Low-Income Programs Not Driving Nation’s Long-Term Fiscal Problem
Programs Outside Health Projected To Decline Relative to Economy
UPDATED
March 12, 2015
BY
Robert Greenstein, Isaac Shapiro, and Richard Kogan
"Low-income programs are not driving the nation's long-term fiscal problems, contrary to the impression that a narrow look at federal spending during the Great Recession and the years that immediately followed might leave. Lawmakers should bear this in mind as they consider proposals that may emerge in coming weeks for deep cuts in this part of the budget.
"Low-income program spending grew significantly between 2007 and 2010 in response to the severe economic downturn, helping to mitigate its worst effects. Since peaking in 2010 and 2011, federal spending on low-income programs other than health care has fallen considerably and will continue to fall as a percent of gross domestic product (GDP) as the economy more fully recovers. By 2018, it will -- based on Congressional Budget Office estimates -- drop below its average over the past 40 years, (from 1975 to 2014) and continue declining as a share of GDP after that. [1] (See Figure 1.)"
"Specifically, federal spending for low-income programs outside health care (including refundable tax credits such as the Earned Income Tax Credit) rose from 1.9 percent of GDP in 2007 to a peak of 2.9 percent of GDP in fiscal years 2010 and 2011. This rise reflected the increase in need during the downturn as well as policies adopted in response. But such spending has dropped to an estimated 2.3 percent of GDP in 2015, and it is projected to return to the prior 40-year average of 2.1 percent by 2017 and then fall further, to 1.7 percent, by 2025."
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So much for the nanny state.
Programs Outside Health Projected To Decline Relative to Economy
UPDATED
March 12, 2015
BY
Robert Greenstein, Isaac Shapiro, and Richard Kogan
"Low-income programs are not driving the nation's long-term fiscal problems, contrary to the impression that a narrow look at federal spending during the Great Recession and the years that immediately followed might leave. Lawmakers should bear this in mind as they consider proposals that may emerge in coming weeks for deep cuts in this part of the budget.
"Low-income program spending grew significantly between 2007 and 2010 in response to the severe economic downturn, helping to mitigate its worst effects. Since peaking in 2010 and 2011, federal spending on low-income programs other than health care has fallen considerably and will continue to fall as a percent of gross domestic product (GDP) as the economy more fully recovers. By 2018, it will -- based on Congressional Budget Office estimates -- drop below its average over the past 40 years, (from 1975 to 2014) and continue declining as a share of GDP after that. [1] (See Figure 1.)"
"Specifically, federal spending for low-income programs outside health care (including refundable tax credits such as the Earned Income Tax Credit) rose from 1.9 percent of GDP in 2007 to a peak of 2.9 percent of GDP in fiscal years 2010 and 2011. This rise reflected the increase in need during the downturn as well as policies adopted in response. But such spending has dropped to an estimated 2.3 percent of GDP in 2015, and it is projected to return to the prior 40-year average of 2.1 percent by 2017 and then fall further, to 1.7 percent, by 2025."
More>>
So much for the nanny state.