The Other 20% of Federal Spending

Nov 9, 2010

Making changes to defense, health care and Social Security will help us reduce our debt, and also leave money to fund other critical responsibilities and invest in our future. But even though other spending programs (including agriculture, transportation, homeland security, education, unemployment benefits, national parks, international relations, and the operations of government) are occupying smaller and smaller portions of the federal budget, there are still opportunities to save money.

All of these spending areas need to be reviewed so that we can find savings and reduce wasteful, outdated, and ineffective activities. Solving our fiscal challenges in a real way will require making some tough decisions on 100 percent of the budget, and setting priorities so that we can live within our means. At the same time, despite what some advocates claim, eliminating foreign aid, earmarks, and “waste, fraud, and abuse” from the budget will not save enough to solve our overall fiscal challenges.

Policy Options:

“Easy” Answers

Common recommendations to help fix the budget such as eliminating earmarks (or “pork barrel spending”), reducing foreign aid, and curbing waste, fraud and abuse sound great but would not produce very significant savings. While earmark reform would serve to improve discipline to the federal budget process, earmarks alone represent less than 1 percent of the budget. Foreign aid also represents a small portion of the budget--less than 2 percent. Another popular proposal is to curb “waste, fraud, and abuse.” Though we would all like to eliminate waste, it is not easy to define exactly what it is and what should be cut.

Set new priorities

There are many programs in the federal budget that began decades ago when conditions were different and the population had different needs. Once programs begin, however, they gain supporters, and they tend to remain in the budget. By taking a hard look at current activities, it may be possible to identify programs that have outlived their usefulness or are low priorities, and find opportunities to make programs more effective and efficient.

Freeze discretionary spending

Policy makers have enacted spending “freezes” in the past to limit the amount of money spent each year through appropriations bills. A freeze provides the same level of funds from one year to the next with no increase. Budget savings result from forcing federal agencies to find ways to absorb rising costs instead of increasing their funding levels. The President’s FY 2011 budget submission called for a three-year freeze in non-security discretionary spending. It exempted the Departments of Defense, Homeland Security, Veterans Administration, as well as the nuclear weapons programs run by the Department of Energy and foreign aid. Other proposals would apply a freeze on all discretionary programs, or would freeze the number of federal workers in order to keep spending from growing.

Learn More:

Budget Options: Volume 2 , Congressional Budget Office
The Future is Now: A Balanced Plan to Stabilize Public Debt and Promote Economic Growth , Maya MacGuineas and Bill Galston
Choosing the Nation’s Fiscal Future , National Research Council and National Academy of Public Administration
Reining in Runaway Spending and Deficits , The Heritage Foundation

What Does the Debt Mean for Our Future?

We all have a responsibility to build a brighter fiscal and economic future for the next generation.

National Debt Clock

See the latest numbers and learn more about the causes of our high and rising debt.