Low-Income Assistance Programs: Trends in
Federal Spending
Gene Falk
Specialist in Social Policy
June 13, 2012



The House Ways and Means Committee is making available this version of this Congressional Research Service
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for the United States Congress, providing policy and legal analysis to Committees and Members of both the
House and Senate, regardless of party affiliation.

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Low-Income Assistance Programs: Trends in Federal Spending

Summary
This report examines the spending trends of 10 major need-tested benefit programs or groups of
programs: (1) health care from Medicaid and the Children’s Health Insurance Program (CHIP);
(2) the refundable portion of the health insurance tax credit enacted in the 2010 health care reform
law; (3) the Supplemental Nutrition Assistance Program (SNAP); (4) assisted housing; (5)
financial assistance for post-secondary students (Pell Grants); (6) compensatory education grants
to school districts; (7) the Earned Income Tax Credit (EITC); (8) the Additional Child Tax Credit
(ACTC); (9) Supplemental Security Income (SSI); and (10) Family Support Payments. The
common feature of need-tested programs is that they provide benefits, services, or funding based
on a measure of limited financial resources (income and sometimes assets). However, other than
that common feature, the programs differ considerably in their target populations, services, and
focus.
In total and in inflation-adjusted terms, federal outlays for major need-tested programs increased
in each decade examined in this report, from the 1960s to the present. There have been
particularly large increases in need-tested outlays during recent years, attributable to the effects of
the recession (which increased the number of people eligible for aid) and policy responses to it
that increased federal funding and benefits for certain programs. The Congressional Budget
Office (CBO) forecasts that under current law, federal outlays for need-tested programs would
continue to increase, even in inflation-adjusted terms, in the upcoming decade. However, that
increase is attributable to health care programs. For programs other than health care, total
inflation-adjusted spending is projected to decrease over the period FY2011 through FY2022.
CBO forecasts that with the economic recovery, caseload increases in certain programs will abate.
Additionally, most of the policy responses to the recession were temporary in nature.
Different programs also have different spending trends. Cash benefits—to needy families with
dependent children and the aged, blind, and disabled—comprised most aid to low-income
families in the early 1960s. However, over the period from the 1960s through the end of the
1980s, most of the growth in aid was for non-cash benefits in the form of education, food,
housing, and medical assistance.
The 1990s was the decade of “welfare reform.” The policies affecting low-income families with
children, in particular, were substantially altered, with less emphasis on providing a “safety net”
for families without a worker and more emphasis on aiding low-income workers in a system
geared to “make work pay.” Spending on need-tested aid, even excluding health care, increased in
the decade of the 1990s. Federal funding for cash assistance for needy families with children fell,
but this was far more than offset by increases in the EITC, which supplements the earnings of
lower-income families, as well as federal funding for other programs that support lower-earning
families (e.g., child care subsidies).
Relative to the size of the economy, aggregate need-tested aid has generally increased since the
1960s. The 4.2% of the Gross Domestic Product (GDP) accounted for by these programs in
FY2011 compares with 3.0% of GDP in FY2007, 2.7% of GDP in FY2000, and 2.0% of GDP in
FY1990. CBO projects that, under current law, total need-tested aid will first fall but then
increase as a share of GDP, again reaching about 4.2% of GDP in 2016 and 2022. However, all
projected growth in spending as a share of GDP is from the health programs.
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Low-Income Assistance Programs: Trends in Federal Spending

Contents
Introduction...................................................................................................................................... 1
Need-Tested Programs..................................................................................................................... 1
Low-Income Assistance Spending Trends....................................................................................... 4
Rates of Growth: Health Programs and Non-health Programs.................................................. 5
Trends in Non-health Spending................................................................................................. 6
Trends through the Late 1980s............................................................................................ 7
The 1990s ............................................................................................................................ 8
2000-2007 ........................................................................................................................... 8
Recent Years........................................................................................................................ 9
Federal Outlays for Low-income Assistance Programs as a Percent of the Gross
Domestic Product ......................................................................................................................... 9
Federal Outlays for Low-Income Assistance Programs as a Percent of the Federal Budget......... 10
Conclusion ..................................................................................................................................... 11
Additional Reading........................................................................................................................ 12

Figures
Figure 1. Federal Outlays for Selected Low-Income Assistance Programs:
FY1962 through FY2022.............................................................................................................. 4
Figure 2. Composition of Federal Outlays on Major Low-Income Assistance Programs:
FY1962 through FY2022.............................................................................................................. 6
Figure 3. Federal Outlays for Selected Non-health Low-Income Assistance Programs:
FY1962 through FY2022.............................................................................................................. 7
Figure 4. Federal Outlays for Major Low-Income Programs as a Percent of
Gross Domestic Product: FY1962 through FY2022................................................................... 10
Figure 5. Federal Outlays for Major Low-Income Assistance Programs as a Percent of
Total Federal Outlays: FY1962 through FY2011 ....................................................................... 11

