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Note that the definition of “means-tested” is somewhat imprecise, with different programs using different income limits and with some increase in income limits relative to the official poverty level over the past decades. Also, recall that the vast majority of state and local spending is on pub- lic schools, which provide universal public education. So while the majority (two-thirds) of federal expenditures on children are provided through means-tested programs, the majority of state and local expenditures are on universal programs.

Another way to examine spending trends is to distin- guish between mandatory and discretionary spending. Mandatory spending refers to spending on entitlement

programs and other programs where the funding level is set directly in the authorizing statute and is not subject to action by appropriations committees. Mandatory spend- ing programs often have automatic growth built into them, such as indexing of benefits to wages, automatic inclusion of newly available health goods and services, or expansion of caseloads in time of recession. In contrast, discretionary programs are subject to annual appropriations and typically do not have any automatic spending increases.

Mandatory programs have grown considerably since 1960 (figure 13). Much of this growth is in Medicaid, SCHI , and nutrition programs, as well as the refundable portions of the EITC and child tax credit.This growth was accelerated in 2009

Share of GDP

1.0%

Cash payments

0.5%

Nutrition, housing, and other in-kind benefits and services

Health

0.0%

Education

1960

1965

1970

1975

1980

1985

1990

1995

Source: The Urban Institute and The Brookings Institution, 2010. Authors' estimates based on the Budget of the U.S. Government Fiscal Year 2011 and past years. Notes: Other includes nutrition, housing, social services, and training programs. The dependent exemption and tax expenditures are not classified as cash or in-kind benefits. Detailed information for how each program is classified (cash versus in-kind versus taxes) is provided in the data appendix.

Tax expenditures

Refundable tax credits

2000

2005

2009

FIGURE 11 In-Kind, Cash Payments, Refundable Taxes, and Tax Expenditures, 1960–2009

In-kind

Cash

1.5%

Dependent exemption

2.0%

3.0%

2.5%

FIGURE 12 Means-Tested Spending, 1960–2009

Share of Total Expenditures on Children

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Means-tested programs and tax provisions Non-means-tested programs and tax provisions

Dependent exemption

Programs not subject to means test

Means tested programs

EITCa

Child tax credit and other tax provisions

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2009

Source: The Urban Institute and The Brookings Institution, 2010. Authors' estimates based on the Budget of the U.S. Government Fiscal Year 2011. a. EITC includes the full EITC (refundable and nonrefundable portion, as well as exclusion of public assistance benefits from taxable income). Detailed information for how each program is classified (means-tested versus not subject to means test) is provided in the data appendix.

AN ANALYSIS OF FEDERAL EXPENDITURES ON CHILDREN

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