What Is an Uncontrollable Expenditure?
Uncontrollable expenditures are the result of government policies that have made some groups automatically eligible for benefits. These expenditures result from mandates of current law or obligations from previous laws. According to TruthandPolitics.org, almost two-thirds of the federal budget is uncontrollable. This means the only way to control these expenditures is to enact new laws that do away with them or find different ways to fund them. The majority of these uncontrolled expenditures result from entitlements or government-sponsored social programs.
Social Security, Medicare and Medicaid are examples of entitlement programs that use large portions of the federal budget. Since the budget for these entitlements has risen faster than the tax revenue, these entitlements become uncontrollable expenditures. Other uncontrollable expenditures include civilian and military pensions, earned income credits and food stamp programs. One way to increase funding for Social Security, for example, would include the removal of the yearly salary cap for Social Security taxes. In 2014, for example, once a person's salary reaches $117,400, he no longer contributes Social Security taxes for any amount earned over that during the year.
Discretionary spending includes items that are not part of the mandatory budget. Discretionary spending is another type of uncontrollable expenditure used for security, health and education. Discretionary spending currently used to make up an increasing percentage of the yearly budget, until 2011 when the Budget Control Act went into effect. The discretionary spending for 2013 was 35 percent of the country's total expenditures, measured as part of the country's gross domestic product and represented one-fifth of the entire economy. Since 2011, several acts and changes to the BCA have been adopted to set caps on discretionary spending.
The biggest source of revenue for the federal government is personal and corporate income tax, social insurance taxes and borrowing. According to “Principles of Accounting,” individual income tax yields approximately 50 percent of every dollar of revenue and corporate tax yields approximately 10 percent. The federal government currently uses a portion of this revenue to pay down the deficit. The interest on this deficit has dropped to roughly 2.8 percent of the GDP, down from 9.8 percent in 2009. The federal government generates additional revenue through borrowing. When the federal government wants to borrow money, the government sells bonds through the Treasury Department. These bond sales generate revenue for the government and guarantee interest for the bondholders.
The process of distributing the federal budget involves many different agencies. Because of the size of the budget, special interest groups, government agencies, the Office of Management and Budget, congressional committees and the president work together to create proposed budgets. Ultimately, however, the constitution dictates that congress authorize the appropriation of the budget and determine the individual funds received to pay for the uncontrollable expenditures.