[Congressional Record Volume 160, Number 52 (Tuesday, April 1, 2014)]
[House]
[Pages H2796-H2800]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                   PUBLICATION OF BUDGETARY MATERIAL

                                         House of Representatives,


                                      Committee on the Budget,

                                    Washington, DC, April 1, 2014.
       Mr. RYAN of Wisconsin. Mr. Speaker, at the beginning of 
     this Congress, two additional requirements for the 
     consideration of a concurrent resolution on the budget 
     resolution were set forth in Section 3(e) of House Resolution 
     5 (113th Congress).
       The first requires the concurrent resolution on the budget 
     include a section related to means-tested and nonmeans-tested 
     direct spending programs. The second requires a statement 
     from the Chair of the Committee on the Budget defining those 
     terms to be included in the Congressional Record prior to the 
     consideration of such concurrent resolution on the budget. 
     Amendments to, and conference reports on, the concurrent 
     resolution must also fulfill these provisions.
       Enclosed please find two tables prepared in order to 
     fulfill the terms of section 3(e) referred to above. I have 
     also included a communication and associated tables from the 
     Director of the Congressional Budget Office, with whom I have 
     consulted in the preparation of this material. While the 
     nonmeans-tested list is not exhaustive, all programs not 
     considered means-tested can be considered nonmeans-tested 
     direct spending. The description of programs considered to be 
     means-tested direct spending and nonmeans-tested direct 
     spending is the same as the one filed on March 7, 2013 in 
     compliance with the section 3(e) requirement.
           Sincerely,
                                       Paul D. Ryan  of Wisconsin,
     Chairman, House Budget Committee.
                                  ____

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                   Washington, DC, March 25, 2014.
     Hon. Paul Ryan,
     Chairman, Committee on the Budget, House of Representatives,
     Washington DC.
       Dear Mr. Chairman: As you requested, enclosed are two 
     tables that show federal spending for each of the 
     government's major mandatory spending programs and tax 
     credits that are primarily means-tested (that is, spending 
     programs and tax credits that provide cash payments or 
     assistance in obtaining health care, food, or education to 
     people with relatively low income or few assets). Table 1 
     shows CBO's baseline projections for the 2014-2024 period; 
     Table 2 shows historical spending data from 2004 through 
     2013, along with CBO's estimates for 2014.
       The tables include total spending for mandatory programs 
     that are primarily not means-tested, but they do not include 
     separate entries for individual programs in that group that 
     have means-tested components (for example, student loans and 
     some portions of Medicare, other than low-income subsidies 
     for Part D). They also do not include means-tested programs 
     that are discretionary (for example, the Section 8 housing 
     assistance programs and the Low Income Home Energy Assistance 
     Program). However, the tables show discretionary spending for 
     the Pell Grant program as a memorandum item because that 
     program has both discretionary and mandatory spending 
     components and the amount of the mandatory Pell grant 
     component is partially dependent on the annual amount of 
     discretionary funding.
       In CBO's latest baseline projections, published in The 
     Budget and Economic Outlook: 2014 to 2024 (February 2014), 
     mandatory outlays for both means-tested and non-meanstested 
     programs are projected to grow over the next decade at an 
     average annual rate of 5.4 percent (see Table 1).
       Overall, the growth rates projected for total mandatory 
     spending over the coming decade are slower than those 
     experienced in the past 10 years--by about one-half 
     percentage point per year, on average. Over the 2005-2014 
     period, CBO estimates that total mandatory outlays will have 
     increased at an average annual rate of 6.0 percent--means-
     tested programs by an average of 6.8 percent per year and 
     non-means-tested programs by 5.7 percent per year (see Table 
     2).
       A number of programs shown in Tables 1 and 2 have been or 
     are scheduled to be significantly affected by changes in law, 
     the recent recession, and the continuing recovery. As a 
     result, important aspects of the programs in the future may 
     differ significantly from historical experience, and those 
     differences may be the source of some of the variation 
     between the growth rates in the past 10 years and those in 
     the coming decade. For example, spending for Medicaid, the 
     Children's Health Insurance Program (CHIP), health insurance 
     subsidies, the Supplemental Nutrition Assistance Program 
     (SNAP), and the refundable portions of the earned income and 
     child tax credits has been or will be significantly affected 
     by program changes that unfold over time:
       The difference in growth rates for Medicaid in the two 
     periods stems in part from policy changes that, on net, 
     reduced those rates for the past decade (when they averaged 
     5.4 percent) but will increase them in the coming decade 
     (when they are projected to average 6.8 percent). For 
     example, in 2006, Medicaid spending contracted when spending 
     for prescription drugs for certain people was shifted to the 
     new Medicare Part D program. By contrast, projected rates of 
     growth in Medicaid spending over the coming decade are

