Low-Income Programs Not Driving Nation’s Long-Term Fiscal Problem

Programs assisting low- and moderate-income people are not driving the nation’s long-term fiscal problems, contrary to assertions from some policymakers.  Despite this, the first two Trump budgets as well as recent congressional Republican budget plans — including the one for fiscal year 2019 recently approved by the House Budget Committee — target these programs for deep cuts.

Low-income program spending grew significantly between 2007 and 2010 in response to the severe recession. But as a percent of the economy, federal spending on low-income programs other than health care has fallen considerably since then.  This year, spending on these programs as a percent of gross domestic product (GDP) will be well below its level in the first full year of the recession and roughly equal to its average level over the past 40 years.  New Congressional Budget Office (CBO) estimates indicate, moreover, that spending on low-income programs other than health care will continue declining below its 40-year average as a percent of GDP over the next decade.

Spending on low-income health care programs — including Medicaid, the Children’s Health Insurance Program (CHIP), and premium tax credits that subsidize marketplace coverage under the Affordable Care Act (ACA) — has risen for many decades as a percent of the economy, as have costs for other health care programs and private-sector health care costs.  While health care cost growth has slowed from prior decades, the combination of increases in health care prices and the aging of the population means that spending in these areas will continue to rise as a percent of the economy.

– Center on Budget and Policy Priorities

Read the full report here.