Government Spending by Year in US | Statistics & Facts

Federal Government Spending Trends by Year in America

Understanding how federal government spending has evolved over recent years provides crucial insights into America’s fiscal trajectory and policy priorities. From the unprecedented surge in expenditures during the COVID-19 pandemic in 2020 when spending reached $6.6 trillion (representing 31.2 percent of GDP), to the gradual normalization in subsequent years, the United States has witnessed dramatic shifts in federal outlays. The pandemic response fundamentally reshaped government spending patterns, with the federal deficit skyrocketing to $3.1 trillion or 14.9 percent of GDP in fiscal year 2020—the highest peacetime deficit as a share of the economy in American history. As emergency pandemic programs wound down, spending declined to $6.1 trillion in 2022 before climbing again to $6.4 trillion in 2023 and $6.8 trillion in 2024, with projections reaching $7.0 trillion for 2025.

Analyzing government spending by year reveals critical trends that will shape America’s fiscal future for decades. Mandatory spending programs including Social Security, Medicare, and Medicaid have grown consistently year-over-year, regardless of economic conditions, driven by demographic shifts as Baby Boomers retire and healthcare costs escalate. Meanwhile, discretionary spending—the portion Congress controls through annual appropriations—has remained relatively constrained, particularly in non-defense areas where spending caps have limited growth. Most alarmingly, interest payments on the national debt have exploded from $352 billion in 2020 to over $900 billion projected for 2025, becoming one of the fastest-growing budget components as the cumulative debt surpassed $35 trillion and interest rates rose from historic lows. These year-over-year comparisons demonstrate that current fiscal policies are unsustainable, with deficits averaging over $1.7 trillion annually since 2020 and the debt-to-GDP ratio climbing from 79 percent in 2019 to 100 percent in 2025, requiring urgent policy interventions to prevent fiscal crisis.

Interesting Facts About Government Spending Trends by Year

Data Source: Congressional Budget Office, U.S. Department of the Treasury, Office of Management and Budget

The year-by-year progression of federal spending from 2020 through 2025 reveals dramatic fiscal shifts driven initially by pandemic response and subsequently by structural budget imbalances. Total federal outlays peaked at $6.8 trillion in 2021 during the height of pandemic relief programs, then declined to $6.1 trillion in 2022 as emergency measures expired, before resuming an upward climb to $6.4 trillion in 2023, $6.8 trillion in 2024, and a projected $7.0 trillion in 2025. While spending as a percentage of GDP has declined from the pandemic peak of 31.2 percent in 2020 to a projected 23.3 percent in 2025, it remains well above the 50-year historical average of 21 percent, indicating persistently elevated government expenditures relative to economic output.

The budget deficit trajectory tells an equally concerning story. After reaching an unprecedented $3.1 trillion (14.9 percent of GDP) in 2020 and $2.8 trillion (12.4 percent) in 2021 to fund pandemic response, the deficit declined sharply to $1.4 trillion in 2022 as emergency programs ended. However, instead of continuing to improve, deficits increased to $1.7 trillion in 2023 and $1.8 trillion in both 2024 and 2025, demonstrating that structural fiscal imbalances persist even after extraordinary pandemic spending ceased. These deficits, averaging 6 percent of GDP from 2023-2025, run nearly double the historical average and have driven the debt-to-GDP ratio from 79 percent in 2019 to 100 percent in 2025—a historic peacetime milestone. Perhaps most troubling is the explosion in interest payments, which have nearly tripled from $352 billion in 2020 to over $900 billion projected for 2025, making debt service costs now exceed defense spending and consume approximately 13 percent of the entire federal budget, crowding out funding for other priorities and foreshadowing even greater fiscal challenges ahead as the national debt approaches $36 trillion.

