Policy Basics: Non-Defense Discretionary Programs

PDF of this analysis (5pp.)

June 14, 2013

Non-defense discretionary (NDD) programs comprise domestic and international programs outside of national defense that Congress funds on an annual basis.  (They exclude “entitlement” programs such as Social Security, Medicare, and Medicaid.)   NDD programs include a broad set of public services, including environmental protection, education, job training, border security, veterans’ health care, scientific research, transportation, economic development, low-income assistance, law enforcement, and international assistance.    

In 2012, NDD spending totaled $616 billion, or 17 percent of federal spending.  Of that total, 34 percent went to grants to states and localities, such as for K-12 education and highway projects, while 21 percent went to low-income programs, such as Head Start and low-income housing assistance.  These categories are not mutually exclusive; a sizable share of grants to states and localities support low-income programs.

NDD Funds Key Public Services

NDD programs can be broken into seven categories, as the chart shows.
(Note:  the chart assigns each program to a single category to avoid double-counting.)

The categories are:

1. Transportation and Economic Development

Transportation and economic development programs constituted 20 percent ($122 billion) of NDD spending in 2012.  

About three-quarters of this spending goes to air, ground, and water transportation programs such as the National Highway System and airport security.  The rest goes to a variety of community development activities; disaster insurance, prevention, and relief; and loans to farmers. 

2. Health Care and Health Research

Health care and health research constituted 19 percent ($117 billion) of NDD spending in 2012.  These programs support health research and the provision of health care services but do not include Medicare and Medicaid.

Just over 40 percent of NDD health spending provides hospital and medical care for veterans.  Another 29 percent goes to research and training, primarily through the National Institutes of Health to finance medical research ranging from cancer treatments to vaccine development.  The rest funds other health programs such as the Indian Health Service and Community Health Centers; the Food and Drug Administration, which ensures that drugs are safe and effective and that the food supply is safe; the Consumer Product Safety Commission, which protects the public from defective products; and Medicare administrative costs.

3. Education and Training

Education and training programs constituted 16 percent ($95 billion) of NDD spending in 2012.

K-12 education accounts for 45 percent of the spending in this category, primarily for students with disabilities and low-income students.  Higher education programs — the largest of which is the Pell Grant program, which helps about 9 million students from low- and moderate-income households afford college — constitute another 28 percent.

Another 21 percent of spending in this category supports a set of programs that provide early education, employment, and other services for children and families, seniors, people with disabilities, and others. This includes Head Start (an early childhood education program that helps about 1 million disadvantaged children prepare for school) and job training programs through the Workforce Investment Act.

The remaining 6 percent of education and training spending goes to veterans’ employment, training, and rehabilitation programs and public education and cultural programs that support the Public Broadcasting System as well as public libraries and museums.

4. Science, Environment, and Energy

Science, environment, and energy programs constituted 13 percent ($81 billion) of NDD spending in 2012.  (This category does not include health-related research, which is part of the health care and health research category discussed above.)

Thirty-six percent of spending in this category goes to conservation and the management of natural resources, such as the National Park System, as well as some flood and forest fire response and prevention measures.  Another 20 percent covers NASA’s space exploration and related scientific research, and 13 percent supports environmental programs, including those in the Environmental Protection Agency.

The remaining spending supports other science programs (ranging from research grants awarded by the National Science Foundation to science, technology, engineering, and mathematics [STEM] education and workforce development programs) and energy programs related to conservation, emergency preparedness, and regulation.   

5. Economic Security

Economic security programs constituted 13 percent ($77 billion) of NDD spending in 2012. Programs in this category primarily help households meet basic needs such as housing, fuel, child care, and food costs.  

Housing assistance, including rental vouchers and subsidies, homeless prevention programs, and assisted housing for elderly and special-needs populations, accounts for nearly 60 percent of economic security spending.  Another 10 percent goes to food and nutrition programs, such as WIC (the Special Supplemental Nutrition Program for Women, Infants, and Children), which provides food assistance to approximately 9 million low-income mothers and children.

The remaining economic security spending provides some form of assistance to low- and moderate-income people (through the Low Income Home Energy Assistance Program, the Child Care and Development Block Grant, and the Veterans Housing Benefit Program, among others) and covers Social Security’s administrative costs.

6. Law Enforcement and Governance

Law enforcement and governance constituted 12 percent ($73 billion) of NDD spending in 2012.

Nearly three-fifths (59 percent) of this category goes for law enforcement, criminal justice, and correctional activities, such as border patrol, prevention and prosecution of domestic violence, reduction of drug trafficking, and the work of the Federal Bureau of Investigation (FBI).  The rest funds the Internal Revenue Service, Congress, the Supreme Court, the Justice Department, the Government Accountability Office, and other basic government operations.

7. Diplomacy and International Affairs

Diplomacy and international affairs constituted 8 percent ($50 billion) of NDD spending in 2012.

Forty-seven percent of spending in this category goes to international development and humanitarian assistance.  This category includes disaster assistance, the Peace Corps, the global HIV and AIDS initiative, and contributions to international agencies such as the World Health Organization.  Another 23 percent supports international security activities and programs such as peacekeeping operations and efforts to prevent the proliferation of nuclear weapons.  The remaining 30 percent covers the maintenance and protection of U.S. embassies and consulates, diplomatic and consular programs, and smaller international financial programs.

NDD Spending Projected to Decline as a Share of the Economy

NDD funding is set to decline over the next decade as a share of the economy.  The 2011 Budget Control Act (BCA) set limits or “caps” on annual discretionary funding through 2021, imposing separate caps for defense and non-defense funding.  Under the caps, NDD spending will fall to its lowest level as a share of gross domestic product (GDP) on record by 2017, with data going back to 1962, and will continue to fall thereafter. 

These projections do not include the effects of “sequestration” — the automatic cuts mandated by the BCA after Congress failed to adopt a more comprehensive deficit-reduction plan.  Sequestration applies in 2013 through 2021 and would cut programs by nearly $1 trillion over those years.  More than 80 percent of these cuts would be in defense discretionary and NDD programs; most entitlements (including Social Security and Medicaid) are exempt. 

If sequestration stays in effect, then total NDD funding between 2013 and 2021 would be about 6 percent below the BCA cap levels.  By 2021, NDD funding under sequestration would be 20 percent below the 2010 level (adjusted for inflation); 2010 was the last year before Congress began cutting discretionary funding to reduce the deficit.

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