Two-thirds of the federal budget is "permanent law ... it's permanently appropriated."
Contemplating January 2015 -- when his fellow Republicans will control the U.S. Senate as well as the House -- U.S. Sen. Ron Johnson of Wisconsin drew attention to one of his favorite topics: the size of the federal budget. Johnson was interviewed Dec. 11, 2014 by conservative talk show host Vicki McKenna on WIBA-AM in Madison. "Here's another reality -- and most people, unfortunately, don't understand this," he began. "All these budget fights are really only over a third of the budget. Two-thirds of the budget is permanent law." Johnson added: "It's permanently appropriated. Obamacare, Medicare, Social Security -- that's how government has grown and how it's always ratcheted up. Totally dysfunctional." We often hear about "discretionary spending" on the one hand and "mandatory spending" or "entitlements," on the other. But Johnson’s word choice gave us pause. Is two-thirds of the roughly $3.5 trillion federal budget "permanent law" and "permanently appropriated"? Budget breakdown Federal spending is divided into three broad categories: discretionary spending, mandatory spending and net interest paid on the federal debt. Since paying the interest on our debt is essentially mandatory, it is often included with mandatory spending, leaving us two major categories: 1. Discretionary spending is about one-third of the budget. It refers to government spending that Congress sets every year through the appropriations process. This portion includes spending for most federal agencies, such as transportation and health, as well as foreign aid and defense spending. 2. Mandatory spending is about two-thirds of the budget. It refers to spending that is controlled by legislation that sets eligibility criteria or spending formulas. This portion includes entitlement programs such as Medicare, Medicaid and Social Security, in which you are legally entitled to benefits as long as you meet certain criteria. It also typically includes programs for which individuals automatically qualify, such as farm subsidies or veterans benefits. Unlike discretionary spending, which gets annual appropriations from Congress, mandatory spending is typically provided in permanent or multi-year appropriations. Therefore, the funding essentially becomes available automatically each year, without further legislative action by Congress. So, as Johnson indicated, two-thirds of the federal budget does not have to be appropriated annually by Congress. Rather, the spending is mandated by law, with the amount determined by how many people qualify. Johnson goes too far, however, when he says the two-thirds portion of the budget is "permanently" appropriated. When conservative columnist George Will said in 2011 that virtually all federal spending is "discretionary," PolitiFact National rated his claim True. Will had said: "It's all discretionary, other than interest on the national debt. Social Security is discretionary. We have the discretion to change the law. Same is true with Medicare and Medicaid." Indeed, it may not happen often, but mandatory spending can be changed at any time by passing new legislation that changes the particular program. In 1983, Republican President Ronald Reagan reached a deal with congressional Democrats to make changes in Social Security. The deal raised tax rates and gradually increased the eligibility age to 67 by the year 2027. The Affordable Care Act, adopted in 2010, reduced the increases in Medicare payments to hospitals and insurance companies. Johnson’s spokeswoman told us that in saying permanent, the senator didn’t mean that mandatory spending could never be changed. Rather, he was distinguishing it from spending that is allocated annually. Our rating Johnson said two-thirds of the federal budget is "permanent law ... it's permanently appropriated." It’s true that only one-third of the federal spending is done through annual appropriations bills approved by Congress, and that the other two-thirds is mandatory spending on entitlements such as Social Security and Medicare. But mandatory spending appropriations aren’t permanent. It isn’t easy, but Congress can make changes in the law that change spending within mandatory programs. For a statement that is accurate but needs clarification, our rating is Mostly True.
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