One exception was from 1975 to 1981, when such spending averaged almost 5 percent of GDP. Over the past four decades, spending in that category has generally ranged from about 3 percent to 4 percent of GDP. Nondefense discretionary spending funds an array of federal activities in areas such as education, transportation, income security, veterans’ health care, and homeland security. In 2012, discretionary spending for defense fell to 4.2 percent of GDP, and CBO estimates that it declined further in 2013. Roughly half of the growth in defense spending over the 2001–2011 period resulted from spending on operations in Iraq and Afghanistan in 2011 such spending was equal to 1.0 percent of GDP. Such outlays began climbing again shortly thereafter, reaching an average of 4.6 percent of GDP from 2009 through 2011. After the end of the Cold War, outlays fell relative to GDP, reaching a low of 2.9 percent at the turn of the century. By the late 1970s, it dropped below 5.0 percent, but it rose again during the defense buildup from 1982 to 1986, when it averaged 5.9 percent. In 1973, discretionary spending for defense was 5.7 percent of GDP. Most of the decline over that period involved spending for national defense. Relative to the size of the economy, discretionary spending declined from 9.6 percent of gross domestic product (GDP) in 1973 to a low of 6.0 percent in 1999 before rising back to about 7 percent in 2013, CBO estimates (see Figure 3-1). Between 19 discretionary spending fell from 53 percent to about 35 percent of total federal spending. Trends in Discretionary SpendingĪ distinct pattern in the federal budget since the 1970s has been the diminishing share of spending that occurs through the annual appropriation process. Thus, in any given year, discretionary outlays include spending both from new budget authority and from budget authority provided in earlier appropriations. Some appropriations (such as those for employees’ salaries) are spent quickly, but others (such as those for major construction projects) are disbursed over several years. The discretionary budget authority (that is, the authority to incur financial obligations) provided in appropriation acts results in outlays when the money is spent. Some fees and other charges that are triggered by appropriation action are classified in the budget as offsetting collections and are credited against discretionary spending. Just over half of that spending was for defense programs the rest paid for an array of nondefense activities. Discretionary spending-the part of federal spending that lawmakers control through annual appropriation acts-totaled about $1.2 trillion in 2013, CBO estimates, or about 35 percent of federal outlays.
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