Understanding Federal Spending

Federal spending is predominantly divided into mandatory and discretionary categories, with approximately 75% allocated to key areas such as Social Security, Medicare, Medicaid, defense, veterans benefits, and interest on the debt. Discretionary spending, which constitutes about 30% of the budget, includes funding for defense and veterans, border security, foreign aid, education, and transportation. This segment of the budget is subject to annual appropriations, though actual cuts to discretionary programs are rare; often, only the growth rate is adjusted. Historical examples indicate that even significant agreements aimed to reduce spending have primarily slowed its growth rather than achieving outright reductions.