[Congressional Record (Bound Edition), Volume 161 (2015), Part 3]
[House]
[Pages 3708-3712]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   PUBLICATION OF BUDGETARY MATERIAL

                                         House of Representatives,


                                      Committee on the Budget,

                                                   Washington, DC.
       Mr. Tom Price of Georgia. Mr. Speaker, section 3(h) of 
     House Resolution 5 requires the concurrent resolution on the 
     budget to include a section related to means-tested and non-
     means-tested direct spending programs. Section 3(h) of House 
     Resolution 5 also requires the Chair of the Committee on the 
     Budget to submit a statement in the Congressional Record 
     defining those terms prior to the consideration of such 
     concurrent resolution on the budget.
       Enclosed please find two tables prepared in order to 
     fulfill this requirement. 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 non-means-tested 
     list is not exhaustive, all programs not considered means-
     tested can be considered non-means-tested direct spending.
                                  ____

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                   Washington, DC, March 13, 2015.
     Re Spending for Means-Tested Programs.

     Hon. Tom Price, M.D.,
     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 other 
     forms of assistance to people with relatively low income or 
     few assets). Table 1 shows the Congressional Budget Office's 
     January 2015 baseline projections for the 2015-2025 period; 
     Table 2 shows historical spending data from 2005 through 
     2014, along with CBO's estimates for 2015.
       The tables also include a line showing total spending for 
     mandatory programs that are primarily not means-tested. Some 
     of those programs have means-tested components (for example, 
     student loans), but the tables do not show separate entries 
     for such programs. 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 
     components and the amount of the mandatory Pell Grant 
     component depends in part on the annual amount of 
     discretionary funding.
       In the projections that CBO published in The Budget and 
     Economic Outlook: 2015 to 2025 in January 2015, mandatory 
     outlays for means-tested programs are projected to grow over 
     the next decade at an average annual rate of 4.6 percent, 
     compared with an average rate of 5.5 percent for non-means-
     tested programs, which include, for example, Social Security, 
     most of Medicare, and civilian and military retirement 
     programs (see Table 1).\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 a little less than one-
     half percentage point per year, on average. Projected growth 
     from 2016 to 2025 is slightly higher for non-means-tested 
     programs (which will have grown at an average rate of

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     5.4 percent from 2006 to 2015, CBO estimates), but much lower 
     for means-tested programs (which will have grown at an 
     average rate of 6.8 percent from 2006 to 2015, by CBO's 
     estimate; 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 most 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), subsidies for 
     health insurance purchased through an exchange, 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:
        Medicaid spending shot up by 35 percent from 2008 to 2010, 
     during the most recent recession. After dropping off a bit in 
     the following few years, it has been boosted by the expansion 
     of Medicaid coverage under the Affordable Care Act. As that 
     expansion has been phased in, spending for the program 
     increased by 14 percent last year and is projected to rise by 
     11 percent in 2015. Under current law, the rate of growth in 
     Medicaid spending will decline through 2018, CBO projects, 
     after which it will level off at a rate of roughly 5.5 
     percent per year through the end of the projection period.
       Spending authority for the CHIP program expires at the end 
     of fiscal year 2015. Consistent with statutory guidelines, 
     CBO assumes in its baseline spending projections that annual 
     funding for the program after 2015 will continue at $5.7 
     billion.\2\ As a result, in CBO's baseline, spending for CHIP 
     is projected to drop from $11 billion in 2016 to about $6 
     billion in subsequent years; it had grown from $5 billion to 
     $10 billion from 2005 to 2015.
       Payments of subsidies for health insurance purchased 
     through an exchange began in January 2014 and are projected 
     to grow rapidly between 2015 and 2018, largely as a result of 
     significant growth in enrollment. CBO and the staff of the 
     Joint Committee on Taxation project annual growth will 
     average about 4 percent between 2019 and 2025.
       SNAP spending increased markedly during the most recent 
     recession--roughly doubling between 2008 and 2011--as more 
     people became eligible for those benefits. In addition, the 
     American Recovery and Reinvestment Act of 2009 (ARRA) raised 
     the maximum benefit under that program; subsequent 
     legislation eliminated that increase as of October 31, 2013. 
     The program's caseload peaked in 2014, and CBO expects that 
     it will fall in each year of the projection period as the 
     economy continues to improve. As a result, spending for SNAP 
     is projected to decline slightly over the next several years, 
     after growing by an average of 9 percent per year over the 
     2006-2015 period.
       Outlays for the earned income and child tax credits rose by 
     almost 40 percent from 2007 to 2008 and have grown slowly 
     since then. They 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.\3\ In 
     2025, those outlays are projected to be about what they were 
     in 2014.
       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 
     portion of that program give incomplete information. The bulk 
     of the funding for Pell grants is provided annually in 
     appropriation acts and thus is discretionary. In recent 
     years, spending for Pell grants also has included two 
     mandatory components, which 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, the 
     projection for the discretionary portion of the Pell Grant 
     program is based on the budget authority appropriated for 
     fiscal year 2015, 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 spending 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.
           Sincerely,
                                             Douglas W. Elmendorf,
                                                         Director.
       Enclosure. 

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                                Endnotes

       1. CBO published Updated Budget Projections: 2015 to 2025 
     in March 2015; some of the amounts shown in Table 1 are 
     different in the March baseline, but at the request of the 
     committee staff, these tables show the projections from the 
     January baseline. In total, for mandatory spending, the 
     differences between the two baselines are small, and the 
     average annual growth rates over the 2016-2025 period are 
     very similar--5.3 percent in the January projections versus 
     5.2 percent in the March baseline.
       2. 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 onetime funding for 
     the program.) Following the rules prescribed by the Deficit 
     Control Act, CBO extrapolates the $2.85 billion provided for 
     the second half of the year to arrive at projected annual 
     funding of $5.7 billion.
       3. Refundable tax credits reduce a filer's overall income 
     tax liability; if the credit exceeds the rest of the filer's 
     income tax liability, the government pays all or some portion 
     of that excess to the taxpayer. Those tax credits also affect 
     the budget, to a lesser extent, by reducing tax revenues; 
     those revenue effects are not shown in the tables.

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