Tables
Table 1. Average Annual Rate of Change in Inflation-Adjusted Outlays for Major Low-
Income Assistance Programs: Selected Periods from FY1962 through FY2022 ......................... 5
Table A-1. Federal Outlays for Selected Major Low-Income Assistance Programs, By
Budget Account, FY2011-FY2013 ............................................................................................. 15

Appendixes
Appendix........................................................................................................................................ 14

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Low-Income Assistance Programs: Trends in Federal Spending

Introduction
The high current and projected federal budget deficits, and debate over the size and scope of
federal spending, have raised interest in how federal dollars are spent. This report focuses on
federal outlays for major “need-tested” programs—programs targeted toward families and
individuals with limited income. The major need-tested programs discussed in this report provide
cash, food, housing, and medical assistance to families and individuals with limited financial
resources with collective FY2011 federal outlays of $622 billion. These programs represented
16.5% of all federal outlays and 4.2% of the Gross Domestic Product (GDP).
This report provides perspective on current federal outlays for these programs, examining
historical trends in their federal outlays as well as showing the Congressional Budget Office’s
(CBO’s) March 2012 baseline budget projections for them. The baseline projections cover the
period from FY2012 through FY2022. The baseline budget projections indicate what spending
would be if current law were continued. Additional perspective is provided by showing their
trends as a percentage of all federal outlays as well as a percent of GDP.
Need-Tested Programs
The common feature of need-tested programs is that they provide benefits, services, or funding
based on a measure of low financial resources (income and sometimes assets). However, other
than that common feature, the programs differ considerably in their target populations, benefits,
services, and focus. That is, aid from these programs is not provided to one group of people or
families, nor do these programs address the same purpose. Some address basic needs (food,
housing, and medical care); others (e.g., student financial assistance) seek to enable recipients to
overcome financial need in order to engage in an activity.
Moreover, need-tested programs are not the only programs that benefit low-income persons and
families. More universally available social programs, such as the social insurance programs of
Social Security, Medicare, and Unemployment Insurance or programs such as Guaranteed Student
Loans, also benefit low-income persons and families. These programs also tend to be
substantially larger (in spending) than need-based programs.
To simplify the analysis, this report focuses on nine of the largest need-tested programs (based on
federal outlays) in FY2011 plus subsidies for health care that were created in the 2010 health
reform law, and are available to lower-income families and persons.1 The need-tested programs
included in this report are the following:2
• Medicaid/CHIP. Medicaid provides medical assistance to needy families with
dependent children and the aged, blind, and disabled who have low incomes.
Beginning in 2014, states will be required to expand coverage to able-bodied
individuals under age 65 with incomes below 133% of the federal poverty

1 The selection of programs for this report was based on the largest programs identified in CRS Report R41625,
Federal Benefits and Services for People with Low Income: Programs, Policy, and Spending, FY2008-FY2009, by
Karen Spar. See the Appendix to this report for a discussion of the selection of programs.
2 The order of the programs listed here is the same order in which they appear on this report’s graphic figures.
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guidelines. A large share of Medicaid expenditures pays for nursing home care for
the elderly and disabled. The State Children’s Health Insurance Program (CHIP)
allows states to cover targeted low-income children with no health insurance in
families with income above Medicaid eligibility levels. In addition, when certain
conditions are met, states may extend CHIP coverage to pregnant women and
parents of Medicaid and CHIP-eligible children. In FY2011, Medicaid/CHIP
outlays of $284 billion accounted for 7.9% of all federal outlays and 1.9% of GDP.
• The health insurance tax credit, created by the 2010 health care reform law,3 will
help certain individuals and families purchase health insurance beginning in 2014.
Under the 2010 health reform law, individuals and families not otherwise covered
will be able to purchase health insurance from state-based “exchanges.” Families
with incomes below 400% of the poverty line will have their out-of-pocket
premium payments capped at a certain percentage of their incomes.4 The
remainder of the premium cost would be paid for through an advance-payable,
refundable tax credit. The refundable portion of that tax credit is considered a
federal outlay.
• Supplemental Nutrition Assistance Program (SNAP, the program formerly
known as food stamps) provides low-income families with an income supplement
to enable them to purchase a minimal cost, nutritious diet. SNAP is available to all
low-income households regardless of their demographic composition, though
benefits for able-bodied adults without dependents and who are not working is
time-limited and certain noncitizens are excluded.5 SNAP benefits are uniform
nationwide for families of a given size except in Alaska, Hawaii, and the
territories. In FY2011, SNAP outlays of $78 billion accounted for 2.2% of all
federal outlays and 0.5% of GDP.
• Student Financial Assistance, mostly Pell Grants, provides funds to students
from low-income families to help meet the cost of post-secondary education.
Awards are based on a need analysis that considers both the cost of education and
financial resources of the student’s family. In FY2011, outlays for student financial
assistance of $38 billion accounted for 1.1% of all federal outlays and 0.3% of
GDP.
• Compensatory Education (Title I-A of the Elementary and Secondary Education
Act) provides aid to school districts based on their number and percentage of
economically disadvantaged children. The purpose of this aid is to ensure that each
child has a high-quality education and reaches, at a minimum, proficiency on state
academic achievement standards and assessments under the No Child Left Behind
Act. In FY2011, total outlays for compensatory education grants of $19.5 billion
accounted for 0.5% of all federal outlays and 0.1% of GDP.
• Housing Assistance, as categorized for this report, includes federal outlays for
project-based rental assistance and tenant-based vouchers (under the Section 8

