Fiscal Policy

Domestic Discretionary Spending

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Domestic discretionary spending, which excludes the defense budget, entitlements and debt interest payments, amounts to 15% of the total federal budget spending. Although discretionary spending was cut in the Budget Control Act of 2011, more cuts will likely follow, as the failure of the Joint Select Committee on Deficit Reduction triggers $1.2 trillion in cuts as sequestration takes effect in March. Brookings experts examine which departments within the federal government are likely to face reductions, and what impact these reductions may have on the country as a whole.

Overall view from the south Rim of the Grand Canyon near Tusayan, Arizona (REUTERS/Charles Platiau).

Opinion

Let’s All Jump Off the Fiscal Cliff

December 7, 2012, Bradley Belt, Jared Bernstein, William G. Gale and Phillip Swagel

As the fiscal cliff approaches and both parties remain unable to reach agreement on how to raise revenue, Bradley Belt, Jared Bernstein, William Gale and Phillip Swagel propose a temporary plan that raises tax rates on all incomes and reduces discretionary spending, but avoids recession by offsetting any negative economic impact with temporary measures to boost near-term demand.

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