Posted August 31, 2011
By Loren Adler and Shai Akabas
The two typical categorical divides for discretionary spending are “defense / non-defense (or domestic) discretionary” and “security / non-security discretionary.” While these two groupings sound similar, there are important differences, as outlined below.
“Security” is a much broader category than “defense.” The latter includes only those programs represented under budget function 050 – such as the military activities of the Department of Defense (DoD), the nuclear-weapons related activities of the Department of Energy (DoE) and the National Nuclear Security Administration, the national security activities of several other agencies such as the Selective Service Agency, and portions of the activities of the Coast Guard and the Federal Bureau of Investigation. “Non-defense discretionary” includes all those categories other than the ones listed as “defense” spending.
In contrast, the “security” category includes a wider swath of discretionary programs. The term has been used with various compositions, but the recently-passed Budget Control Act defines it as all of “defense” (function 050) as well as international affairs programs, the Department of Homeland Security, the Department of Veterans Affairs, and a couple other accounts. When combined, the categories and programs under “security” cover most military spending, homeland security and international security efforts.
“Security” Spending (as defined in the Budget Control Act) incorporates:
“Defense” spending (not including overseas contingency operations, such as Iraq and Afghanistan):
- Department of Defense (military spending)
- Pay and benefits of active, Guard, and reserve military personnel
- Training, maintenance of equipment, and facilities
- Healthcare for military personnel and dependents
- Procurement of weapons
- Research and development
- Atomic energy defense activities
- Defense-related activities
- International development
- Humanitarian, financial, and security assistance programs
- Foreign information & exchange activities
Programs in Department of Homeland Security
National Nuclear Security Administration
Programs in Department of Veterans Affairs
Intelligence Community Management Account
The “non-security” category encompasses all discretionary spending that is not classified as “security” related. It constitutes, therefore, a relatively small portion of the budget, but an incredibly diverse cross-section.
“Non-security” Spending includes discretionary programs in:
Department of HHS
Department of Energy (aside from nuclear)
Department of Interior
Department of Justice
Department of Transportation
Department of Education
Department of Housing and Urban Development
Many other categories
The recently-passed Budget Control Act (BCA) utilizes both the defense and security categorizations. For the initial spending caps, it incorporates the “security/non-security” distinction for Fiscal Years (FY) 2012 and 2013. Discretionary spending as a whole would face a real (inflation-adjusted) 3.8 percent cut next year from its current level. After FY 2013, there is one uniform spending cap for all discretionary spending. [To see the year-by-year effect of the BCA caps, see the projections in our earlier post.]
If the Joint Select Committee does not succeed, an additional sequester of discretionary spending (as well as some non-exempt mandatory spending) takes effect, beginning in calendar year 2013. For purposes of the sequester, the bill distinguishes the cuts as coming from “defense/non-defense” classifications. The full sequester cut in 2015 would be approximately 10 percent for “defense” and 7.5 percent for “non-defense.” (These percentage cuts would be on top of the discretionary cuts that are already enacted up front.)
Historically, the budget division has always been between defense and non-defense, but last year, both the BPC’s Debt Reduction Task Force and the president’s Fiscal Commission recommended that the “security/non-security” distinction be used for budgeting moving forward. They contended that it would be a more sensible division of priorities, allowing for evaluation of the entire national security apparatus within one budget category.
Recently, both parties have begun using that distinction, and President Obama did the same for his FY 2012 budget. Although the change has not been “institutionalized” yet by the Congressional Budget Office or the budget committees, the momentum points in that direction. The primary issue left to be resolved is an agreement on what constitutes the “security” category. Hopefully, the bipartisan nature of the BCA – with its definition of “security” therein – will help to settle this debate.
Economic Policy Project