Total Federal Spending by Year Comparison

Data Source: Congressional Budget Office, U.S. Treasury Financial Reports, Office of Management and Budget

Total federal spending has undergone extraordinary fluctuations over the past six fiscal years, fundamentally reshaping the size and scope of government operations. From a relatively stable baseline of $4.4 trillion in fiscal year 2019, outlays exploded to $6.6 trillion in 2020—a staggering $2.2 trillion or 50 percent increase in a single year—as the federal government mobilized an unprecedented emergency response to the COVID-19 pandemic. This surge included enhanced unemployment insurance paying an additional $600 weekly to millions of jobless Americans, Paycheck Protection Program forgivable loans exceeding $800 billion to keep small businesses afloat, Economic Impact Payments distributing $1,200 to $1,400 per person to most Americans across three rounds totaling over $800 billion, expanded nutrition assistance, emergency healthcare spending, and myriad other relief measures designed to prevent economic collapse.

Spending remained elevated at $6.8 trillion in 2021 as many pandemic programs continued, though the year-over-year increase moderated to $200 billion or 3 percent. A sharp correction occurred in fiscal year 2022 when spending declined by $700 billion (10 percent) to $6.1 trillion as most emergency pandemic programs expired, enhanced unemployment benefits ended, PPP ceased accepting applications, and Economic Impact Payments concluded. However, this decline proved short-lived as spending resumed its upward trajectory, rising to $6.4 trillion in 2023 (up $300 billion or 5 percent), $6.8 trillion in 2024 (up $400 billion or 6 percent), and a projected $7.0 trillion in 2025 (up another $200 billion or 3 percent). Comparing 2025 projections to 2019 pre-pandemic levels reveals that federal spending has grown by $2.6 trillion or 59 percent in just six years—far outpacing inflation, population growth, and economic expansion. While spending as a percentage of GDP has declined from the pandemic peak of 31.2 percent to a projected 23.3 percent in 2025, it remains significantly above both the 2019 level of 21.0 percent and the 50-year historical average, indicating that government has grown substantially relative to the overall economy and showing no signs of returning to pre-pandemic fiscal parameters despite the end of emergency conditions.

Federal Budget Deficit Trends by Year

Data Source: Congressional Budget Office, U.S. Treasury Monthly Treasury Statements, Financial Report of the U.S. Government

The federal budget deficit trajectory over the past six years demonstrates how pandemic-era fiscal interventions created unprecedented peacetime shortfalls that have persisted even after emergency conditions ended. In fiscal year 2019, the deficit stood at $984 billion or 4.6 percent of GDP—already elevated compared to historical norms but manageable within recent experience. The COVID-19 pandemic’s economic devastation and the government’s massive response caused the deficit to explode to $3.1 trillion in 2020, representing 14.9 percent of GDP and shattering all peacetime records. This $2.1 trillion year-over-year increase reflected both dramatically reduced revenues as businesses closed and unemployment skyrocketed, combined with trillions in emergency spending on relief programs.

The $2.8 trillion deficit in fiscal year 2021 remained extraordinarily high at 12.4 percent of GDP, declining only $300 billion from the previous year as pandemic relief continued. A dramatic $1.4 trillion improvement occurred in 2022, with the deficit falling to $1.4 trillion (5.5 percent of GDP) as emergency programs expired and revenues rebounded from economic recovery. However, rather than continuing this positive trajectory toward fiscal sustainability, deficits reversed course and began climbing again—rising $300 billion to $1.7 trillion in 2023 (a 23 percent increase), then adding another $140 billion to reach $1.8 trillion in 2024 (an 8 percent increase). The projected 2025 deficit of $1.8 trillion shows essentially no improvement, declining by only $8 billion.

These persistent deficits of $1.7-1.8 trillion annually from 2023-2025, representing 6.2-6.4 percent of GDP, run approximately 65 percent above the 50-year historical average of 3.8 percent. They signal fundamental structural imbalances between spending and revenues that existed before the pandemic, were massively exacerbated during the crisis, and now continue unabated despite the return to economic normalcy. Over the six-year period from 2020 through 2025, cumulative deficits exceed $12 trillion, adding enormously to the national debt and triggering the explosion in interest costs that now consume over $900 billion annually. These sustained deficits occur despite revenues reaching record levels, demonstrating that spending growth—particularly in mandatory programs like Social Security, Medicare, and Medicaid, plus surging interest payments—consistently outpaces revenue increases even during periods of economic expansion and strong job growth.

