Fact Sheet on Senate Budget Process: 98-319 GOV

The Largest Spending Programs in the Federal Budget: FY1998 Outlays Over $10 Billion

Bill Heniff, Jr., Consultant in American National Government
Government and Finance Division
Update February 26, 1999

Spending enforcement procedures require that spending is classified as mandatory or discretionary. Mandatory, or direct, spending is provided by substantive law. Most mandatory spending programs are funded by permanent appropriations, but some are funded in annual appropriations bills. In either case, the spending amounts for mandatory programs are based on benefit levels or other factors established by the substantive laws rather than through the appropriations process. By contrast, the level of discretionary spending is established by Congress and the President in the 13 general appropriations bills and other appropriations bills during the annual appropriations process.

Table 1 lists the largest mandatory and discretionary spending activities, each of which has outlays greater than $10 billion. The classification between mandatory and discretionary programs is based on the list of accounts provided in the conference report to the Balanced Budget Act of 1997 (H.Rept. 105-217, pp. 1014-1053). One caveat to note is that the amounts presented below for each spending activity do not include offsetting collections. Such offsets may reduce the total outlays for individual programs, the total mandatory outlays, and the total discretionary outlays.

Without adjusting for offsetting collections, the spending activities listed below account for more than 73% of total federal outlays. The 12 largest mandatory programs account for 52.5% of total federal outlays, while the 10 largest discretionary spending activities account for 21.0%.

Table 1. Federal Outlays for the Largest Spending Programs, FY1998
(outlays in millions of dollars)

Program or spending activity	Typea	FY1998 outlays	Percent of total federal outlays
Social Security (Old-age and survivors)	M	$328,188	19.9%
Medicareb	M	190,233	11.5%
Grants to states for Medicaid	M	101,234	6.1%
DOD-Operation and Maintenance	D	93,473	5.7%
DOD-Military Personnel	D	68,976	4.2%
DOD-Procurement	D	48,206	2.9%
Social Security (Disability)	M	47,932	2.9%
Civil service retirement and disability	M	43,464	2.6%
DOD-Research, Development, Test, and Evaluation	D	37,420	2.3%
Military retirement	M	31,142	1.9%
Supplemental security income	M	27,472	1.7%
Public and Indian housing programs	D	24,145	1.5%
Earned income tax credit	M	23,239	1.4%
Veterans income security	M	21,322	1.3%
Food stampsc	M	20,141	1.2%
Federal-aid highways	D	19,968	1.2%
Unemployment compensation	M	19,586	1.2%
Veterans Health Administrationd	D	17,586	1.1%
National Aeronautical and Space Administration	D	14,206	0.9%
Temporary assistance for needy families	M	13,286	0.8%
National Institutes of Health	D	12,500	0.8%
Atomic Energy Defense Activities (Dept. of Energy)	D	11,181	0.7%
Mandatory spending subtotal		$867,239	52.5%
Discretionary spending subtotal		347,611	21.0%

Source: Table prepared by CRS based on data from U.S. Office of Management and Budget. Budget of the United States Government, Fiscal Year 2000 (Washington: GPO, 1999), Outlays by Function, Category and Program, Table 34-2, pp. 315-347, for mandatory spending; and from U.S. Office of Management and Budget. Budget of the United States Government, Fiscal Year 2000, Analytical Perspectives (Washington: GPO, 1999), Federal Programs by Agency and Account, chapter 25, pp. 415-610, for discretionary spending.

^aM=mandatory; D=discretionary.

^bDeduction made for premiums, collections, and interfund transactions ($20.7 billion in FY1998) as well as discretionary outlays ($2.6 billion in FY1998).

^cIncludes nutrition assistance for Puerto Rico. The food stamp program is defined as direct spending by the Budget Enforcement Act of 1990 (Subtitle A, Part 1, Section 13101) rather than by its substantive legislation.

^dExcludes amounts from trust fund ($26 million in FY 1998).