Our most significant methodological challenge this year was to estimate the children’s share of spending under the American Recovery and Reinvestment Act by year. Such information is not available in the Appendix to the Budget of the U.S. Government, which does not separate out outlays attributable to the Recovery Act from regular program outlays. Nor was there sufficient programmatic detail in the CBO estimate produced in February 2009 when the bill was enacted. We therefore requested special tabulations from the CBO, detailing its outlay projections for the regular and ARRA pieces of programs for 2010-19. While these tabula- tions did not directly tell us estimated spending in 2009, we usually could estimate 2009 spending from the 2010-19 projections or from other sources. In addition, we estimated how much of each program increase should be allocated to children, generally relying on the children’s share calcula- tions used in our overall estimates.
Methods for Projections
Our projections for children’s spending in the future are made under a current policy or baseline scenario that assumes continuation of current law in some areas and continuation of current policy in others. The latter mainly involves programs that are scheduled to expire (discretion- ary or mandatory) but, because of continual reenactment, are not expected to expire. Our estimates do not yet include the impact of the health reform bill enacted on March 23, 2010; we plan to build the impact of this recent and sweep-
ing legislation into our report next year.6 Except for the extension of certain expiring tax provisions, we do not as- sume enactment of any legislative proposals that were not enacted before January 2010; this means that our baseline projections assume expiration of ARRA provisions as under current law and do not incorporate the changes adopted in 2010 or proposed in President Obama’s FY 2011 budget.
In general, our projections follow the economic and pro- grammatic assumptions in the CBO’s Budget and Economic Outlook, FY 2010–20 and updated baseline projections from An Analysis of the President’s Budgetary Proposals for Fiscal
ear 2011.In the mandatory spending area,the CBO baseline projections assume a continuation of current law and a reau- thorization of expiring programs. In the case of some larger programs like Medicaid, Social Security, and SSI, we are able to use detailed CBO baseline projections, which project pro- gram outlays separately for children and other categories of beneficiaries. For most other mandatory programs, we use CBO baseline projections for the program as a whole and assume that the children’s share of spending within each program will remain constant from 2009 to 2020.
It is not possible to make detailed programmatic pro- jections for discretionary programs, whose levels are set annually by congressional appropriations committees. In- stead, we assume an across-the-board increase for inflation, consistent with the global growth in domestic discretion- ary spending under the CBO baseline, adjusted to exclude spending from ARRA. For the ARRA portion of spending, we relied on CBO tabulations of ARRA spending by pro- gram, showing how the 2009 appropriation spends out over time.
Finally, in the area of taxes, we use the Urban-Brookings Tax Policy Center Microsimulation Model to estimate the larger tax provisions, and we rely on the administration’s estimates in the Analytical Perspectives volume of the budget for the smaller tax provisions.We adjust the administration’s tax expenditures for the difference between OMB and CBO projections of GDP, so all our projections are consistent with CBO projections for economic and budgetary growth. We differ from the strict CBO “current law” baseline, however, in that we assume an extension of the individual income tax provisions included in the 2001 and 2003 tax bills (including the $1,000 level for the child tax credit), maintain the estate tax at its 2009 parameters, extend the patch to the alternative minimum tax at its 2009 parameters, and index the AMT exemption, rate bracket threshold, and phase-out exemp- tions to inflation.