Social Security Spending Trends by Year

Data Source: Social Security Administration, Social Security Trustees Reports (2020-2025), SSA Budget Justifications, Congressional Budget Office

Social Security spending has grown consistently year-over-year throughout the 2020-2025 period, driven by two primary factors: an expanding beneficiary population as Baby Boomers continue retiring in massive numbers, and Cost-of-Living Adjustments that increased benefit amounts to account for inflation. From approximately $1.1 trillion in fiscal year 2020, Social Security outlays climbed to $1.15 trillion in 2021 (a 4-5 percent increase), then to $1.22 trillion in 2022 (6 percent growth). The most dramatic acceleration occurred in 2023 when spending surged to $1.35 trillion—an 11 percent year-over-year increase driven largely by the 8.7 percent COLA, the largest adjustment in over four decades implemented in response to inflation that reached 9 percent in 2022. Spending continued rising to $1.47 trillion in 2024 (a 9 percent increase) and is projected to exceed $1.6 trillion in 2025 (an 8 percent increase).

Over the five-year period from 2020 to 2025, Social Security spending has increased by approximately $500 billion or 45 percent—far outpacing general economic growth and adding substantially to federal budget pressures. The beneficiary population expanded from approximately 64 million in 2020 to 73.9 million by 2025, adding nearly 10 million recipients in just five years as roughly 10,000 Baby Boomers reach retirement age daily. The Old-Age and Survivors Insurance program, which provides retirement and survivor benefits, saw costs rise from $1.051 trillion in 2020 to $1.295 trillion in 2024—a $244 billion or 23 percent increase in just four years.

Cost-of-Living Adjustments have varied dramatically year-to-year based on inflation trends. The 2021 COLA of 1.3 percent reflected the low-inflation environment during the pandemic’s early phase. However, as inflation returned with economic reopening and supply chain disruptions, the 2022 COLA jumped to 5.9 percent, followed by the historic 8.7 percent adjustment for 2023—the largest increase since 1981. As inflation moderated, subsequent COLAs declined to 3.2 percent for 2024 and 2.5 percent for 2025, with the Social Security Administration announcing a 2.8 percent increase for 2026 in October 2025. These COLA increases directly drive spending growth, with the 8.7 percent adjustment alone adding over $100 billion to annual costs. Looking ahead, the Social Security Trustees Report consistently warns that the Old-Age and Survivors Insurance Trust Fund will be depleted by 2033, at which point continuing payroll tax revenues would cover only 77 percent of scheduled benefits—requiring either benefit cuts of 23 percent, tax increases, transfers from general revenues, or some combination of reforms to maintain full benefit payments to retirees who depend on Social Security for the majority of their retirement income.

Medicare Spending Growth by Year

Data Source: Centers for Medicare & Medicaid Services, Medicare Trustees Reports (2020-2025), CMS Rate Announcements

Medicare spending has grown substantially year-over-year from 2020 through 2025, driven by enrollment expansion as Baby Boomers age into eligibility, rising healthcare costs exceeding general inflation, increased utilization of medical services, and costly new treatments and technologies. In calendar year 2020, Medicare expenditures totaled approximately $775 billion, with the pandemic causing unusual patterns as beneficiaries delayed elective procedures and routine care due to lockdowns and fears of virus exposure. Calendar year 2021 saw dramatic growth to approximately $900 billion—a 16 percent increase—as delayed care caught up and healthcare utilization rebounded sharply. Spending continued climbing to approximately $950 billion in 2022 (5-6 percent growth), then crossed the $1.0 trillion threshold in 2023 (5 percent increase), before accelerating to $1.122 trillion in 2024 (a 12 percent jump).

Over the four-year period from 2020 to 2024, Medicare spending increased by approximately $350 billion or 45 percent—substantially outpacing GDP growth, general inflation, and beneficiary enrollment increases. The Congressional Budget Office projects Medicare will continue consuming a growing share of the federal budget and economy, with spending expected to rise from 3.9 percent of GDP currently to 6.2 percent by 2049 as the population ages and medical cost inflation persists. Medicare Part A (Hospital Insurance) spending grew from $369 billion in 2020 to over $450 billion in 2024, while Part B (Medical Insurance) outlays increased from $332 billion to over $450 billion during the same period.