[[Page H2797]]

     elevated by the expansion of Medicaid coverage under the 
     Affordable Care Act. CBO expects growth in such spending to 
     average about 10 percent per year over the 2014-2017 period, 
     as the expansion is phased in, and then to level off at a 
     steady-state rate of roughly 5.5 percent per year in the 
     final years of the projection period.
       The difference in growth rates between the two periods for 
     CHIP (11.8 percent in the 2005-2014 period vs. -8.6 percent 
     in the 2015-2024 period) reflects the sunset of CHIP's 
     existing authority at the end of fiscal year 2015. Consistent 
     with statutory guidelines, CB0 assumes in its baseline 
     spending projections that funding for the program after 2015 
     will continue at $5.7 billion, which is a significant 
     reduction from the amount available at the start of the 2015-
     2024 period.
       Payments of health insurance subsidies under the Affordable 
     Care Act began in January 2014, and the high rates of growth 
     projected for the next several years reflect a startup period 
     for the new program. In the current projection, the number of 
     people gaining coverage through the exchanges rises from 6 
     million in 2014 to 22 million in 2016. CBO projects that, 
     after the initial startup, annual growth will average about 6 
     percent over the 2018-2024 period.
       SNAP spending increased markedly during the recent 
     recession--particularly in 2009 and 2010--as more people 
     became eligible for those benefits. CB0 expects that SNAP 
     caseloads will fall in each year of the projection period as 
     the economy continues to improve. In addition, provisions in 
     the American Recovery and Reinvestment Act of 2009 (ARRA) 
     raised the maximum benefit under that program; those 
     provisions expired in October 2013.
       The outlay portions of the earned income and child tax 
     credits are expected to dip after 2018 because provisions 
     expanding the refundability of those credits (which were 
     originally enacted in ARRA and were subsequently extended) 
     are scheduled to expire on December 31, 2017.
       Finally, because of the unique budgetary treatment of the 
     Pell Grant program--which has both mandatory and 
     discretionary components--the growth rates for the mandatory 
     portions of that program give incomplete information. The 
     bulk of the funding for Pell grants is discretionary and is 
     provided annually in appropriation acts. In recent years, 
     spending for Pell grants also has included two mandatory 
     components that have allowed the discretionary budget 
     authority provided by the regular appropriation acts to 
     remain well below the full cost of the program.
       In keeping with procedures that govern CBO's baseline 
     projections, the projection for the discretionary portion of 
     the Pell Grant program is based on the budget authority 
     appropriated for fiscal year 2014, adjusted for inflation. 
     (Discretionary spending for the program is shown as a 
     memorandum item in both tables.) Thus, the baseline 
     projection for both discretionary and mandatory speeding for 
     Pell grants does not represent an estimate of the expected 
     future costs of the program; such a projection also would 
     take into account such factors as changes in eligibility and 
     enrollment.
       I hope that you find this information helpful. If you have 
     any further questions, please contact me or my staff. The 
     primary staff contact is Barry Blom, who can be reached at 
     226-2880.
           Sincerely,
                                             Douglas W. Elmendorf,
                                                         Director.
       Enclosure


                                endnote

       1. Under current law, funding for the program in 2015 
     consists of two semiannual allotments of $2.85 billion--
     amounts that are much smaller than the allotments made in the 
     four preceding years. (The first semiannual allotment in 2015 
     will be supplemented by $15.4 billion in one-time funding for 
     the program.) Following the rules prescribed by the Deficit 
     Control Act, CB0 extrapolates the $2.85 billion provided for 
     the second half of the year to arrive at projected annual 
     funding of $5.7 billion.

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