provide a starting point for discussions about spending trends and federal priorities, but it does not attempt to explain spending patterns in each policy area. Other CRS products, however, can provide insights into those spending trends in specific functional areas.

Functional categories (e.g., national defense, agriculture, etc.) provide a means to compare federal funding for activities within broad policy areas that often cut across several federal agencies. Subfunction categories provide a finer division of funding levels within narrower policy areas. Budget function categories are used within the budget resolution and for other purposes, such as possible program cuts and tax expenditures.

The report includes a series of figures showing discretionary budget authority as a percentage of gross domestic product (GDP), which compares spending levels in each functional category with the size of the U.S. economy. Measuring spending as a percentage of GDP in effect controls for inflation and population increases. A flat line on such graphs indicates that spending in that category is increasing at the same rate as overall economic growth.

Three functions, however, are omitted. These are (1) allowances, which contain items reflecting technical budget adjustments; (2) net interest, which by its nature is not discretionary spending; and (3) undistributed offsetting receipts, which are treated for federal budgetary purposes as negative budget authority.

Spending in this report is measured in terms of discretionary budget authority as a percentage of GDP. Discretionary spending is provided and controlled through appropriations acts, which fund many of the activities commonly associated with such federal government functions as running executive branch agencies, congressional offices and agencies, and international operations of the government. Essentially all spending on federal wages and salaries is discretionary. Program administration costs for entitlement programs such as Social Security, is generally funded by discretionary spending, while mandatory spending generally funds the benefits provided through those programs. Thus, the figures showing trends in discretionary budget authority presented herein do not reflect the much larger expenditures on program benefits supported by mandatory spending. For some federal agencies, such as the Departments of Veterans Affairs and Transportation, the division of expenditures into discretionary and mandatory categories can be complex. This report will not be updated.

Date of Report: March 29, 2011
Number of Pages: 27
Order Number: R41726
Price: $29.95

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