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Thursday, May 2, 2013

Discretionary Budget Authority by Subfunction: An Overview

D. Andrew Austin
Analyst in Economic Policy

President Obama’s FY2014 budget submission was released on April 10, 2013. Using data from that budget submission, this report provides a graphical overview of historical trends in discretionary budget authority (BA) from FY1976 through FY2012, preliminary estimates for FY2013 spending, and the levels consistent with the President’s proposals for FY2014 through FY2018. Spending caps and budget enforcement mechanisms established in the Budget Control Act of 2011 (P.L. 112-25; BCA) strongly affected the FY2013 budget cycle and are likely to shape the FY2014 budget cycle as well. BCA provisions include separate caps on discretionary defense and non-defense spending.

As the 113
th Congress considers funding levels for FY2014 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 American Recovery and Reinvestment Act of 2009 (P.L. 111-5; ARRA) funded sharp increases in spending on education, energy, and other areas. Since FY2010, however, base defense discretionary spending has essentially been held flat and non-defense discretionary spending has been reduced significantly. The base defense budget excludes war funding (Overseas Contingency Operations/Global War on Terror). 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 are available to 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. 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 and illustrated in terms of discretionary budget authority as a percentage of gross domestic product (GDP). 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.

Discretionary spending is provided and controlled through appropriations acts, which provide budget authority to federal agencies to 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 are 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: April 25, 2013
Number of Pages: 31
Order Number: R41726
Price: $29.95

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