The federal government takes in nearly $2 trillion dollars a year in revenue. About three-quarters of its spending, however, is “mandatory.” Mandatory spending is money lawmakers are required by law to spend on certain programs or to use for interest payments on the national debt.

     Most mandatory spending is for entitlements. These are benefits paid to people who meet certain requirements, such as age or income. Spending on entitlement programs rises as the number of qualified recipients rise. The largest entitlement programs are Social Security, Medicare, and Medicaid, which provides health insurance to low-income families. Other mandatory spending programs include food stamps, Supplemental Security Income (SSI), and child nutrition, generally for low-income people. The federal government also pays retirement benefits and insurance for federal workers and veterans’ pensions.

     Discretionary spending is spending for which government planners can make choices. It accounts for about one-quarter of federal spending. Discretionary spending includes defense spending, education, national parks and monuments, transportation, disaster aid, foreign aid, and many other items.

     The federal government also provides aid to state and local governments and shares the costs for some programs with state and local governments. Medicaid costs, for example, are shared by both the federal and state governments.