Beneficiary enrollment expanded from approximately 62 million in 2020 to over 67 million by 2025—adding roughly 5 million seniors and disabled individuals to the program. The most dramatic shift has occurred in Medicare Advantage, where enrollment surged from approximately 26 million (42 percent of total Medicare beneficiaries) in 2020 to 35.7 million (51 percent) in 2025—meaning private insurance plans now cover the majority of Medicare enrollees for the first time in program history. The federal government pays these private insurers between $500-600 billion annually in 2025, with payments growing approximately $16 billion or 3.70 percent from 2024. The most significant policy development affecting year-over-year comparisons was the Inflation Reduction Act’s redesign of Medicare Part D prescription drug coverage, which took full effect in 2025 by capping annual out-of-pocket spending at $2,000 for the first time—providing $7.4 billion in savings to 18.7 million beneficiaries (36 percent of Part D enrollees) with average savings of nearly $400 per person for those reaching the cap. This revolutionary change addresses one of seniors’ greatest financial concerns while adding to federal costs as the government absorbs expenses previously borne by beneficiaries, illustrating the complex tradeoffs inherent in Medicare policy decisions as the program faces long-term financing challenges with the Part A Hospital Insurance Trust Fund projected to be depleted by 2033.

Defense and Military Spending by Year

Data Source: U.S. Department of Defense, Office of the Under Secretary of Defense (Comptroller), Congressional Budget Office, National Defense Authorization Acts

Defense and military spending has grown substantially from fiscal year 2020 through 2025, increasing by approximately $181 billion or 25 percent over the five-year period—significantly exceeding inflation and reflecting intensified focus on modernization, readiness, and great power competition particularly with China and Russia. Starting from approximately $714 billion in fiscal year 2020, the defense budget climbed to $741 billion in 2021 (a $27 billion or 4 percent increase), then to $782 billion in 2022 ($41 billion or 5 percent growth). The most dramatic expansion occurred in fiscal year 2023, when defense spending jumped to approximately $858 billion—a $76 billion or 10 percent year-over-year increase that reflected Russia’s invasion of Ukraine, heightened tensions with China over Taiwan, and bipartisan consensus on the need for military modernization to maintain American technological superiority.

Defense spending continued rising to approximately $886 billion in fiscal year 2024 (adding $28 billion or 3 percent) before reaching the $895 billion statutory cap imposed by the Fiscal Responsibility Act for fiscal year 2025. The President’s fiscal year 2025 budget request of $849.8 billion operates within this constraint, forcing difficult prioritization decisions across weapons procurement, research and development, personnel costs, and operations and maintenance. These spending levels support approximately 1.3 million active-duty military personnel, 800,000 reserve and National Guard members, and **750,000 civilian Defense Department employees operating across 750+ military installations worldwide.

A significant component of year-over-year defense spending growth has been military personnel costs, particularly pay raises responding to inflation and competitive civilian labor markets. Annual military pay increases ranged from a modest 2.7 percent in 2022 to record levels of 5.2 percent in 2024 and 4.5 percent in 2025—the largest sustained pay raises in over two decades designed to improve retention and recruitment during a challenging period when the military struggled to meet recruitment goals across most service branches. Beyond personnel, the defense budget prioritizes modernization programs including the $1.7 trillion F-35 fighter program, Columbia-class ballistic missile submarines replacing aging Ohio-class boats, new B-21 Raider strategic bombers, hypersonic weapons development to counter Chinese and Russian advances, artificial intelligence and autonomous systems, cyber capabilities, and space domain operations. The fiscal year 2025 budget allocates over $145 billion for Research, Development, Test & Evaluation to maintain America’s technological edge in an era of renewed great power competition, while Operation and Maintenance receives the largest share funding day-to-day military operations, training exercises, and equipment sustainment ensuring combat readiness for forces potentially called upon to respond to crises in Ukraine, the Middle East, the Taiwan Strait, or other global hotspots where American interests are at stake.