3 The Patient Protection and Affordable Care Act (P.L. 111-148) as amended by the Heath Care and Education
Reconciliation Act of 2010 (P.L. 111-152).
4 See CRS Report R40942, Private Health Insurance Provisions in the Patient Protection and Affordable Care Act
(PPACA), by Hinda Chaikind and Bernadette Fernandez ...
5 There are also rules that restrict noncitizen eligibility for other low-income benefit programs; see CRS Report
RL33809, Noncitizen Eligibility for Federal Public Assistance: Policy Overview and Trends, by Ruth Ellen Wasem.
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program); other support for public housing; and housing assistance for the elderly,
the disabled, and American Indians. In FY2011, housing assistance outlays of $40
billion accounted for 1.1% of all federal outlays and 0.3% of GDP.
• The Earned Income Tax Credit (EITC) represents the refundable portion of the
earned income tax credit. It provides an earnings supplement for low-wage
earners, with the size of the credit dependent on family type and earnings. The
bulk of EITC dollars goes to families with children. Historically, the bulk of
refundable EITC dollars was delivered through tax refund checks. Beginning in
2012, all “advance payments” of EITC benefits are ended, and all refundable EITC
dollars will be paid through refund checks. In FY2011, EITC outlays of $56 billion
accounted for 1.5% of all federal outlays and 0.4% of GDP.
• The Additional Child Tax Credit (ACTC) represents the refundable portion of
the child tax credit. It assists eligible parents of children who have earned income
above a certain threshold but whose tax liability is too small to fully benefit from
the regular non-refundable child tax credit. It is delivered to families through
refund checks when they file their taxes. In FY2011, ACTC outlays of $23 billion
accounted for 0.6% of all federal outlays and 0.2% of GDP.
• Supplemental Security Income (SSI) provides a federally funded cash income
floor for low-income persons or couples who are aged, blind, or disabled. Federal
SSI benefits are based on uniform nationwide eligibility and benefit rules, and they
are paid with federal funds. States may supplement SSI with their own funds. In
FY2011, SSI outlays of $56.5 billion accounted for 1.6% of all federal outlays and
0.4% of GDP.
• Family Support, as categorized for this report, includes outlays for the Temporary
Assistance for Needy Families (TANF) block grant, the Child Support
Enforcement (CSE) program, and federal grants to help support state child care
subsidy programs. In FY2011, family support outlays of $28.4 billion accounted
for 0.8% of all federal outlays and 0.2% of GDP.
This report focuses only on federal outlays. A number of programs (Medicare, SNAP, housing
assistance, and family support) are actually administered at the state or local level. States also
contribute financially to Medicaid, SNAP (administrative and employment and training costs),
and family support. Further, the bulk of financing for elementary and secondary education
represents state and local dollars.
Additionally, this report focuses on programs classified as “major” by their current spending
level. This focus might leave out some programs that historically comprised a greater share of aid
to low-income persons. For example, employment and training programs had much higher
spending levels in the 1970s than they do today. Excluding such programs has the effect of
somewhat depressing historical spending levels (in the late 1970s) and overstating growth since
then. It also leaves out the part of the story regarding low-income assistance: training and
employment, particularly public service employment in the late 1970s, were once a greater part of
low-income aid.
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Low-Income Assistance Programs: Trends in Federal Spending

Low-Income Assistance Spending Trends
Federal outlays for low-income assistance have generally, and fairly steadily, increased over the
past five decades. In total, spending for low-income assistance in inflation-adjusted terms has
been higher at the end of each decade. Growth in aggregate federal outlays for low-income
assistance has occurred during both economic downturns and periods of economic growth.
Figure 1 shows federal outlays for the major low-income assistance programs in inflation-
adjusted terms historically for FY1962 through FY2011, and shows CBO-projected outlays under
current law for FY2012 through FY2022. The figure shows several periods of pronounced
growth, with the most recent occurring from FY2007 through FY2011. This represents spending,
both automatic (through increased enrollment) as well as legislated (e.g., benefit and funding
increases through the American Recovery and Reinvestment Act of 2009, ARRA, P.L. 111-5), in
response to the deep recession from 2007-2009.
CBO baseline projections show that, under current policies, total spending on low-income
assistance programs will decline in FY2012 from a peak in FY2011. Spending, however, will
again begin to increase in FY2013. However, almost all of the increases in future low-income
assistance spending are attributable to spending increases for health care.
Figure 1. Federal Outlays for Selected Low-Income Assistance Programs:
FY1962 through FY2022
(In billions of constant FY2011 dollars)
$900
Actual
Projected
$800
$700
Health Care Tax Credit
$600
Medicaid/CHIP
SNAP
$500
Student Financial Assistance
Compensatory Education
Assisted Housing
$400
EITC
Additional Child Credit
$300
SSI
Family Support
$200
$100
$0
1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022

