February 15, 2018

Federal Spending in Perspective, Part 1

Any discussion of the federal budget necessarily touches on how the historical growth in spending outpaces the growth in revenues. As shown in the figure below, this phenomenon is expected to continue in future budgets.The funding gap and its growth are not driven by all types of spending equally, though: some federal programs have grown faster than others. Social Security, major healthcare programs (Medicare and Medicaid), and interest on the debt have consistently grown more quickly than other programs and are projected to keep doing so. On the other hand, some types of spending appear to be under control. Defense and nondefense discretionary spending have both grown far more slowly, and other mandatory spending—spending that automatically continues without reauthorization each year—has remained almost flat.As time passes, the categories of the federal budget that are under control become a smaller proportion of the nation’s budget. In fact, by the 2020s the three more stable categories will become the smallest parts of the budget as interest on the national debt surpasses each.