Interest on National Debt by Year

Data Source: U.S. Department of the Treasury, Congressional Budget Office, Financial Report of the U.S. Government, U.S. Treasury Fiscal Data

Interest payments on the national debt represent the most alarming fiscal trend of the 2020-2025 period, transforming from a relatively modest budget item to one of the largest and fastest-growing components of federal spending. Net interest costs remained stable at $352 billion in both fiscal years 2020 and 2021, consuming just 5.2-5.3 percent of the federal budget and approximately 1.6-1.7 percent of GDP. This period coincided with the Federal Reserve maintaining near-zero interest rates to support the economy during the pandemic, with average interest rates on federal debt hovering around 1.5 percent—the lowest levels in modern history. However, as inflation surged to 9 percent in 2022 following pandemic-era fiscal stimulus, supply chain disruptions, and energy price shocks, the Federal Reserve began aggressively raising interest rates in the most rapid tightening campaign since the 1980s.

The impact on federal interest costs was swift and devastating. Interest payments jumped $123 billion or 35 percent to $475 billion in fiscal year 2022 as rising rates affected both new debt issuance and refinanced maturing securities. The acceleration intensified in fiscal year 2023, with interest costs surging another $184 billion or 39 percent to $659 billion—consuming 10.3 percent of the federal budget and 2.5 percent of GDP. Fiscal year 2024 witnessed the most explosive growth, with interest payments skyrocketing $233 billion or 35 percent to $892 billion, representing 13.1 percent of all federal spending and 3.2 percent of GDP. This trajectory places interest costs on track to exceed $900 billion in fiscal year 2025, approaching 3.5 percent of GDP and surpassing defense spending for the first time in modern history.

Over just four years from 2020 to 2024, interest payments increased by $540 billion or 153 percent—nearly tripling and making debt service the fastest-growing major category in the federal budget. This explosion stems from two compounding factors: the debt held by the public grew by approximately $7 trillion from around $21 trillion in 2020 to over $28 trillion in 2025 (pushing the debt-to-GDP ratio to the historic 100 percent milestone), and average interest rates on that debt doubled from roughly 1.5 percent to over 3.0 percent as the Federal Reserve fought inflation through 2022-2024. The Congressional Budget Office projects these trends will continue relentlessly, with net interest costs expected to reach approximately $1.4 trillion by 2030 and $1.7 trillion by 2035—at which point interest would consume 4.1 percent of GDP and roughly one-sixth of the entire federal budget. These projections assume no additional fiscal crises requiring emergency spending, no major wars or disasters, and interest rates remaining at current levels rather than rising further—highlighting how even baseline scenarios portend severe fiscal strain as interest costs crowd out funding for defense, infrastructure, education, research, and social programs while accelerating the debt spiral by requiring ever-larger deficits simply to pay interest on previously accumulated debt.

Federal Revenue Trends by Year

Data Source: Congressional Budget Office, U.S. Treasury Monthly Treasury Statements, Office of Management and Budget

Federal revenues have experienced dramatic volatility year-over-year from 2020 through 2025, reflecting economic disruption during the pandemic recession, rapid recovery fueled by fiscal stimulus, and subsequent normalization as the economy stabilized. Revenues declined slightly from $3.5 trillion in fiscal year 2019 to $3.4 trillion in 2020 (down $100 billion) as widespread business closures, mass unemployment reaching 14.7 percent, and economic lockdowns reduced taxable income despite emergency fiscal interventions. The decline proved short-lived as revenues rebounded sharply to $4.0 trillion in 2021 (up $600 billion or 18 percent) driven by economic reopening, massive fiscal stimulus boosting incomes, and strong stock market gains generating capital gains taxes.

Fiscal year 2022 witnessed an unprecedented revenue surge to $4.9 trillion—a stunning $900 billion or 23 percent year-over-year increase that pushed revenues to 19.6 percent of GDP, the highest level since 2000. This extraordinary growth reflected multiple factors: individual income tax receipts climbed approximately $600 billion as employment recovered, wages rose, and capital gains taxes soared from stock market gains; corporate income tax revenues doubled from pandemic lows to approximately $425 billion as business profits reached record levels; and payroll taxes increased as over 22 million jobs were added back following pandemic losses. However, revenues declined significantly in fiscal year 2023 to $4.4 trillion (down $500 billion or 10 percent), falling to 17.2 percent of GDP as the economy cooled, stock market declined erasing capital gains, and business profits moderated from 2022 highs.

