Mandatory spending is composed of budget outlays controlled by laws other than appropriation acts, including federal spending on entitlement programs. Entitlement programs such as Social Security and Medicare make up the bulk of mandatory spending. Other mandatory spending programs include Supplemental Security Income (SSI), unemployment insurance, certain veterans' benefits, federal employee retirement and disability, Supplemental Nutrition Assistance Program (SNAP), and various tax credits. (See list in Table 1 .) Mandatory spending also includes many smaller budgetary items, such as salaries of Members of Congress and the President. Congress sets eligibility requirements and benefits for entitlement programs. If the eligibility requirements are met for a specific mandatory program, outlays are made automatically. In FY2014, mandatory spending—totaling 12.2% of gross domestic product (GDP)—exceeded discretionary spending's 6.8% share of GDP. In addition, federal net interest payments accounted for 1.3% of GDP. Together, total federal spending represented 20.3% of GDP. Mandatory spending composed nearly 60% of all federal spending in FY2014. Social Security, Medicare, and the federal share of Medicaid alone composed nearly 50% of all federal spending. Mandatory spending plays a major role in larger fiscal trends. During economic downturns, government revenues fall and expenditures rise as more people become eligible for mandatory programs such as unemployment insurance and income security programs, causing deficits to increase or surpluses to shrink. These effects, known as "automatic stabilizers," provide a countercyclical fiscal stimulus in the short run without the need for new legislative action. As a result of the recent economic downturn and federal actions taken in response to it, mandatory spending was higher than its historical levels (as a percentage of GDP) between FY2009 and FY2011. Since then, mandatory spending has remained relatively constant around 12% of GDP. The Congressional Budget Office (CBO) projects mandatory spending will increase slightly from its current levels and then will remain relatively constant, as a share of GDP, through FY2020 (around 13% of GDP). After FY2021, mandatory spending is projected to account for nearly 14% of GDP between 2022 and 2024 before topping 14% in 2025. Mandatory spending, according to CBO current-law projections, will be about 14.2% of GDP in FY2025. However, CBO baseline projections, which extend 10 years forward, do not reflect the full force of the pressures the aging population and increasing health care costs are expected to exert on the federal budget over the longer term. This report looks at mandatory spending and its growth over time relative to total federal spending and the size of the U.S. economy. It also analyzes future mandatory spending levels and how they are projected to impact the federal budget. Mandatory spending is controlled by laws other than appropriations acts. Such laws generally take the form of authorizing legislation. Authorizing legislation establishes or continues the operation of a federal program or agency, either indefinitely or for a specified period. Mandatory spending typically is provided in permanent or multi-year appropriations contained in the authorizing law, and therefore, the funding becomes available automatically each year, without further legislative action by Congress. In most cases, the authorizing law requires payment, based on a benefit formula, to an individual or entity (e.g., a state) if eligibility criteria are met. In contrast, discretionary spending is provided and controlled through the annual appropriations process. Net interest payments, the final category of federal spending, are automatically authorized and are the government's interest payments on debt held by the public offset by interest income that the government receives. Entitlement spending, such as for Medicaid and certain veterans' programs, is funded in annual appropriations acts. Such entitlement spending is referred to as appropriated entitlements. The level of spending for appropriated entitlements, like other entitlements, is based on the benefit and eligibility criteria established in law. The amount of budget authority provided in appropriations acts for these specific programs is based on meeting projected spending levels. Since the authorizing legislation effectively determines the amount of budget authority required, the Budget Enforcement Act (BEA) of 1990 ( P.L. 101-508 ) classified appropriated entitlement spending as mandatory. Not all mandatory spending funds entitlement programs. For example, the Forest Service makes some payments to states that are mandatory, but are not entitlements. Some agencies gained authority to sign contracts or create obligations in other ways, which GAO has termed "backdoor" spending authority. Those obligations become part of mandatory spending unless limited by the BEA or other budget legislation. As noted above, salaries of Members of Congress and the President are also deemed mandatory but are not entitlements. Table 1 , below, shows CBO baseline projections for mandatory spending from FY2014 (actual) to FY2025. Mandatory spending is partially offset by certain fees and payments, known as offsetting receipts, which are generally counted as negative budget authority. Market-like charges, such as Medicare Part A deductibles and Medicare Part B premiums, are considered offsetting receipts. Payments by Medicare beneficiaries and the federal government's tax and pension contributions in its role as an employer comprise the largest component of offsetting receipts. Most mandatory spending is accounted for in the budget based on the dollar amount spent in each fiscal year. However, some mandatory programs are recorded differently. For example, federal student loan programs, like other federal loan and loan guarantee programs, are scored under terms of the Federal Credit Reform Act of 1990 (FCRA; P.L. 101-508 ). Rather than being accounted for on a cash basis, FCRA programs are accounted for on a net subsidy basis. FCRA required that the reported budgetary cost of a credit or loan program equal the estimated subsidy costs at the time the credit is provided. In other words, the subsidy cost is the estimated long-term cost to the government of a direct loan or a loan guarantee, calculated on a net present value basis, excluding administrative costs. This places the cost of federal credit programs on a budgetary basis equivalent to other federal outlays. Mandatory spending has taken up a larger and larger share of the federal budget over time. Mandatory spending grew over time with enactment of the Social Security Act of 1935 (P.L. 74-271) and the Medicare Act of 1965 (P.L. 89-97). In FY1962, three years before the creation of Medicare and Medicaid, less than 30% of all federal spending was mandatory. At that time, Social Security accounted for about 13% of total federal spending or about half of all mandatory spending. In the mid-1970s, growth of mandatory spending as a share of total federal spending slowed. During part of the 1980s, mandatory spending declined as a share of total federal spending. Since then, mandatory spending has increased its share of federal spending at a gradual pace. Figure 1 shows historical trends in mandatory spending between FY1962 and FY2014 and CBO's baseline projections for these components to FY2025, expressed as a percentage of total federal spending. Mandatory spending was about a quarter of total federal spending in FY1962 (nearly a third if offsetting receipts are excluded). In FY1968, mandatory spending began growing relative to total federal spending and by FY1975 accounted for about 45% of total spending (about half before offsetting receipts). From the mid-1980s through 1990, mandatory spending's share in total spending remained relatively steady, before starting to grow again after FY1990. In FY2014, mandatory spending accounted for nearly 60% of total spending and 12.2% of GDP (or just under 14% of GDP before offsetting receipts). Mandatory spending spiked between FY2008 and FY2009 largely due to increases in outlays related to federal financial interventions and the economic downturn. After falling in FY2010 (12.9% of GDP) relative to FY2009 levels (14.5% of GDP), mandatory spending rose again in FY2011 (13.2% of GDP). It began to fall again in FY2012 (12.6% of GDP) and remained constant between FY2013 and FY2014 (12.2% of GDP). The Congressional Budget Office (CBO) projects mandatory spending will increase slightly before remaining relatively constant, as a share of GDP through FY2020. After FY2021, mandatory spending is projected to account for nearly 14% of GDP between 2022 and 2024 before topping 14% in 2025. Mandatory spending, according to CBO current-law projections, will be about 14.2% of GDP in FY2025. Table 2 , below, presents components of mandatory spending in FY2014 and FY2015 (estimated) and CBO baseline projections in FY2025 (projected) in dollar terms, as a percentage of total mandatory spending, and as a percentage of GDP. In FY2009, total mandatory spending increased by 31% in dollar terms over FY2008, primarily due to the economic downturn and federal financial interventions, including assistance provided in the Troubled Asset Relief Program (TARP) and to the GSEs (Fannie Mae and Freddie Mac). The majority of the impact of the enacted federal financial intervention programs on mandatory spending occurred in FY2009 for TARP and between FY2009 and FY2012 for GSE assistance. Outlays for income security programs, like unemployment compensation and SNAP, also increased in FY2009 and continued at elevated levels through FY2013. By FY2014, outlays for these programs returned to their FY2008 levels (as a percentage of GDP) as the economic recovery continued, lessening the reliance on these "automatic stabilizers." However, mandatory spending as a whole is projected to remain on an upward trajectory primarily due to higher levels of federal health spending. The composition of mandatory spending has changed dramatically over the past 40 years and, according to CBO baseline projections, will continue to change over the decade.