Federal Budget

Federal Budget
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Federal Budget
Introduction
The federal budget, which is key in government spending, is divided into three groups; Mandatory spending, discretionary spending and net interest. Mandatory spending is controlled by the law and it involves spending on entitlement programs which are the big three; Medicare, Medicaid and social security and other several programs which include unemployment insurance, retirement benefits for military and federal civilian, and supplemental nutrition assistance. Discretionary spending is set annually by the House and Senate Appropriations Committee, and it includes programs for defense, transportation, education, border security and law enforcement, environmental protection, and international assistance. Government spending on net interest and mandatory programs are termed as “uncontrollable”.
Cutting down federal spending either by changing the benefit levels or changing eligibility criteria for entitlement programs or by reducing discretionary programs appropriations, is usually difficult politically. However, it is said that it is easier to control discretionary programs since they come to an end when not renewed by the Congress.
Uncontrollable spending has in the recent past grown rapidly than the overall spending and hence accounting a larger share of the total budget. In this regards, most growth is from entitlements that are serving the health insurance and the elderly population. Since the population is growing rapidly, it has affected both health and Social Security programs.

Health programs have grown rapidly because of the high costs per beneficiary than the incomes per capita. Medicare and Social Security, which are the largest health program are the main political programs ever invented. Entitlement spending, however, can be controlled by mainly changing the generosity of benefits or eligibility criteria. This requires the Congress to change the law but it can be politically difficult.
Conclusion
In Federal Budget, entitlement spending is said to be uncontrollable due to political rather than legal reasons. However, it can be controlled legally through reforming programs. Discretionary spending is in this regard assumed to be easier to control than entitlement spending.
Reference
Campo, S. (2017). Government budgeting and expenditure management: principles and
International practice. New York: Routledge.