The federal government spent $6.2 trillion in fiscal year 2023 — $3.8 trillion of mandatory spending, $1.7 trillion of discretionary spending, and $659 billion in interest on outstanding US debt.
What is mandatory spending?
The federal spending is split into two categories: discretionary and mandatory. Mandatory spending does not require action every year, while discretionary spending does.
Congress doesn't need to pass new laws each year for mandatory spending programs like Medicare and Social Security to operate; they continue automatically unless Congress changes the law. Sometimes, changes occur because Congress sets a timeline for modifications.
The spending amount for mandatory programs is unpredictable at the start of the year. For instance, spending for the Supplemental Nutrition Assistance Program (SNAP, or food stamps) and unemployment insurance depends on how many people qualify and claim benefits, which is influenced by factors like inflation, economic growth, and demographics.
There's no spending cap on these programs, which reduces Congress and the president's flexibility in setting spending and policy priorities.
What programs are funded by mandatory spending?
In fiscal year 2023, around 60% of federal spending was mandatory spending.
Of that, $1.56 trillion went to major health care programs like Medicare and Medicaid. Medicare is a federal health insurance program serving people 65 and older, younger disabled patients, and dialysis patients. Medicaid is a medical assistance program which serves low-income people regardless of age.
Another $1.35 trillion of mandatory spending went to Social Security. Social Security provides financial support to people of retirement age.
The remaining mandatory spending was allocated to support assistance programs like unemployment and SNAP, retirement programs for civilians and military personnel, and veteran support programs.
The Congressional Budget Office (CBO) estimated $191 billion in mandatory spending savings from student loan programs. This is because, in June 2023, the Supreme Court blocked the Biden administration's plan to cancel student loan debt, which would have otherwise been spent to fund student loan forgiveness.
CBO also estimated $197 billion in savings from offsetting receipts. Offsetting receipts are funds collected by government agencies from other government accounts or the public, which reduces gross spending. Examples include payments for federal employees’ retirement benefits, and receipts from natural resource activities like oil and gas. Total Medicare outlays include related offset receipts.
For more on government budget data, explore the USAFacts State of the Union in Numbers and get the facts every week by signing up for our newsletter.