Source: Congressional Research Service (CRS), based on data from the U.S. Office of Management and Budget
FY2013 Public Budget Database, and the Congressional Budget Office March 2013 baseline budget projections
for FY2012 through FY2022.
Notes: Constant dollars were computed using the implicit price deflator for Gross Domestic Product (GDP).
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Rates of Growth: Health Programs and Non-health Programs
Historically, spending for health care (mostly Medicaid) has grown faster than the other
categories of low-income assistance spending. Over the entire FY1962 through FY2011 period,
federal outlays for low-income health programs have increased, in inflation-adjusted terms, at a
rate of 13.3% per year versus 6.5% for other spending. Some of this is attributable to high rates of
growth early in the period, as Medicaid was established. As shown in Table 1, the growth of
inflation-adjusted spending for health care generally outpaced the growth for other low-income
assistance programs. The major exceptions were in the 1970s, when rates of growth were
equivalent between health and non-health programs, and the recent recessionary period, which
saw more rapid growth for non-health programs than for health programs. Table 1 also shows
that under current policies, CBO projects that health outlays would grow at an average annual rate
of 6.9% in the upcoming decade, versus a decline in real spending for other low-income
assistance at an average annual rate of 2.0% for that same period.
Table 1. Average Annual Rate of Change in Inflation-Adjusted Outlays for Major
Low-Income Assistance Programs: Selected Periods from FY1962 through FY2022

Total
Health Programs
Non-health Programs
1962-1970 14.7%
46.5%
10.7%
1970-1980 9.8
9.8
9.8
1980-1990 3.7
6.8
2.3
1990-2000 6.5
8.9
4.9
2000-2007 4.1
4.7
3.5
2007-2011 9.0
7.8
10.0
2011-2022 3.0
6.9
-2.0
Source: Congressional Research Service (CRS), based on data from the U.S. Office of Management and Budget,
FY2013 Public Budget Database, and the Congressional Budget Office, March 2012 baseline budget projections
for FY2011 through FY2022.
Notes: Constant dollars were computed using the implicit price deflator for Gross Domestic Product (GDP).

The factors affecting spending for low-income health care (primarily through Medicaid) are
complex. However, two major factors are
• health care cost increases that are greater than the rate of general price inflation;
and
• the growth in Medicaid enrollment.
Originally, Medicaid eligibility was tied to the receipt of cash assistance from programs for the
elderly, blind, and disabled and families with dependent children. Growth in the enrollment of
these programs—particularly in two periods (the late 1960s through the 1970s, and the late 1980s
through the early 1990s)—contributed to Medicaid spending increases. However, Medicaid
enrollment also increased as a result of legislated expansions of coverage for children beyond
those in families receiving cash assistance, as well as pregnant women with incomes below 133%
of the federal poverty level.
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The much faster rate of growth in health care than in other forms of need-tested aid means that
health has been an increasing share of total federal outlays for need-tested programs. Figure 2
shows the composition of federal outlays on major low-income assistance programs for FY1962
through FY2022. In FY1962, most need-tested aid was in the form of cash public assistance
through grants to states for families with children and the aged, blind, and disabled. This has
changed dramatically over time. Non-cash benefits or services, particularly health care, accounted
for an increasing share of aid to low-income families and persons. In FY2011, federal outlays for
Medicaid and CHIP alone accounted for almost half (46%) of all federal outlays for major low-
income assistance programs.
As projected under current policies by CBO, federal outlays for health will account for a growing
share of need-tested aid in the coming decade. By FY2022, health would account for close to 7
out of every 10 dollars on major low-income assistance programs. The projected health outlays
include the estimated costs of the expansions made in the 2010 health reform law, including the
expansion of Medicaid coverage for currently uncovered persons under age 65 with incomes
below 133% of the federal poverty level and the refundable portion of the health tax credit that
will subsidize health insurance purchased through state exchanges for those with incomes under
400% of the federal poverty level.
Figure 2. Composition of Federal Outlays on Major Low-Income
Assistance Programs: FY1962 through FY2022
Actual
Projected
100%
80%
Health Care Tax Credit
Medicaid/CHIP
60%
SNAP
Student Financial Assistance
Compensatory Education
Assisted Housing
40%
EITC
Additional Child Credit
SSI
Family Support
20%
0%
1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022

Source: Congressional Research Service (CRS), based on data from the U.S. Office of Management and Budget
FY2013 Public Budget Database, and the Congressional Budget Office March 2012 baseline budget projections
for FY2012 through FY2022.
Trends in Non-health Spending
The large growth in health spending obscures some of the trends in the non-health portion of aid
to low-income families and persons. As discussed above, inflation-adjusted outlays for the major
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low-income assistance programs also grew over the past five decades, albeit at a slower rate of
growth than health spending.
Figure 3 shows the trends for inflation-adjusted outlays of the selected non-health programs that
provide low-income assistance. Historically, aggregate outlays for the non-health need-tested
programs increased during periods of both economic downturn and economic growth. However,
CBO projects that, under current law, spending for all of these programs except SSI will decline
in real terms over the next few years as the economy continues to recover from the 2007-2009
recession.
Figure 3. Federal Outlays for Selected Non-health Low-Income Assistance Programs:
FY1962 through FY2022
(In billions of constant FY2011 dollars)
$400
Actual
Projected
$350
$300
SNAP
$250
Student Financial Assistance
Compensatory Education
$200
Assisted Housing
EITC
Additional Child Credit
$150
SSI
Family Support
$100
$50
$0
2
7
7
2
196
1967 1972 1977 1982 198
1992 1997 2002 200
2012 2017 202

