There’s a core reason: in many governments, a large portion of spending is governed by permanent laws rather than annual appropriations. This creates what economists and budget analysts call “mandatory spending,” which tends to be quite large in practice. Key points to understand this topic:
- What is mandatory spending?
- It includes outlays that are determined by existing statutes and eligibility rules, not by annual appropriation bills. Programs like Social Security, Medicare, and Medicaid are classic examples, along with other entitlement programs and some interest on the debt. Because the amounts depend on how many people qualify and participate, they rise or fall with demographic and economic conditions rather than with politicians’ yearly spending priorities. [Source-level understanding: general budget basics; entitlements expand as populations grow and as benefits or eligibility rules change.]
- Why so large in many tax-budgeted economies (like the U.S.)?
- Demographics: Aging populations increase the number of beneficiaries for Social Security and Medicare, driving up outlays even if per-beneficiary benefits stay the same. [General budget analysis: aging society amplifies entitlement costs.]
- Health care costs: Medical inflation and rising health care needs push up spending on programs like Medicare and Medicaid, adding to mandatory totals. [General budget analysis: health costs feed into entitlement spending.]
- Entitlement structure: Once a program is established by law, its spending unfolds automatically according to eligibility rules and benefit formulas, which makes it “mandatory” and shielded from the annual appropriations process. Over time, expansions—such as tax credits or new social-insurance programs—increase the mandatory share. [General explanation: automaticity of entitlement programs.]
- Debt service: Some portion of mandatory outlays goes to interest on the national debt, which itself grows when deficits accumulate. As debt rises, interest consumes a larger slice of the budget, further elevating mandatory spending as a share of the total. [Budget accounting: debt service adds to mandatory-like outlays.]
- How it has evolved over time
- In many countries (and the U.S. specifically), the share of the budget devoted to mandatory spending has risen as new entitlement programs were added and as existing ones have grown with population aging and health care cost pressures. This dynamic typically outpaces discretionary spending, which is set each year by appropriations and can be adjusted more readily in response to revenue changes or policy choices. [Historical budget analyses and briefing materials summarize this trend.]
- What this means for policy debates
- Flexibility: Because a large chunk of spending is automatic, it reduces the immediate leverage of annual budget ceilings; policymakers often find it harder to achieve large fiscal reforms without changing the laws behind these programs.
- Trade-offs: Adjusting mandatory programs usually involves difficult trade-offs—benefits, eligibility, or the mix of programs—because these are embedded in law and reflect long-term commitments to voters and beneficiaries.
- Revenue linkages: Some systems try to control mandatory costs with broader reforms to health care, retirement ages, or indexation rules, while also addressing revenue needs to sustain these programs.
If you’d like, I can tailor this explanation to a specific country’s budget structure (for example, the United States, the United Kingdom, or another system) and outline which programs drive the biggest mandatory costs in that context, along with common policy options considered by lawmakers.
