Identify each group of spending outlays as mandatory or discretionary.
Mandatory
government employee salaries
unemployment compensation
income assistance + food stamps
Social Security
Medicare
Discretionary
funding for scientific research
defense
international aid
The correct answer and explanation is :
Mandatory Outlays:
- Government employee salaries: This is a discretionary spending item, not mandatory. Salaries for government employees are subject to the decisions made by lawmakers in the annual budget process.
- Unemployment compensation: Mandatory. Unemployment compensation is considered a mandatory expenditure because it is a program authorized by law, and eligible individuals are entitled to receive payments when they meet certain criteria, regardless of the government’s annual budget.
- Income assistance + food stamps (SNAP): Mandatory. These programs are entitlement programs where eligible individuals automatically receive benefits based on meeting certain criteria, such as income levels. The funding for these programs is legally required to meet the needs of eligible recipients.
- Social Security: Mandatory. Social Security is an entitlement program where individuals who meet specific eligibility criteria, such as age or disability status, are entitled to receive benefits. The funding for this program is determined by law and automatically provided.
- Medicare: Mandatory. Like Social Security, Medicare provides healthcare coverage to those over 65 or with certain disabilities, and its funding is required by law, regardless of annual budget decisions.
Discretionary Outlays:
- Funding for scientific research: Discretionary. Scientific research funding is part of discretionary spending, meaning it is decided each year by Congress during the budget process. It is not an entitlement and depends on the political priorities of the administration and lawmakers.
- Defense: Discretionary. Defense spending, like scientific research funding, is a discretionary expenditure. Congress decides how much to allocate to defense on an annual basis. While defense is often prioritized in the budget, it is still subject to yearly review and approval.
- International aid: Discretionary. International aid is considered discretionary because its funding is determined through the annual budget process. Congress decides how much funding to allocate to foreign assistance programs based on political and diplomatic priorities.
In summary, mandatory outlays are those that are required by law and typically include entitlement programs such as Social Security, Medicare, and income assistance. These outlays are automatically funded based on eligibility criteria. Discretionary outlays are those that are determined through the annual budgeting process, and include spending on things like scientific research, defense, and international aid.