[Congressional Record (Bound Edition), Volume 162 (2016), Part 3]
[House]
[Pages 3257-3260]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   PUBLICATION OF BUDGETARY MATERIALS

                                         House of Representatives,


                                      Committee on the Budget,

                                   Washington, DC, March 15, 2016.

     Re Communication from the Chairman of the Committee on the 
         Budget.
       Dear 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. It 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.
           Sincerely,

                                              Tom Price, M.D.,

                                                         Chairman,
     Committee on the Budget.
                                  ____

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                Washington, DC, February 16, 2016.

     Re Spending for Means-Tested Programs in CBO's Baseline, 
         2016-2026.
     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 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 CBO's January 2016 baseline projections for 
     the 2016-2026 period.

[[Page 3258]]

       Table 2 shows historical spending data from 2006 through 
     2015 along with CBO's estimates for 2016.
       Each table also includes a line showing total spending for 
     mandatory programs that are not primarily means-tested. (Some 
     of those programs--the student loan programs, for example--
     have means-tested components, however.) The tables exclude 
     means-tested programs that are discretionary (such as the 
     Section 8 housing assistance programs and the Low Income Home 
     Energy Assistance Program). However, each table shows 
     discretionary spending for the Federal Pell Grant Program as 
     a memorandum item because that program has discretionary and 
     mandatory components and because the amount of the mandatory 
     component depends in part on the amount of discretionary 
     funding.
       In The Budget and Economic Outlook: 2016 to 2026, which CBO 
     published in January 2016, mandatory outlays for means-tested 
     programs are projected to grow over the next decade at an 
     average annual rate of 4.3 percent, compared with an average 
     rate of 5.5 percent for non-means-tested programs, such as 
     Social Security, most of Medicare, and civilian and military 
     retirement programs (see Table 1). Mandatory outlays in 2016 
     will be boosted by an estimated shift of $39 billion in 
     payments from fiscal year 2017 to 2016 (because October 1, 
     2016, falls on a weekend). If not for that shift, mandatory 
     outlays for means-tested programs would grow over the next 
     decade at an average annual rate of 4.4 percent, compared 
     with 5.7 percent for non-means-tested programs. Compared with 
     growth from 2007 through 2016, projected growth from 2017 to 
     2026 (adjusted for shifts in the timing of payments) is much 
     lower for means-tested programs (which will have grown at an 
     average rate of 7.2 percent from 2007 to 2016, by CBO's 
     estimate). In contrast, projected growth for non-means-tested 
     programs (which will have grown at an average rate of 4.8 
     percent from 2007 to 2016, CBO estimates) is almost one 
     percentage point higher per year, in part because of the 
     aging of the population (see Table 2).
       Overall, the growth rates projected for total mandatory 
     spending over the coming decade are slower than those of the 
     past 10 years--by about one-half of a percentage point per 
     year, on average. However, most of that difference results 
     from the shift of some payments from 2017 to 2016. If not for 
     that shift, the average growth rate projected for total 
     mandatory spending over the coming decade would be 5.4 
     percent, equal to the rate recorded for the past 10 years.
       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 also 
     exert an influence. As a result, important aspects of the 
     programs in the future may differ significantly from 
     experience over the past decade, 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 several programs--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, both because of enrollment 
     growth and as a result of a temporary increase in the federal 
     matching rate. After dropping off a bit subsequently, that 
     spending 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 32 
     percent from 2013 to 2015 and is projected to rise by 9 
     percent in 2016. Under current law, the rate of growth in 
     Medicaid spending would decline through 2019, CBO projects, 
     after which it would largely level off at a rate of roughly 5 
     percent per year through the end of the projection period.
       Under current law, spending authority for CHIP will expire 
     at the end of fiscal year 2017. Consistent with statutory 
     guidelines, CBO assumes in its baseline spending projections 
     that annual funding for the program after 2017 will continue 
     at $5.7 billion.\1\ As a result, in CBO's baseline, spending 
     for CHIP is projected to drop to $11 billion in 2018 and to 
     about $6 billion in subsequent years; it had grown from $5 
     billion to $13 billion from 2006 to 2016.
       Payments of subsidies for health insurance purchased 
     through an exchange began in January 2014 and totaled $27 
     billion in fiscal year 2015. They are projected to continue 
     to grow rapidly between 2016 and 2018, largely as a result of 
     significant growth in enrollment. CBO and the staff of the 
     Joint Committee on Taxation project annual growth averaging 
     about 4 percent between 2019 and 2026.
       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) 
     temporarily raised the maximum benefit under that program. 
     The combination of higher enrollment and an increased benefit 
     caused outlays to peak at $83 billion in 2013. Spending has 
     fallen since then because subsequent legislation eliminated 
     the increase in the maximum benefit (as of October 31, 2013) 
     and because the program's caseload (which peaked in 2014) has 
     declined. CBO expects that enrollment will continue to 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 8 percent per year over the 
     2007-2016 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. Provisions expanding the refundability of those 
     credits originally enacted in ARRA (and subsequently 
     extended) recently were made permanent.\2\ As a result, those 
     outlays are projected to continue to grow slowly--by an 
     average of about 2 percent per year--over the projection 
     period.
       Finally, because of the unusual budgetary treatment of the 
     Pell grant program--which has mandatory and discretionary 
     components--the growth rates for the mandatory portions of 
     that program give incomplete information. The bulk of the 
     funding is provided annually in appropriation acts and thus 
     is discretionary. In recent years, spending for the program 
     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, the 
     projection for the discretionary portion of the Pell grant 
     program is based on the budget authority appropriated for 
     fiscal year 2016, adjusted for inflation. (That projection of 
     discretionary spending 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 account for such factors as award 
     amounts, 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,
                                                       Keith Hall,
                                                         Director.
       Enclosures.