Revenues rebounded in fiscal year 2024 to $4.9 trillion (up $500 billion or 11 percent), rising to 17.5 percent of GDP as employment remained strong and wage growth continued, before climbing further to a projected $5.2 trillion in 2025 (up $300 billion or 6 percent) at 17.1 percent of GDP—slightly below the 50-year historical average of 17.3 percent. Over the five-year period from 2020 to 2025, revenues increased by $1.8 trillion or 53 percent, demonstrating substantial growth that nevertheless failed to keep pace with spending increases of $400 billion over the same period (after accounting for the pandemic spending peak). Individual income taxes grew from approximately $1.6 trillion in 2020 to $2.5 trillion projected for 2025, while payroll taxes funding Social Security and Medicare rose from approximately $1.3 trillion to $1.7 trillion, reflecting strong employment and wage growth throughout most of the period. Despite record revenue levels in nominal terms, persistent deficits averaging over $1.7 trillion annually from 2023-2025 demonstrate that spending growth—particularly in mandatory programs and interest payments—continues outstripping revenue increases even during periods of economic expansion, full employment, and robust tax collections, underscoring fundamental structural imbalances requiring difficult policy choices about tax increases, spending restraint, or accepting permanently elevated debt levels with associated economic risks.

Medicaid Spending Growth by Year

Data Source: Centers for Medicare & Medicaid Services, Congressional Budget Office, Kaiser Family Foundation, Medicaid.gov

Medicaid spending and enrollment underwent extraordinary changes year-over-year from 2020 through 2025, primarily driven by pandemic-era policies that fundamentally altered the program’s operation before returning toward historical patterns. Federal Medicaid spending began at approximately $450 billion in fiscal year 2020 with enrollment at 72 million Americans, representing the pre-pandemic baseline for this joint federal-state program providing healthcare coverage to low-income individuals, children, pregnant women, elderly needing long-term care, and people with disabilities. The Families First Coronavirus Response Act enacted in March 2020 provided states with enhanced federal funding in exchange for maintaining continuous coverage for all enrollees—meaning states could not disenroll anyone during the Public Health Emergency regardless of changing circumstances like income increases or moving out of state.

This continuous coverage provision caused enrollment to surge dramatically, reaching 80 million by fiscal year 2021 (up 8 million) with federal spending rising to approximately $510 billion (up $60 billion or 13 percent). Enrollment continued climbing to 88 million in fiscal year 2022 with federal outlays of approximately $545 billion (up $35 billion or 7 percent), then peaked at 94 million enrollees in fiscal year 2023 with spending reaching approximately $565 billion (up $20 billion or 4 percent). This 22 million enrollment increase from 2020 to 2023 (a 31 percent expansion) represented the largest and fastest growth in Medicaid history, driven entirely by the continuous coverage requirement preventing any disenrollments even for individuals who would normally lose eligibility.

The Consolidated Appropriations Act of 2023 decoupled the continuous coverage requirement from the Public Health Emergency, allowing states to resume normal eligibility redeterminations beginning April 2023. This unwinding process caused enrollment to decline to approximately 90 million by fiscal year 2024 as states disenrolled individuals who no longer qualified or failed to complete renewal paperwork, with federal spending declining slightly to approximately $555 billion (down $10 billion). Fiscal year 2025 projections indicate federal Medicaid spending stabilizing around $500+ billion with enrollment remaining elevated at 90+ million—substantially higher than pre-pandemic levels as many individuals who gained coverage during the pandemic retained eligibility and states continued Affordable Care Act expansions adopted by 40 states plus the District of Columbia. Throughout this turbulent period, Medicaid consistently covered over 40 million children—more than any other insurance program—and paid for approximately 60 percent of all nursing home residents’ long-term care costs, providing essential services that Medicare does not cover. Combined federal and state Medicaid spending exceeded $800 billion throughout most of this period, making it one of the largest health programs alongside Medicare and demonstrating the program’s critical role as America’s healthcare safety net, particularly during economic crises when employment-based coverage becomes unavailable and vulnerable populations require guaranteed access to medical care regardless of ability to pay.

