Correction: There Is No Such Thing as Mandatory Out-Year Entitlement Spending

Astute Cato@Liberty reader Mark Close challenged my assertion that there is no such thing as mandatory federal spending – and won.

Since Congress can reduce spending on Social Security, Medicare, Medicaid, etc. at will, I made the strong claim that all federal spending is discretionary. I was even willing to describe interest payments on the national debt that way. I know, I know, the consequences of reneging on the debt would be catastrophic. But the (short-term) consequences of repealing Social Security & Medicare could be catastrophic for many people, too. (Imagine thousands of unemployed bureaucrats with no marketable skills! Won’t somebody please think of the surgeons??) Yet Social Security & Medicare spending is clearly discretionary.

If the difference between mandatory and discretionary spending is determined by the amount of economic dislocation that results from shutting off the spigot, I reasoned, where to draw the line? If it’s just a matter of degree, how can there be any definition of “mandatory” that isn’t just arbitrary?

Mr. Close suggested a very defensible place to draw that line: if reneging on a spending commitment would subject the U.S. government to legal action, then such spending is effectively mandatory. Examples include current-year entitlement spending, as well as current and future contractual obligations (e.g., interest payments on the national debt). Future outlays for Social Security, Medicare, etc. are not mandatory because reneging on those commitments would not subject the U.S. government to legal action.

Of course, one could still argue that interest payments on the national debt are discretionary, because Congress could always change the law to eliminate the threat of such legal action. But that’s pretty far-fetched. Even if it weren’t, Mr. Close has provided a non-arbitrary way to distinguish between mandatory and discretionary spending.

So to recap … when government officials refer to future Social Security, Medicare, and Medicaid expenditures as “mandatory spending,” they’re still lying. The U.S. government, its officers, and its agents should describe such spending as automatic, not mandatory. And the new rallying cry for the Sub-Boomer generations shall be:

There Is No Such Thing as Mandatory Out-Year Entitlement Spending!

Not quite as punchy as the original, is it? I am consoled by the fact that such smart people read Cato@Liberty.