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The future of Federal funding in 2013 and later years is of considerable interest to many grant seekers and the grant writers who work with them and for them. Perhaps of particular interest are the grant programs whose annual appropriations fall under the category of non-defense domestic discretionary spending.


The Congressional Research Service, which provides technical analysis and support to members of the United States Congress, describes the history of Federal outlays for discretionary and mandatory programs in its report titled “Trends in Discretionary Spending” (2010).


This post explores historical trends in Federal budget composition and in domestic discretionary spending as a proportion of gross domestic product (GDP). Later posts will explore other related trends and recent legislation impacting the future of Federal grant making.


Trends in Federal Budget Composition:

The composition of the Federal budget has changed enormously since the early 1960s. Over the past five decades, the share of total discretionary spending in the Federal budget has fallen, the share of mandatory spending has risen, and net interest has held relatively steady.


In 1962, out of total Federal outlays, discretionary spending comprised 67.5%, mandatory spending made up 26.1%, and net interest accounted for 6.5%. By contrast, in 2010, out of total Federal outlays, discretionary spending accounted for 37.8%, mandatory spending comprised 56.1%, and net interest made up 6.1%.


Fiscal Year Discretionary Mandatory Net Interest Total
FY1962 67.5% 26.1% 6.5% 100%
FY2010 37.8% 56.1% 6.1% 100%


Discretionary spending, as a proportion of Federal outlays, peaked in 1963 then fell for three decades from the late 1960s through the late 1990s. By 2000, it had fallen to 34.4% of total outlays, although it ended the decade at 37.8% in 2010. In contrast to the longer term trends, between 2000 and 2010, discretionary spending grew more quickly than mandatory spending.


Future discretionary spending as a share of total Federal outlays is projected to decline. By fiscal year 2020, some projections anticipate that it will reach a new historical low of 29.3% of total Federal outlays.


Domestic Discretionary Spending and GDP:

Domestic discretionary spending supports the largest number of Federal agencies and programs that are likely to be sources of competitive grants — science and technology research, natural resources, energy, education, and numerous others. None of the individual programs within the domestic discretionary category has approached 1% of gross domestic product (GDP) since 1962. Most such programs spent less than 0.5% of GDP during that period.


As a share of GDP, Federal non-defense domestic discretionary spending has had its ups and downs. It was 3.2% of GDP in 1969, hit a peak of 4.8% of GDP in 1978, fell to 3.1% of GDP in 1987 then fluctuated between 3.0% and 3.6% of GDP. In 2009, it rose to 4.1% of GDP – growth attributable largely to new economic stimulus spending and a decade of increases in defense spending from 2000 through 2009.


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