Source: Congressional Research Service (CRS), based on data from the U.S. Office of Management and Budget
FY2013 Public Budget Database, and the Congressional Budget Office March 2012 baseline budget projections
for FY2012 through FY2022.
Notes: Constant dollars were computed using the implicit price deflator for Gross Domestic Product (GDP).
Trends through the Late 1980s
As discussed above, cash benefits (in the family support category) dominated spending in the
early years. Supplemental Security Income (SSI) represented a federalization of cash benefits for
the aged, blind, and disabled beginning in FY1974. However, from the mid-1970s through the
end of the 1980s, cash benefits as represented by the family support and SSI categories increased
only slightly. The largest growth in spending through the late 1980s was in noncash benefits and
services:
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• Elementary and Secondary Education Aid. Compensatory education grants to
school districts (Title I-A of the Elementary and Secondary Education Act), based
on their number and percentage of disadvantaged children, date back to President
Lyndon Johnson’s Great Society.
• Higher Education Aid. The Basic Educational Opportunity Grants (BEOG), the
predecessor to Pell Grants, were created in the Education Amendments of 1972.
• SNAP (the program formerly known as food stamps). A Food Stamp pilot
program began in 1961 and legislation in 1964 made the program permanent.
However, it did not operate nationwide until 1974.
• Housing assistance. Federal housing aid dates back to the Great Depression. Until
the Housing Act of 1974, federal policy emphasized supporting the construction of
public housing for low-income persons. The 1974 act established the Section 8
program, which changed the emphasis of housing assistance policies toward
providing rent subsidies for lower-income households in private market housing.6
The 1990s
The 1990s was the decade of welfare reform. In that decade, total spending on non-health low-
income assistance programs increased. However, aid was substantially restructured during the
period. For low-income families with children, policies were shifted away from providing a
safety net for families without earnings toward a policy to support work among low-income
parents. The 1996 welfare reform law converted the cash assistance entitlement for families with
dependent children into the Temporary Assistance for Needy Families (TANF) block grant, with
recipients of cash aid subject to work requirements and time limits for federal aid. The 1996 law
also curtailed aid to noncitizens.
However, aid to working poor families with children was increased during the 1990s. Earnings
supplements for working parents through the EITC were substantially expanded through
legislation in 1990, with a major increase in the credit amount enacted in 1993. A child tax credit
of $500 per child was established by tax legislation in 1997. The 1996 welfare reform law also
substantially expanded funding to help states pay for child care subsidies for working parents.
2000-2007
The major legislated expansions in aid in the 2000s before the onset of the recession were in the
EITC and child tax credit. Several pieces of legislation increased the size of the child tax credit
(to $1,000 beginning in 2003). In addition, tax legislation through this period made the credit
refundable to more families.7 In addition, substantial changes were made to Pell Grants in 2007
amendments (and again in 2010).

6 The trend in housing outlays shows the effects of a one-time payment made in FY1985, which resulted from a change
in financing of public housing construction and modernization activities.
7 For a discussion, see CRS Report R41873, The Child Tax Credit: Current Law and Legislative History , by Margot L.
Crandall-Hollick.
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Recent Years
There were large increases in spending for low-income aid in recent years in response to the
2007-2009 recession. This resulted from both automatic factors (increases in enrollments in the
entitlement programs) as well as legislated changes. The American Recovery and Reinvestment
Act of 2009 (P.L. 111-5) provided an increase in the EITC for families with three or more
children; further expanded the availability of the refundable portion of the child credit; increased
the average SNAP benefit by 15%; increased the maximum Pell Grant; and provided extra
funding for both compensatory education and TANF.
Many of the ARRA provisions are temporary, with funding increases that have expired or are (in
the case of SNAP) scheduled to expire. Additionally, the child credit (and its refundable portion,
the ACTC) is scheduled to revert back to pre-2001 rules after 2012. CBO’s March 2012 baseline
projects that enrollment in SNAP will gradually decline as the economy recovers over the next
decade. Thus, federal outlays for the major non-health need-tested programs are projected to
decline, in real terms, over the coming decade.
Federal Outlays for Low-income Assistance
Programs as a Percent of the Gross
Domestic Product
Federal outlays for major low-income assistance programs measured as a percent of Gross
Domestic Product (GDP) provide a sense of how large these programs are relative to the size of
the national economy. These programs have grown as a share of GDP over the past five decades,
ending each decade at a higher level as a percent of GDP.
Figure 4 shows federal outlays for major low-income programs as a percent of GDP for FY1962
through FY2011, and as projected under the CBO baseline for FY2012 through FY2022. Outlays
for these programs—both the non-health and health programs—generally increased as a share of
GDP with some fluctuations due mostly to the economic cycle (e.g., increasing as a share of GDP
during economic slumps, decreasing during periods of growth). The longest period of decline as a
percent of GDP was in the late 1990s. Federal outlays for major low-income assistance programs
as a percent of GDP decreased for four consecutive years. During this period, outlay growth for
these programs increased, but at a rate slower than overall economic growth.
In FY2010 and FY2011, federal outlays on low-income assistance as a percentage of GDP
reached 4.2%. Given the projected rate of growth in the economy and the continuation of current
law, federal outlays for these programs would drop as a percent of GDP to 3.9% in FY2012—still
higher than the pre-recession level of 3.0% of GDP in FY2007. Aggregate federal outlays for
these programs are projected to increase again through FY2022, again reaching 4.2% in FY2022.
However, all of that increase reflects the continued growth of health care. Federal outlays for the
major non-health programs as a percent of GDP would drop from their peak 2.3% of GDP in
FY2011 to below their pre-recession level by FY2017, with continued declines thereafter.
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Figure 4. Federal Outlays for Major Low-Income Programs as a Percent of
Gross Domestic Product: FY1962 through FY2022
4.5%
Actual
Projected
4.0%
3.5%
Health Care Tax Credit
3.0%
Medicaid/CHIP
SNAP
Student Financial Assistance
2.5%
Compensatory Education
Assisted Housing
2.0%
EITC
Additional Child Credit
1.5%
SSI
Family Support
1.0%
0.5%
0.0%
1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022

