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Thursday, May 10, 2012

Don’t Blame Budget Problems on the Safety Net

It's hard to say this enough. The long-run budget problem is a health care cost problem, "which affect costs for private-sector care as much as for Medicaid and other government health care programs":

Federal spending on low-income programs has gone up considerably in recent years, a development discussed at a recent House Budget Committee hearing.  A new CBPP analysis examines why and explains that low-income programs outside of health care are not a factor in our serious long-term budget problems. Here’s the opening:
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 means-tested 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.
Moreover, Congressional Budget Office (CBO) projections show that federal spending on means-tested programs other than health-care programs will fall substantially as a percent of gross domestic product (GDP) as the economy recovers — and fall below its average level as a percent of GDP over the prior 40 years, from 1972 to 2011. Since these programs are not rising as a percent of GDP, they do not contribute to our long-term fiscal problem. ...
Federal spending for low-income discretionary programs is virtually certain to fall as a percent of GDP in the coming decade as well.  Under the Budget Control Act’s funding caps, non-defense discretionary spending will fall over the decade to its lowest level as a percent of GDP since 1962 (and probably earlier).
As a result, total spending for low-income programs outside health care — both mandatory and discretionary programs — is expected to fall over the coming decade to a level below its prior 40-year average.

This won't stop conservatives from using the deficit as a battering ram to assault social insurance -- facts haven't stopped them yet and they won't matter now -- particularly since the media is so willing to play along. [More here.]

    Posted by on Thursday, May 10, 2012 at 10:32 AM in Budget Deficit, Economics, Politics, Social Insurance | Permalink  Comments (31)


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