An entitlement is a federal program or provision of law that requires payments to any person or state or local government, or other entities that meet the eligibility criteria established by authorizing law. Entitlements constitute a binding obligation on the part of the federal government, and eligible recipients have legal recourse if the obligation is not fulfilled. Social Security, veterans' compensation, and government pensions are examples of entitlement programs.
Entitlements as non-discretionary spending
Entitlement spending can also be referred to as non-discretionary spending or mandatory spending, and is not controlled through the regular 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 has been 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 each year as the number of eligible beneficiaries and the authorized benefit payments increases. However, some entitlement spending—particularly entitlement payments to states, such as the State Children's Health Insurance Program (commonly referred to as 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 multiyear 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.
Budget Act of 1974
The Congressional Budget Act of 1974 attempted to limit the use of entitlement authority. The key characteristic of entitlements is that, once enacted, the authorizing legislation automatically creates enforceable claims to benefits and thus effectively preempts the formal appropriations process. Thus, the determination of outlays at any given time is a function of variables outside the control of the appropriations committees.
Current spending on entitlements
In the Fiscal Year 2013 budget that President Obama originally proposed to Congress, 62% of the United States federal budget went for non-discretionary, mandatory spending, including entitlements.