                                Endnotes

       1. Under current law, funding for the program in 2017 
     consists of two semiannual allotments of $2.85 billion--
     amounts that are much smaller than the allotments made in the 
     past. (The first semiannual allotment in 2017 will be 
     supplemented by $14.7 billion in one-time funding for the 
     program.) Following the rules prescribed by the Balanced 
     Budget and Emergency Deficit Control Act of 1985, CBO 
     extrapolates the $2.85 billion provided for the second half 
     of the year to arrive at projected annual funding of $5.7 
     billion.
       2. 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.

                                                                        TABLE 1--MANDATORY OUTLAYS IN CBO'S 2016 BASELINE
                                                                          [Outlays by fiscal year, billions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                       Average
                                                                                                                                                                                        Annual
                                          2016         2017         2018         2019         2020         2021         2022         2023         2024         2025         2026        Growth
                                                                                                                                                                                      (Percent)
                                                                                                                                                                                      2017-2026
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Means-Tested Programs:
    Health Care Programs:
        Medicaid....................          381          401          420          439          460          484          509          536          564          593          642          5.4
        Medicare Part D Low-Income             28           28           27           32           34           37           44           44           45           53           57          7.4
         Subsidies..................
        Health insurance                       39           57           67           70           71           74           79           82           86           89           93          9.1
         subsidiesa,b...............
        Children's Health Insurance            13           13           11            6            6            6            6            6            6            6            6         -7.6
         Program....................
                                     -----------------------------------------------------------------------------------------------------------------------------------------------------------
            Subtotal................          460          499          525          546          571          601          637          668          700          740          798          5.7

[[Page 3259]]

