more than 16 percent in 2009—largely because of economic stabilization and recovery initiatives.

SPENDING CATEGORIES AND TRENDS

The vast majority of spending for defense programs, which includes such related functions as intelligence, has to be appropriated on an annual basis—that is, it is “discretionary.” In 2008, approximately 57 percent of spending on “other domestic” programs (i.e., nondefense programs other than Medicare, Medicaid, and Social Security) was discretionary. The remaining 43 percent was set by permanent law—that is, it was “mandatory.”

Most mandatory programs are so-called “entitlements” that provide payments or other benefits to people eligible by law to receive them. Examples include food stamps, benefits for disabled veterans, federal spending on unemployment compensation, cash refunds from the Earned Income Tax Credit, and federal civilian and military employee retirement payments. Examples of non-entitlement mandatory spending include Temporary Assistance to Needy Families and some payments to farmers and for deposit insurance.

The domestic discretionary category is very broad and diverse. It includes the federal judicial system; homeland security; commerce-related activities; education, training, and employment, low-income housing aid, and other social service programs; science research and development, space exploration, and other technology programs; energy assistance; natural resource protection and other environmental programs; and transportation.1

Debates About Spending

In addition to being diverse, the domestic components of this category are often controversial. The value of domestic spending is very much in the eye of the beholder. Arguments about excess federal spending often center on items in this category that are regarded as wasteful, either because the program’s purposes are not valued (or are regarded as obsolete) or because the programs are not believed to be effective in achieving their stated ends. Critics may argue, for example, that programs providing support for low-income people are excessively generous or encourage dependency, and that domestic spending includes unnecessary and sometimes unproductive subsidies to interested business or industry groups. They would say that politics seldom lead to efficient allocation.

On the other side of the debate, proponents of domestic spending stress that it includes useful public investments (even as skeptics may take issue with the word “investment”) as well as essential services. Advocates contend that many domestic appropriations build economic capacity through



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