10 Largest Budget Functions

Jun 7, 2018

Spending in the federal budget is grouped into categories, which are known as budget functions. Each function includes a group of activities or programs that have a similar public purpose, which is helpful for comparing and analyzing overall spending priorities. The 10 largest budget functions for 2017 are listed below.

Budget Function Description Cost in 2017 ($ billions)
Social Security The Social Security function includes the two programs administered by the Social Security Administration: Old Age and Survivors Insurance, and Disability Insurance. This function includes both benefit payments to retired and disabled workers (and their spouses, survivors and dependent children), as well as the cost of administering the programs. $945
National Defense The National Defense function largely covers the military activities of the Department of Defense. The rest of the funding goes towards the defense related activities of other departments, such as the Department of Energy nuclear programs and the National Security Administration. $599
Medicare The Medicare function consists entirely of the Medicare program, which provides health insurance to Americans 65 or over and people with disabilities. Most of the spending goes towards the provision of medical services and prescription drugs. $597
Health The Health function includes most direct healthcare services funded by the federal government other than Medicare, health benefits for federal employees and certain retirees, as well as the treatment, assessment, and prevention of health-related issues in the United States.

Examples include Medicaid, the Children’s Health Insurance Program, and activities carried out by agencies, such as the National Institutes of Health, Centers for Disease Control and Prevention, and the Food and Drug Administration.
Income Security The Income Security function includes programs that provide cash and other government assistance to individuals in need, such as those who are unemployed or earning a low-income.

Examples include public housing assistance and a number of entitlement programs, such as unemployment insurance, the Supplemental Nutrition Assistance Program, Supplemental Security Income, Temporary Assistance to Needy Families, foster care, and certain federal retirement programs (other than Social Security).
Net Interest The Net Interest function includes interest payments on the federal debt paid to private and foreign government holders of U.S. Treasury securities. It is partially offset by interest income on loans and earnings from the National Railroad Retirement Investment Trust. $263
Veterans Benefits and Services The Veterans Benefits and Services function includes the spending of the Department of Veterans Affairs and affiliated programs. Most of the spending in this function is for veterans’ compensation, pensions, and health care. $177
Education, Training, Employment, and Social Services This function includes federal funding for the Department of Education and social service programs to educate and train workers administered by a variety of agencies. It also includes the Library of Congress and certain research and cultural institutions, such as the National Endowment for the Arts and the Smithsonian. $144
Transportation The Transportation function includes spending on highways, public transit, the Transportation Security Administration, the Federal Aviation Administration, the Federal Railroad Administration, and most programs of the Coast Guard. $94
Administration of Justice The Administration of Justice function includes federal law enforcement, correctional operations, and judicial activities.

Examples include activities within the Federal Bureau of Investigation, the Drug Enforcement Administration, customs and border protection, and the federal judiciary.

Source: Table 3.2, Presidents Budget for Fiscal Year 2019, Historical Tables, https://www.whitehouse.gov/omb/historical-tables/.

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