Source: Congressional Research Service (CRS), based on data from the U.S. Office of Management and Budget
FY2013 Public Budget Database, and the Congressional Budget Office March 2012 baseline budget projections
for FY2012 through FY2022.
Federal Outlays for Low-Income Assistance
Programs as a Percent of the Federal Budget
Though federal spending for major low-income assistance programs has increased by almost any
measure, so has total federal spending. Figure 5 shows total federal outlays for major need-tested
programs as a percent of total federal spending. Though the long-term trend has been for the
major need-tested programs to account for a greater share of total federal spending, the largest
jumps in this measure occurred from the mid-1980s to the mid-1990s, when spending for them
jumped from about 8% to 14% of total federal outlays. Aggregate federal outlays for these
programs increased again to about 16% of total federal outlays by FY2004, fell before the
recession, and then increased to 17.4% of total outlays in FY2010. In FY2011, federal outlays for
low-income assistance programs fell slightly, to 17.3% of total outlays.
Unlike other charts in this report, Figure 5 shows only historical spending trends for low-income
assistance programs as a percent of total federal outlays. This is because the CBO current law
baseline reflects the effect of automatic spending cuts due in January 2013 under the Budget
Control Act of 2011 (P.L. 112-25) for total federal spending, but generally not for individual
programs except for defense and Medicare spending. Most low-income assistance programs
discussed in this report are exempt from these automatic cuts. The major exceptions are
compensatory education grants to school districts and housing assistance programs that, under
current law, are subject to automatic cuts.8 The inconsistent treatment in the CBO current law

8 See CRS Report R42050, Budget “Sequestration” and Selected Program Exemptions and Special Rules, coordinated
(continued...)
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baseline of the automatic cuts for total outlays and some of the programs discussed in this report
would slightly distort an analysis of projected low-income assistance programs spending as a
percent of total federal outlays. Therefore, such an analysis was excluded from this report.
Figure 5. Federal Outlays for Major Low-Income Assistance Programs as a Percent
of Total Federal Outlays: FY1962 through FY2011
20%
18%
16%
14%
Medicaid/CHIP
SNAP
12%
Student Financial Assistance
Compensatory Education
10%
Assisted Housing
EITC
8%
Additional Child Credit
SSI
6%
Family Support
4%
2%
0%
1962
1968
1974
1980
1986
1992
1998
2004
2010

Source: Congressional Research Service (CRS), based on data from the U.S. Office of Management and Budget
FY2013 Public Budget Database, and the Congressional Budget Office March 2012 baseline budget projections
for FY2012 through FY2022.
Conclusion
At the beginning of the period examined in this report (FY1962), federal aid to address low
income was dominated by grants to the states to provide public assistance for the aged, blind, and
disabled and families with dependent children. Grant-in-aid programs for the low-income aged,
families with dependent children, and the blind were established by the Social Security Act of
1935 and focused on groups that, during that era, were not expected to work. A grant-in-aid
program for low-income disabled persons was added in 1950.
The period since the 1960s saw large changes in programs that assist low-income families. First,
there were large expansions in non-cash medical, food, and housing assistance. The Great Society
era also produced expanded educational aid for elementary and secondary education for school
districts with large concentrations of low-income children, and the early 1970s saw the
establishment of grants to help students from low-income families attend college.

