Report

US / Means-tested programs and tax credits for low-income households rose more than tenfold in the four decades since 1972

The federal government devotes roughly one-sixth of its spending to 10 major means-tested programs and tax credits, which provide cash payments or assistance in obtaining health care, food, housing, or education to people with relatively low income or few assets. Those programs and credits consist of the following:

  • Medicaid,
  • The low-income subsidy (LIS) for Part D of Medicare (the part of Medicare that provides prescription drug benefits),
  • The refundable portion of the earned income tax credit (EITC),
  • The refundable portion of the child tax credit (CTC),
  • Supplemental Security Income (SSI),
  • Temporary Assistance for Needy Families (TANF),
  • The Supplemental Nutrition Assistance Program (SNAP, formerly called the Food Stamp program),
  • Child nutrition programs,
  • Housing assistance programs, and
  • The Federal Pell Grant Program.

In 2012, federal spending on those programs and tax credits totaled $588 billion. (Certain larger federal benefit programs, such as Social Security and Medicare, are not considered means-tested programs because they are not limited to people with specific amounts of income or assets.)

Total federal spending on those 10 programs (adjusted to exclude the effects of inflation) rose more than tenfold—or by an average of about 6 percent a year—in the four decades since 1972 (when only half of the programs existed). As a share of the economy, federal spending on those programs grew from 1 percent to almost 4 percent of gross domestic product (GDP) over that period. (For ease of presentation, this report frequently uses the term “programs” to encompass both the spending programs and the tax credits.)

Capture d’écran 2013-02-11 à 14.43.38

Medicaid accounted for more than 40 percent of the federal spending on those programs in 2012, followed in size by SNAP. A decade from now, Medicaid will account for an even larger share of spending on those programs, CBO projects. A new means-tested program—federal subsidies to help low- and moderate-income people buy health insurance through insurance exchanges, which will begin in 2014—will be the second-largest means-tested program in 2023, CBO estimates.

Chosen excerpts by Job Market Monitor from

Capture d’écran 2013-02-11 à 14.39.19

via CBO | Growth in Means-Tested Programs and Tax Credits for Low-Income Households.

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