 
    Income Security:
        Earned income and child tax            83           82           82           84           86           88           91           93           95           97           99          1.8
         creditsb,c.................
        SNAP........................           75           74           73           73           72           72           72           72           72           73           74         -0.1
        Supplemental Security Income           59           56           53           60           61           63           70           67           64           71           74          2.2
        Family support and foster              31           32           32           33           33           33           34           34           34           35           35          1.1
         cared......................
        Child nutrition.............           23           24           25           26           27           28           29           30           32           33           34          4.2
                                     -----------------------------------------------------------------------------------------------------------------------------------------------------------
            Subtotal................          271          267          265          274          280          285          296          296          297          309          317          1.6
        Veterans' pensions..........            6            6            6            7            7            7            8            7            7            8            8          2.9
        Pell Grantse................            7            6            8            8            8            8            8            8            8            8            8          2.3
            Subtotal, Means-Tested            744          778          804          835          865          901          948          979        1,012        1,065        1,130          4.3
             Programs...............
Non-Means-Tested Programsf..........        1,959        2,018        2,076        2,238        2,377        2,519        2,720        2,829        2,933        3,156        3,362          5.5
                Total Mandatory             2,703        2,796        2,880        3,073        3,243        3,419        3,669        3,808        3,944        4,221        4,492          5.2
                 Outlaysg...........
Memorandum:
Pell Grants (Discretionary)h........           23           25           28           23           24           24           25           25           26           26           27          1.8
Means-Tested Programs Adjusted for            737          778          811          835          865          901          939          979        1,021        1,065        1,130          4.4
 Timing Shifts......................
Non-Means-Tested Programs Adjusted          1,927        2,015        2,111        2,238        2,377        2,519        2,669        2,825        2,988        3,156        3,362         5.7
 for Timing Shifts..................
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Congressional Budget Office; staff of the Joint Committee on Taxation.
The projections shown here are the same as those reported in Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2016 to 2026 (January 2016).
The average annual growth rate over the 2017-2026 period encompasses growth in outlays from the amount projected for 2016 through the amount projected for 2026.
Projections of spending for benefit programs in this table exclude administrative costs that are classified as discretionary but generally include administrative costs that are classified as
  mandatory.
SNAP = Supplemental Nutrition Assistance Program.
Because October 1 will fall on a weekend in 2016, 2017, 2022, and 2023, certain federal payments that are due on those dates will instead be made at the end of the preceding September and thus
  be shifted into the previous fiscal year. Those shifts primarily affect outlays for Supplemental Security Income, veterans' compensation benefits and pensions, and Medicare.
aDiffers from the amounts reported in Table 3-2 in The Budget and Economic Outlook: Fiscal Years 2016 to 2026 in that it does not include payments to health insurance plans for risk adjustment
  (amounts paid to plans that attract less healthy enrollees) and reinsurance (amounts paid to plans that enroll people with high health care costs). Spending for grants to states to establish
  exchanges is also excluded.
bDoes not include amounts that reduce tax receipts.
cDiffers from the amounts reported in Table 3-2 in The Budget and Economic Outlook: Fiscal Years 2016 to 2026 in that it does not include other tax credits that were included in that table.
dIncludes the Temporary Assistance for Needy Families program, the Child Support Enforcement program, the Child Care Entitlement program, and other programs that benefit children.
eIncludes mandatory spending designed to reduce the discretionary budget authority needed to support the maximum award amount set in the appropriation act plus mandatory spending that, by
  formula, increases the total maximum award above the amount set in the appropriation act.
fDoes not include offsetting receipts.
gDoes not include outlays associated with federal interest payments.
hThe discretionary baseline does not represent a projection of expected costs for the discretionary portion of the Federal Pell Grant Program. As with all other discretionary programs, the
  budget authority is calculated by inflating the budget authority appropriated for fiscal year 2016. Outlays for future years are based on those amounts of budget authority and also reflect a
  temporary surplus of budget authority provided in 2016.