(...continued)
by Karen Spar.
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Second, there was the increasing dominance of medical assistance in spending for low-income
families. By FY2011, Medicaid and the State Children’s Health Insurance Program (CHIP )
accounted for almost half of all spending on major low-income assistance programs.
Third, low-income aid became increasingly federalized. In the 1970s, the federal government
assumed the costs of providing a cash income floor for the aged, blind, and disabled; by mid-
decade the expanded food stamp program provided 100%-federally funded benefits nationwide
using uniform benefit and eligibility rules; and housing aid shifted to 100%-federally financed
vouchers. In the last two decades (the 1990s and the 2000s), the major expansion of aid was done
through refundable tax credits for families with children, 100% federally financed and
administered through the tax code. The exception to the rule of increasing federalization—and it
is a major exception—is that the costs of Medicaid and CHIP are shared with the states.
Fourth, for families with children, expansions of aid went to the working poor rather than the
nonworking poor. The Medicaid expansions of the 1980s and early 1990s were for children who
were not on cash assistance and thus targeted families with earnings. The Earned Income Tax
Credit (EITC) and the refundable portion of the child credit require earnings to qualify for the
credits. Food and housing assistance programs go to families with and without earned income,
and increasingly to those who work.
Looking at CBO’s budget projections of current policies, low-income aid would become
increasingly dominated by health care. Medicaid, CHIP, and the new health care tax credit
established in the 2010 health law would account for almost 7 out of 10 dollars spent on low-
income aid by 2022. Non-health programs would see their aggregate spending decline. This
decline would result from three major factors: (1) declines in caseloads as the economy is
expected to continue to recover from the 2007-2009 recession; (2) expiration of temporary benefit
and funding increases in ARRA; and (3) the scheduled expiration in 2012 of the expansions of the
child tax credit (and its refundable portion, the Additional Child Tax Credit, ACTC) and the
EITC.

Additional Reading
CRS Report R41625, Federal Benefits and Services for People with Low Income: Programs,
Policy, and Spending, FY2008-FY2009, by Karen Spar.
CRS Report R42368, Centers for Medicare & Medicaid Services: President’s FY2013 Budget,
coordinated by Alison Mitchell and Paulette C. Morgan.
CRS Report R42446, Federal Pell Grant Program of the Higher Education Act: How the
Program Works, Recent Legislative Changes, and Current Issues, by Shannon M. Mahan.
CRS Report RL34591, Overview of Federal Housing Assistance Programs and Policy, by
Maggie McCarty et al.
CRS Report R42542, Department of Housing and Urban Development (HUD): Funding Trends
Since FY2002, by Maggie McCarty.
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CRS Report RS21352, The Earned Income Tax Credit (EITC): Changes for 2011 and 2012, by
Christine Scott.
CRS Report R41873, The Child Tax Credit: Current Law and Legislative History, by Margot L.
Crandall-Hollick.
CRS Report R42505, Supplemental Nutrition Assistance Program (SNAP): A Primer on
Eligibility and Benefits, by Randy Alison Aussenberg.
CRS Report R40946, The Temporary Assistance for Needy Families Block Grant: An
Introduction, by Gene Falk.
CRS Report R41917, Welfare, Work, and Poverty Status of Female-Headed Families with
Children: 1987-2010, by Thomas Gabe.

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Appendix.
The spending trends shown in this report are based on spending for 9 of the 10 largest (in terms of
spending) programs providing low-income assistance catalogued in CRS Report R41625, Federal
Benefits and Services for People with Low Income: Programs, Policy, and Spending, FY2008-
FY2009, by Karen Spar. That report provides a “snapshot” of federal or federally assisted need-
based programs with $100 million or more in obligations in FY2008 or FY2009. This report
intends to complement the material in CRS Report R41625 by providing information on long-
term spending trends.
The 10 largest need-tested programs discussed in CRS Report R41625 were (1) Medicaid; (2)
SNAP; (3) SSI; (4) EITC; (5) Pell Grants; (6) the ACTC (the refundable portion of the child tax
credit); (7) Title I-A Education for the Disadvantaged; (8) Medicare Part D, the Prescription Drug
Low-Income Subsidy; (9) TANF; and (10) Section 8 Housing Choice Vouchers. CRS Report
R41625 used federal obligations as its measure of spending for a program because they are the
most consistent measure at the level of detail (program-level) used in that report. However, as
mentioned in that report, obligations are difficult to track in a consistent manner over time.
The most consistent measure of federal spending available over time is outlays, which represent
actual payments from the federal government, usually in the form of checks or electronic
transfers of funds. Each year, the Office of Management and Budget (OMB) releases a database
that shows historical outlays for each budget account for each fiscal year from FY1962 and later.
Additionally, the Congressional Budget Office (CBO) makes its baseline budget projections in
terms of outlays for each budget account. The tradeoff here is that budget account outlays do not
necessarily represent program-level activity. Some programs represent spending within only a
part of an account. Moreover, the composition of accounts sometimes changes over time, which
necessitates combining multiple accounts to provide consistent measures of spending over time.
Table A-1 shows the federal outlays for the selected major income assistance programs by budget
account. It shows that three of the categories represent combinations of accounts. Medicaid (the
largest program) is combined in this report with the State Children’s Health Insurance program
(CHIP) because some CHIP programs are expansions of Medicaid. Housing assistance combines
many accounts and represents far more spending than the Section 8 Housing Choice Vouchers
discussed in CRS Report R41625. The account composition of housing aid has changed many
times over the years, and a consistent measure of “housing assistance” requires combining both
rent vouchers and support for families in public housing. Finally, the “Family Support” account
comprises more than TANF. In the federal budget, TANF’s predecessor (Aid to Families with
Dependent Children) was included in the same account as the Child Support Enforcement (CSE)
program and child care for families receiving, transitioning from, or at-risk of receiving cash
assistance. Therefore, the “Family Support” category covers TANF, CSE, and today’s child care
subsidy programs. TANF also consolidated funding in the pre-1996 program to provide
employment services, education, and training for cash assistance recipients (the Job Opportunity
and Basic Skills Training, or JOBS, program); funding for that program is included in the
historical outlays of the “Family Support” category.
In addition, Pell Grants are the major component of the “Student Financial Assistance” account.
Also included in the “Student Financial Assistance” account are federal supplemental educational
opportunity grants (SEOGs) and college work study programs. The largest component of the
“Compensatory Education” (currently named “Accelerating Achievement and Ensuring Equity”)
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account is the Title I-A grants to school districts with low-income children, but it also includes
School Improvement Grants, Even Start, and the High School Graduation initiative, among other
activities.
The Medicare Part D (prescription drug) low-income subsidy is not included in this report
because it is not separately accounted for in the federal budget, but instead is subsumed in the
much larger budget account that finances the Medicare prescription drug program. Unlike other
programs, CRS Report R41625 did not use federal budget information to capture spending for
this program. Rather, it used information from the annual report of the Medicare trustees.
Table A-1. Federal Outlays for Selected Major Low-Income Assistance Programs, By
Budget Account, FY2011-FY2013
Dollars in millions
CBO March 2012



