[thethimble]

Is "mandatory" spending actually fundamentally mandatory? Characterizing it as such feels like a sleight of hand that prevents us from discussing whether that spend is truly necessary.

In an overspending crisis of such magnitude I wish there was more urgency in the culture to cut spending across every budget segment regardless of whether it's "mandatory" or not.

[bradfa]

As my sibling comment states, mandatory spending is spending which is required by existing laws which have already been passed. But a secondary point is that mandatory spending means no one knows how much it'll be ahead of time. You can only find out how much actual mandatory spending happened after the fact. Contrast this with discretionary spending, where the budget says how much can be spent on a given set of things (like airplanes, or road improvements, or new toilets for all the Navy submarines) so you know ahead of time the spending amount.

Debating changing mandatory spending laws in order to hopefully reduce mandatory spending is totally allowed, it's just very hard to know exactly how much you'd save with any change. The CBO will make estimates for you, but those are going to be based on assumptions which may or may not turn out to reflect reality in the future.

[jaredklewis]

“Mandatory spending” is a term of art that means something very specific in this very specific context (congressional budgeting). The common meaning of the words is not particularly relevant.

If you have ever seen the phrase “act of God” in a contract, this is similar. In contract law, “act of God” means something and it doesn’t require either party to subscribe to any religious beliefs.

[ethbr1]

"Mandatory" in the sense that there are laws on the books that say it must be spent.

Sure, Medicare or Social Security can be cut, but see how that flies in the polls.

[hshdhdhj4444]

But also they are self funded programs.

You have separate Medicare and social security taxes that fund those programs.

If you cut social security and Medicare, at the very least you will need to change the laws so that taxes intended specifically for social security and Medicare can be used for general expenses.

[bdangubic]

if they refunded every penny we put into (with interest) it’d go well. these should be called entitlements as much you going to grocery story to buy food for your family is an entitlement

[phil21]

It’s strange that even on HN with above average financial literacy people still have this completely wrong mental model of social security.

It’s simply a general tax dressed up in marketing fluff. It’s a pay as you go defined benefits program. Current workers are paying for current retirees.

There is very little difference between it and any other means tested welfare program - it’s just the means testing works in a different manner but can be changed at any time.

It’s no more “your money” than any federal income tax you’ve paid in over the years.

[Fade_Dance]

Additionally, even if the "self-funded" aspect was enshrined into the process on all levels, you're looking at a program that dwarfs any other program of this type, worldwide. It would necessarily be in US government bonds, and the real yields of bonds are very much a function of the overall deficit and wider tax current situation and outlook. The treasury actively twists issuance and effectively has yield curve targets. The Federal Reserve does active balance sheet management as well, and monetary and fiscal are increasingly working in sync with one another. A program of the size of social security with inflation adjusted US dollar denominated obligations in trillions can never be and will never be truly separate.

Even if they wanted to do something extremely simple like hold TIPS (inflation linked bonds) and hedge some of the inflation risk internally, buying TIPS from the US government would simply be a circular transaction that would be canceled out by the bond component of the TIPS. Pointless. If SS went out into the global financial market, they would quite literally absorb a big chunk of the global capacity for that risk, and more importantly, on a global level it all feeds back to the US/dollar, especially in times of stress (which having a Gorilla sucking up endless amounts of inflation risk would actually amplify). Again - it would cancel out on net. A program that big is almost too large for traditional financialization. It would need to be buying networks of ports and such like China does with their surpluses, but even here, the US already carries a large amount of geopolitical risk in their financial system (look at the Tariff scare where the bond market almost blew up because the large amount of financial assets held by foreigners were pulled from the country). It's actually fairly interesting to follow these lines and feedback loops and see how everything is connected.

[toomuchtodo]

You can’t refund it because it isn’t a bank account, it is pay as you go. It’s insurance, both cash benefit and medical.

Certainly, it might fly with the uneducated and unsophisticated, but not someone who knows better.

[mgh95]

> if they refunded every penny we put into (with interest) it’d go well. these should be called entitlements as much you going to grocery story to buy food for your family is an entitlement

Unfortunately, it's unlikely that the government will collect tax revenues necessary to even keep up with some of these mandatory programs, such as social security. The reality is there is a very serious chance many people do not receive the fully stated benefit value.

[palmotea]

> Is "mandatory" spending actually fundamentally mandatory? Characterizing it as such feels like a sleight of hand that prevents us from discussing whether that spend is truly necessary.

> In an overspending crisis of such magnitude I wish there was more urgency in the culture to cut spending across every budget segment regardless of whether it's "mandatory" or not.

I'm betting it includes stuff like Social Security payments, Medicare, etc. So it's fundamentally mandatory as real people's lives were planned around its availability.