Medicare, Social Security, Medicaid – All Discretionary Spending

Members of Congress are actively working to cut the federal budget and bring down spending. But they’re steering clear of the politically difficult, big-ticket items such as Social Security, Medicare, Medicaid, interest on the debt and national defense.

“It’s not being debated because they say we’re only going to debate discretionary spending. We should ban that word,” said conservative commentator George F. Will on This Week with Christiane Amanpour.

“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,” Will said.

We thought Will’s statement was a provocative and interesting way to frame the debate. But was it true? We decided to check it out.

We’ll begin with a brief lesson on the terms Congress uses to describe the federal budget.

Discretionary spending means government spending that Congress sets every year through a process known as appropriations. It includes spending for most federal agencies, such as transportation and health. It includes foreign aid and defense spending. And it includes most grant programs administered by the federal government.

Non-discretionary spending, on the other hand, is spending that is controlled by legislation that sets eligibility criteria or spending formulas. It 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 military benefits. Sometimes non-discretionary spending is called mandatory spending or direct spending.

We ran Will’s comments by four experts on the federal budget. They all said that Will was essentially correct, that non-discretionary spending can be changed at any time by passing new legislation that changes the particular program.

A recent example of this is the health care law supported by President Obama and Democrats in Congress. The law made many changes to Medicare, to reduce its spending, in order to offer subsidies for health care insurance to the uninsured.

“There is no constitutional roadblock to Congress changing any spending at any time. In that sense, all spending is discretionary,” said Marc Goldwein, policy director for the nonpartisan Committee for a Responsible Federal Budget.

The reasons members of Congress are now so focused on discretionary spending is because it’s more politically difficult to change programs that affect benefits for so many voters.

“But you can’t stabilize the debt by focusing on only 12 percent of the budget,” Goldwein added. “Trying to do so is going to make the cuts far more painful than what would be necessary if we were to look more broadly.”

Both Medicare and Social Security were on the table in previous years when the budget needed adjustment, said the experts we consulted on both sides of the political aisle. Jim Horney of the left-leaning Center on Budget and Policy Priorities noted that “every major deficit reduction plan in the last 20 years has made significant changes to Medicare.” Brian Riedl of the conservative Heritage Foundation pointed out that Social Security was changed significantly in 1983 in a deal between Democrats in Congress and President Ronald Reagan.

Interest on the federal debt is a required payment unless the government is willing to default, a highly unlikely scenario. There are a few other contractually obligated payments the government has to make, typically for insurance programs such as mortgage insurance, flood insurance, and federal deposit insurance. But those payments are relatively small.

“I would add that even interest on the debt is in some way discretionary, because levels of debt can be changed by decisions to tax and spend and not run budget deficits,” said Josh Gordon, policy director of the Concord Coalition, a nonpartisan group that wants to eliminate deficits.

Will said that federal spending is “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.” Will is making a broad statement here and leaves out a few details. But he’s largely correct, and we rate his statement True.

http://www.politifact.com/truth-o-meter/statements/2011/mar/15/george-will/george-will-says-all-federal-spending-ultimately-d/