Discretionary Spending Trends by Year

Data Source: Congressional Budget Office, Office of Management and Budget, Congressional Appropriations

Discretionary spending—the portion of the federal budget Congress controls through annual appropriations rather than automatic formulas—has experienced divergent trends across defense and non-defense categories from 2020 through 2025. Total discretionary spending began at approximately $1.4 trillion in fiscal year 2020, split nearly evenly between defense at $714 billion and non-defense at $700 billion. Discretionary outlays increased to approximately $1.5 trillion in 2021 (up $100 billion) and $1.7 trillion in 2022 (up another $200 billion) as pandemic emergency supplemental appropriations boosted non-defense spending for healthcare response, small business assistance, education support, transportation aid, and other relief measures. However, as emergency pandemic funding expired, the trajectory diverged sharply between defense and non-defense accounts.

Defense discretionary spending has grown consistently year-over-year, climbing from $714 billion in 2020 to $741 billion in 2021, $782 billion in 2022, $858 billion in 2023 (a $76 billion jump), $886 billion in 2024, and $895 billion in 2025 under the Fiscal Responsibility Act cap—representing a cumulative $181 billion or 25 percent increase over five years. This sustained growth reflects bipartisan consensus on the need for military modernization, readiness improvements, and investments in advanced capabilities to counter great power competitors particularly China and Russia. The defense budget prioritizes the $1.7 trillion F-35 program, new Columbia-class submarines, B-21 Raider bombers, hypersonic weapons, artificial intelligence, cyber capabilities, and space systems while providing substantial military pay raises ranging from 4.5 percent to 5.2 percent annually in 2024-2025 to improve recruitment and retention.

In sharp contrast, non-defense discretionary spending peaked at approximately $910 billion in fiscal year 2022 including pandemic emergency funds, then declined to $850 billion in 2023, $820 billion in 2024, and just $711 billion in 2025 under statutory caps—representing a cumulative increase of only $11 billion or 2 percent from 2020 levels. After accounting for inflation exceeding 20 percent over this period, non-defense discretionary spending has declined substantially in real purchasing power, forcing difficult tradeoffs across education programs, infrastructure maintenance, scientific research, law enforcement, environmental protection, diplomatic operations, and other domestic priorities. The Fiscal Responsibility Act of 2023 imposed strict caps limiting total discretionary spending to $1.606 trillion in 2025 (split $895 billion defense and $711 billion non-defense), with provisions for only 1 percent annual growth through 2025—well below inflation rates—before reverting to uncapped status in subsequent years.

Despite these constraints, Congress has enacted major legislation providing significant funding outside regular discretionary caps. The bipartisan Infrastructure Investment and Jobs Act passed in November 2021 authorized $550 billion in new spending over a decade for transportation infrastructure including roads, bridges, railways, transit systems, airports, ports, and broadband internet expansion—though much of this flows through mandatory spending mechanisms or advance appropriations spreading costs across multiple years. The Inflation Reduction Act of August 2022 included approximately $370 billion for climate change mitigation and clean energy incentives over ten years, primarily through mandatory spending tax credits rather than discretionary appropriations, alongside provisions allowing Medicare to negotiate prescription drug prices generating estimated savings of $288 billion over ten years. As discretionary spending faces increasing constraints from statutory caps and political gridlock over appropriations, it now represents only approximately 23 percent of total federal outlays compared to roughly 35 percent historically, as mandatory spending programs including Social Security, Medicare, Medicaid, and particularly interest payments on the national debt consume ever-larger budget shares operating on autopilot beyond annual congressional control—fundamentally reshaping fiscal debates as policymakers confront the reality that solving long-term deficit challenges requires addressing mandatory spending growth and revenue adequacy rather than focusing primarily on discretionary accounts that constitute a shrinking fraction of overall government operations.

Disclaimer: This research report is compiled from publicly available sources. While reasonable efforts have been made to ensure accuracy, no representation or warranty, express or implied, is given as to the completeness or reliability of the information. We accept no liability for any errors, omissions, losses, or damages of any kind arising from the use of this report.

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