David R. Henderson  

What is Mandatory Spending? What is Entitlement Spending?

Crowding Out: A New Subject... Some Data to Ponder...

Discussions of government spending are carried on as if there's a clearcut difference between "discretionary spending" on the one hand and "mandatory" or "entitlement" spending on the other. What do the words mean?

Discretionary spending is spending that politicians have to vote for in order for it to take place. Mandatory spending is spending that doesn't have to be approved by Congress: it happens automatically even if Congress doesn't vote for it. Social Security is an example. Entitlement spending is a subset of mandatory spending. Interest payments on the federal debt are usually thought of as mandatory but are not usually thought of as entitlements. Social Security is also an example of entitlement spending.

The words "mandatory" and "entitlement" are not accurate. Why?

Start with mandatory spending. Maybe you could make a case that spending on interest is mandatory. But spending on Social Security and Medicare is not. Congress could vote to end them. If Congress can vote to end them, they are not mandatory; they are discretionary. The spending does occur automatically unless Congress votes not to spend. So most of what is called mandatory spending should be called automatic discretionary spending.

What about entitlement spending? The term is a non-starter because you shouldn't start by using value-laden terms. If someone is entitled, then he's entitled. And don't underestimate the hold such terms have on the public, most of whom think about these things way less than the usual blog reader. I would bet that many people think Congress should not cut entitlement spending because people are entitled. I think, by the way, that David Stockman introduced this term in 1981 when he was director of the Office of Management and Budget.

Comments and Sharing

CATEGORIES: Fiscal Policy

COMMENTS (9 to date)
Joey Donuts writes:

The condition that congress can vote on discretionary spending leads to some strange situations. Take the latest congressional squabble on the continuing resolution. The RULES prevented the House of Representatives from voting on funding for Obamacare. Of course, the House could have voted to change the rules but it didn't. During the debate the majority of House members (including many Republicans) considered the spending mandatory.

Æternitatis writes:

It is a neat rhetorical trick, isn't it?

My cable bill gets automatically charged to my credit card without me having to specifically authorize it each month or send a check.

That means it is mandatory! So any suggestion that we cut CineMax to save money is practically an assault on an entitlement.

Floccina writes:

George Will said that only the interest in the debt is mandatory spending. I agree with him.

Ryan writes:

It is true that David Henderson is an economist. Although, sometimes he speaks and frames an argument how, I believe, many politicians should. Assuming running for office is out of the question, what's your consulting fee?

Douglass Holmes writes:

Another excellent post. Of course, even interest on the debt is not mandatory. It is, however, necessary if we want the government to continue to function.

Scott writes:

Maybe this is a reflection of my biases, but I have the opposite emotional reaction when someone says they're "entitled" to something. If you call something "entitlement spending", I'm going to be emotionally opposed, and you'll have a harder time convincing me that the spending is necessary.

Guy in the Veal Calf Office writes:

I've been objecting to the term "Mandatory spending" for a long time. Its only mandatory in the way that a car crash is mandatory if you don't apply the brakes.

NenA nAMLA writes:

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