Policy Basics: Non-Defense Discretionary Programs
April 30, 2014
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, some low-income assistance, law enforcement, and international assistance.
In 2013, NDD spending totaled $576 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
We break NDD programs into seven categories, as the chart shows.
(Note: we assign each program to a single category to avoid double-counting.)
The categories are:
1. Health Care and Health Research
Health care and health research constituted 20 percent ($116 billion) of NDD spending in 2013. These programs support health research and the provision of health care services but do not include Medicare and Medicaid.
Just over 45 percent of NDD health spending provides hospital and medical care for veterans. Another 28 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.
2. Transportation and Economic Development
Transportation and economic development programs constituted 19 percent ($109 billion) of NDD spending in 2013.
About four-fifths 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.
3. Education and Training
Education and training programs constituted 15 percent ($88 billion) of NDD spending in 2013.
K-12 education accounts for 47 percent of the spending in this category, primarily to aid school districts in educating 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 25 percent.
Another 22 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 to public education and cultural programs that support the Public Broadcasting System as well as public libraries and museums.
4. Economic Security
Economic security programs constituted 13 percent ($76 billion) of NDD spending in 2013. 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 56 percent of economic security spending. Another 9 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 other forms 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.
5. Science, Environment, and Energy
Science, environment, and energy programs constituted 13 percent ($73 billion) of NDD spending in 2013. (This category does not include health-related research, which is part of the health care and health research category discussed above.)
Thirty-seven 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 23 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.
6. Law Enforcement and Governance
Law enforcement and governance constituted 12 percent ($69 billion) of NDD spending in 2013.
Three-quarters of this category goes for law enforcement, criminal justice, and correctional activities, such as border patrol, prevention and prosecution of domestic violence, and reduction of drug trafficking. The rest funds the Internal Revenue Service, Congress, the Supreme Court, the Government Accountability Office, and other basic government operations.
7. Diplomacy and International Affairs
Diplomacy and international affairs constituted 8 percent ($47 billion) of NDD spending in 2013.
Half of the 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 21 percent supports international security activities and programs such as peacekeeping operations and efforts to prevent the proliferation of nuclear weapons. The remaining 28 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 spending 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. In addition, the BCA mandated automatic further reductions — called “sequestration” — after Congress failed to adopt a more comprehensive deficit-reduction plan by January 2012.
Sequestration was applied starting in 2013. Congress took steps to scale back the depth of the sequestration cuts for 2014 and 2015, but the full sequestration cuts are scheduled to take effect again in each year from 2016 through 2021. The sequestration cuts would reduce NDD funding below the austere BCA cap levels by about $215 billion during that period.
Under current policies including the sequestration cuts, NDD spending is projected to fall to its lowest level as a share of gross domestic product (GDP) on record in 2016, with data going back to 1962, and will continue to fall thereafter. (Even without the sequestration cuts, NDD spending is projected to reach its lowest level as a share of GDP in 2017.) By 2021, if sequestration stays in place, funding for NDD programs will be 18 percent below the 2010 level (adjusted for inflation); 2010 was the last year before Congress began cutting discretionary funding to reduce the deficit.