                                                                              TABLE 2--MANDATORY OUTLAYS SINCE 2006
                                                                          [Outlays by fiscal year, billions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                        Annual
                                                                                                                                                                                        Growth
                                          2006         2007         2008         2009         2010         2011         2012         2013         2014         2015      Est., 2016   (Percent)
                                                                                                                                                                                      2007-2016
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Means-Tested Programs:
    Health Care Programs:
        Medicaid....................          181          191          201          251          273          275          251          265          301          350          381          7.7
        Medicare Part D Low-Income             11           17           17           19           21           24           20           22           22           24           28          9.6
         Subsidies
        Health insurance                        0            0            0            0            0            0            0            0           13           27           39         n.a.
         subsidiesa,b...............
        Children's Health Insurance             5            6            7            8            8            9            9            9            9            9           13          8.7
         Program
                                     -----------------------------------------------------------------------------------------------------------------------------------------------------------
            Subtotal................          197          213          225          277          302          308          279          297          346          411          460          8.8
    Income Security:
        Earned income and child tax            52           54           75           67           77           78           77           79           82           81           83          4.8
         creditsb...................
        SNAP........................           35           35           39           56           70           77           80           83           76           76           75          8.1
        Supplemental Security Income           37           36           41           45           47           53           47           53           54           55           59          4.8
        Family support and foster              30           31           32           33           35           33           30           32           31           31           31          0.3
         carec......................
        Child nutrition.............           14           14           15           16           17           18           19           20           20           22           23          5.1
                                     -----------------------------------------------------------------------------------------------------------------------------------------------------------
            Subtotal................          168          170          202          217          247          260          254          266          263          264          271          4.9
    Veterans Pensions...............            4            3            4            4            4            5            5            5            6            5            6          5.5
    Pell Grantsd....................            0            0            1            2            4           14           12           16            8           10            7         n.a.
            Subtotal, Means-Tested            369          386          431          501          557          587          550          584          623          690          744          7.3
             Programs...............
Non-Means-Tested Programse..........        1,188        1,242        1,349        1,787        1,553        1,648        1,710        1,752        1,753        1,865        1,959          5.1
                                     -----------------------------------------------------------------------------------------------------------------------------------------------------------
                Total Mandatory             1,556        1,628        1,780        2,288        2,110        2,236        2,260        2,336        2,376        2,555        2,703          5.7
                 Outlaysf...........
Memorandum:
Pell Grants (Discretionary).........           13           13           15           13           20           21           21           17           23           20           23          5.8
Means-Tested Programs Adjusted for            368          389          431          501          557          581          556          584          623          690          737          7.2
 Timing Shifts......................
Non-Means-Tested Programs Adjusted          1,202        1,241        1,349        1,787        1,553        1,627        1,731        1,752        1,753        1,865        1,927          4.8
 for Timing Shifts..................
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Congressional Budget Office; staff of the Joint Committee on Taxation.
The average annual growth rate over the 2007-2016 period encompasses growth in outlays from the amount recorded in 2006 through the amount projected for 2016.
Data on spending for benefit programs in this table exclude administrative costs that are classified as discretionary but generally include administrative costs that are classified as
  mandatory.
SNAP = Supplemental Nutrition Assistance Program; n.a. = not applicable.
Because October 1 fell on a weekend in 2006, 2007, and 2012, certain federal payments that were due on those dates were instead made at the end of the preceding September and thus shifted into
  the previous fiscal year.
aDiffers from the amounts reported in Table 3-2 in The Budget and Economic Outlook: Fiscal Years 2016 to 2026 in that it does not include payments to health insurance plans for risk adjustment
  (amounts paid to plans that attract less healthy enrollees) and reinsurance (amounts paid to plans that enroll people with high health care costs). Spending for grants to states to establish
  exchanges is also excluded.
bDoes not include amounts that reduce tax receipts.
cIncludes the Temporary Assistance for Needy Families program, the Child Support Enforcement program, the Child Care Entitlement program, and other programs that benefit children.
dIncludes mandatory spending designed to reduce the discretionary budget authority needed to support the maximum award amount set in the appropriation act plus mandatory spending that, by
  formula, increases the total maximum award above the amount set in the appropriation act.
eDoes not include offsetting receipts.
fDoes not include outlays associated with federal interest payments.


[[Page 3260]]



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