Discretionary spending refers to government spending that is optional and implemented through an appropriations bill. This is in contrast to mandatory spending, which is funding for social programs that is mandatory and determined by the number of eligible recipients. Discretionary spending is a part of fiscal policy and is set by appropriation levels each year, at the discretion of Congress. Examples of areas funded by discretionary spending in the United States include national defense, foreign aid, education, and transportation. Discretionary spending can also be decomposed by function, with most of the spending going to salaries and benefits for government employees, grants to state and local governments, and purchases of goods and services from the private sector.
In a household or business context, discretionary spending refers to nonessential expenses that are not essential for the operation of a home or a business. These are purchases for things that are wants, not needs, and include things like dining out, shopping, entertainment, and subscription services. Discretionary expenses are often defined as nonessential spending, and businesses and individuals pay for them with discretionary income, which is the amount of money left over after paying for housing, food, taxes, and other necessities.
In summary, discretionary spending refers to optional government spending implemented through an appropriations bill, while in a household or business context, it refers to nonessential expenses that are not essential for the operation of a home or a business.
