US Federal Mandatory and Discretionary Spending Since 1962

In 1962, when the OMB budgetary data series begins, mandatory spending (including interest) was 5.75 percent GDP, and discretionary spending (including defense) was 11.9 percent GDP.

For the next 20 years, mandatory spending more than doubled and discretionary spending declined, with mandatory spending in 1982 at 12.6 percent GDP and discretionary spending at 9.8 percent GDP.

From 1980 to 2007 mandatory spending stayed steady, between 11.5 and 13 percent GDP. Discretionary spending declined to a low of 6 percent GDP in 2000 before bouncing up to 7.4 percent GDP in the 2000s.

Since a bulge in spending during the Great Recession mandatory spending has begun a gradual increase, reaching 14.7 percent GDP in 2019, and discretionary spending has stabilized at about 6.3 percent GDP.

Pension Spending Almost All Mandatory
Divided up by function, entitlement spending turns out to be almost all mandatory. Pension spending has been steady at about 5 percent of GDP, almost all mandatory. This includes Social Security spending and spending on federal government employee pensions.

Healthcare Spending Mostly Mandatory
Back in 1962 federal healthcare spending was all discretionary. But Medicare and Medicaid spending, starting out at 0.5 percent GDP in the late 1960s, has been almost all mandatory, and increasing decade by decade to the current 3.5 percent of GDP.

Defense Spending Almost All Discretionary
Defense spending, perhaps the core federal program, is almost all discretionary, declining from almost 10 percent of GDP in 1962 at the height of the Cold War to under 5 percent of GDP in recent years. But one year, in 1991, mandatory spending on defense went negative, at minus 0.53 percent of GDP. This way, presumably allied contributions to the 1991 effort to free Kuwait from Iraqi invasion.

Welfare Spending Almost All Mandatory
Back in 1962 federal welfare spending was almost all mandatory, and the majority of welfare spending has remained mandatory, including in the explosion of welfare spending during the COVID crisis of 2020.