Baseline
Treasury Identification
Program/Group
for Budget Account
2011
2012
2013
Medicaid/SCHIP




Medicaid 75-0512-0-1-551
$274,964
$258,040
$276,064
Children’s Health Insurance Funda 75-0515-0-1-551
8,633
9,195
9,748
Total Medicaid/SCHIP

283,597
267,235
285,812
SNAP
12-3505-0-1-605 77,637
81,053
81,986
Student Financial Assistance
91-0200-0-1-502 37,894
37,421
38,146
Compensatory Education
91-0900-0-1-501 19,536
18,012
16,448
Assisted Housingb




Tenant-Based Rental Assistance
86-0302-0-1-604
18,570
18,118
18,442
Project-based Rental Assistance
86-0303-0-1-604
8695
9,309
9,700
Housing Certificate Fund
86-0319-0-1-604
1,170
900
732
Housing for the Elderly
86-0320-0-1-604
934
850
783
Housing for Persons with Disabilities
86-0237-0-1-604
309 235 225
Revitalization of Severely Distressed
86-0218-0-1-604 177
155
135
Public Housing
Green Retrofit Program for Multifamily
86-0306-0-1-604 147
32
0
Housing
Public Housing Capital Fund
86-0304-0-1-604
4,176
2,650
2,200
Public Housing Operating Fund
86-0163-0-1-604
4,620
4,287
4,004
Native American Housing Block Grant
86-0313-0-1-604
854
645
618
Other Assisted Housing Programs
86-0206-0-1-604
496
460
417
Flexible Subsidy Fund
86-4044-0-3-604
-37
-30
-30
Total Assisted Housing

40,111
37,611
37,226
EITC
20-0906-0-1-609 55,652
55,686
58,243
Additional Child Tax Credit
20-0922-0-1-609 22,691
22,973
22,865
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CBO March 2012



Baseline
Treasury Identification
Program/Group
for Budget Account
2011 2012 2013
SSI
28-0406-0-1-609 56,462
50,407
57,162
Family Supportc




Family Support Account (Child Support
75-1501-0-1-609 4,182
4,226
4,277
Enforcement)
TANF 75-1552-0-1-609
17,116
17,144
16,878
Contingency Fund
75-1522-0-1-609
1,956
1,134
786
CCDBG 75-1515-0-1-609
2,984
2,252
2,297
Child Care Entitlement to the States
75-1550-0-1-609
3,100
2,896
2,897
Federal Share of Child Support
75-9992-8-1-609 -940
-867
-871
Collections
Total Family Support

28,398
26,785
26,264
Source: Congressional Research Service (CRS), based on data from the U.S. Office of Management and Budget
(OMB) and the Congressional Budget Office (CBO).
a. Includes outlays for the children’s health insurance contingency enrol ment fund.
b. For prior years, includes outlays from the fol owing accounts that no longer have spending associated with
them: annual contribution to assisted housing, prevention of resident displacement, preserving housing
investment, section 8 reserve preservation account, moving to work, rental housing assistance, and low-rent
public housing loans and other expenses.
c. For prior years, includes outlays from the Job Opportunity and Basic Skil s Training (JOBS) account.




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