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Sunday, November 04, 2012

Low-Income Programs are Not the Cause of our Long-Run Fiscal Problem

Despite what Republicans would like you to believe in their quest to support tax cuts for the wealthy with cuts to social programs, programs that help low-income households are not the source of our long-run fiscal problem:

Are Low-Income Programs Enlarging the Nation’s Long-Term Fiscal Problem?, by Robert Greenstein and Richard Kogan: Several conservative analysts and some journalists lately have cited figures showing substantial growth in recent years in the cost of federal programs for low-income Americans. ... These figures can create the mistaken impression that growth in low-income programs is a major contributor to the nation’s long-term fiscal problems.
In reality, virtually all of the recent growth in spending for low-income programs is due to two factors: the economic downturn and rising costs throughout the U.S. health care system, which affect costs for private-sector care as much as for Medicaid and other government health care programs.
The first cause — increased spending on safety net programs because of the recession — is temporary. Congressional Budget Office (CBO) projections show that federal spending on low-income programs other than health care has already started to decline and will fall substantially as a percent of gross domestic product (GDP) as the economy recovers. By the end of the decade, it will fall below its average level as a percent of GDP over the prior 40 years, from 1972 to 2011. (See Figure 1.) Since these programs are not rising as a percent of GDP, they do not contribute to our long-term fiscal problems.

...The above figures include expenditures for both mandatory (entitlement) and discretionary (annually appropriated) programs. ...

    Posted by on Sunday, November 4, 2012 at 09:27 AM in Budget Deficit | Permalink  Comments (17)


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