Entitlements and Appropriated Entitlements in the Federal Budget Process
Entitlements and Appropriated Entitlements
in the Federal Budget Process
Bill Heniff Jr.
Analyst on the Congress and Legislative Process
Government and Finance Division
Entitlements are programs that require payments to persons, state or local
governments, or other entities if specific eligibility criteria established in the authorizing
law are met. Entitlement payments are legal obligations of the federal government, and
eligible beneficiaries may have legal recourse if full payment under the law is not
provided. This report provides a brief explanation of spending for entitlements, including
so-called appropriated entitlements, and discusses the congressional procedural
constraints on legislation affecting such entitlement spending. For more information on
the budget process, see the CRS Guides to Congressional Processes at
[ http://www.crs.gov/products/guides/guidehome.shtml] .
Entitlement Spending
Entitlement spending is a form of mandatory spending (also referred to as direct
spending), which currently comprises more than half of total federal spending. Spending
on entitlements is not controlled through the annual appropriations process. Instead,
entitlement spending is based on the eligibility and benefit criteria established in law,
which is under the jurisdiction of the various authorizing committees of the House and
Senate. The total amount of spending on entitlements is determined by the aggregate total
of all individual benefits. Most entitlement spending, such as for Medicare, is not capped
at a specific spending level, and typically increases (but may decrease) each year as the
number of eligible beneficiaries and the authorized benefit payments increases (or
decreases). However, some entitlement spending — particularly entitlement payments
to states, such as the State Children’s Health Insurance Program (commonly referred to
as S-CHIP) — is capped at a specific level provided in the authorizing law.
Most entitlement spending bypasses the annual appropriations process altogether and
is funded by permanent or multi-year appropriations in substantive law. Such spending
becomes available automatically each year, without legislative action by Congress.
Examples of such programs include Social Security, Medicare, and federal employee
retirement.
A portion of entitlement spending, such as Medicaid and certain veterans’ programs,
is funded in annual appropriations acts. Such entitlement spending, referred to as
appropriated entitlements, comprises roughly 36-38% of funding provided in the annual
appropriations acts. While the funding is provided in the annual appropriations acts, the
level of spending for appropriated entitlements is not controlled through the annual
appropriations process. Instead, the level of spending for appropriated entitlements, like
other entitlements, is based on the benefit and eligibility criteria established in law, and
the amount provided in appropriations acts is based on meeting this projected level.
Procedural Controls on Entitlement Spending Legislation
The Congressional Budget Act of 1974 (Titles I-IX of P.L. 93-344, 2 U.S.C. 601-
688), as amended, provides for the annual adoption of a budget resolution to serve as a
framework for the consideration of budgetary legislation each year. Accordingly, the
budget resolution contains projected spending levels, including entitlement spending,
under existing law, adjusted for any proposed policy changes, for a period of at least five
fiscal years. The projected spending totals, however, do not include spending for the
largest entitlement program, Social Security, which is excluded by law from the totals and
presented separately.
The budget resolution also may include reconciliation directives instructing House
and Senate authorizing committees to recommend legislative changes to existing laws
affecting entitlements to meet the recommended levels of spending. Once reported, such
reconciliation legislation is considered under special procedures on the House and Senate
floor. 1
Separate from any reconciliation directives, entitlement spending legislation may
originate under the normal legislative process, initiated by the authorizing committees or
individual members. Section 303 of the Budget Act, however, prohibits entitlement
spending legislation from being considered before a budget resolution has been adopted.
When entitlement spending legislation is considered, its content is restricted under
the rules of the congressional budget process. First, Section 302(f) of the Budget Act
prohibits the consideration of any entitlement legislation that would cause a committee
to exceed its spending allocation associated with the most recently adopted budget
resolution for the first fiscal year or the total of all fiscal years. A committee’s spending
allocation, commonly referred to as its Section 302(a) spending allocation, reflects the
amount of mandatory spending, including entitlement spending, under its jurisdiction.
Second, Section 311 of the Budget Act prohibits consideration of any entitlement
legislation that would cause spending to exceed the agreed upon total spending levels
contained in the budget resolution for the first fiscal year.2 Third, Section 401(b) of the
Budget Act generally prohibits the consideration of any legislation providing new
entitlement spending that would become effective in the current fiscal year.
In addition, both the House and Senate have “pay-as-you-go” (PAYGO)
requirements for entitlement spending legislation. The House and Senate PAYGO rules
1 For further information on the reconciliation process, see CRS Report RL33030, The Budget
Reconciliation Process: House and Senate Procedures, by Robert Keith and Bill Heniff Jr.
2 For further information on the enforcement of the budget resolution, see CRS Report 98-815,
Budget Resolution Enforcement, by Bill Heniff Jr.
(Rule XXI, clause 10, and Section 201 of S.Con.Res. 21, the FY2008 budget resolution,
respectively) prohibit the consideration of legislation affecting entitlement spending (as
well as revenues) that would have the net effect of increasing the deficit (or in the House,
reducing the surplus) over either a six-year period covering the current fiscal year plus the
ensuing five fiscal years or an 11-year period covering the current fiscal year plus the
ensuing 10 fiscal years.3
Finally, legislation affecting the Social Security program, the largest entitlement, also
is constrained by congressional budget procedures. First, a budget resolution that would
decrease the Social Security surplus is subject to a point of order in the Senate under
Section 301(i) of the Budget Act. Second, Section 311(a)(3) provides a point of order in
the Senate against any legislation that would cause Social Security surpluses to decrease
or deficits to increase relative to the levels set forth in a budget resolution. In addition,
Section 13302 of the Budget Enforcement Act of 1990 (Title XIII of P.L. 101-508)
established a point of order in the House prohibiting the consideration of any legislation
that would change certain balances of the Social Security trust funds over specified
periods. Lastly, a point of order under Section 310(g) may be raised in the House and
Senate against a reconciliation bill that contains recommendations relating to the Social
Security program.
A point of order is the procedural mechanism for enforcing the rules governing the
consideration of entitlement spending legislation. Points of order, however, are not
self-enforcing: a Member must raise a point of order to enforce such rules. Budget
enforcement points of order also may be waived. In the House, a point of order may be
waived by unanimous consent, by suspension of the rules, or by a special rule reported by
the Rules Committee and adopted by the full House. In the Senate, points of order under
the Budget Act or provided in budget resolutions, such as the PAYGO point of order, may
be waived by unanimous consent or by motion as provided under Section 904 of the
Budget Act. A motion to waive most Budget Act points of order requires an affirmative
vote of three-fifths of all Senators duly chosen and sworn (60 votes if there are no
vacancies); Section 303 of the Budget Act may be waived by a majority vote.
3 For further information on these PAYGO rules, see CRS Report RL34300, Pay-As-You-Go
Procedures for Budget Enforcement, by Robert Keith.