Karen Spar
Specialist in Domestic Social Policy and Division Research Coordinator
Gene Falk
Specialist in Social Policy
Debate is occurring on short- and long-term efforts to boost the economy, reduce the deficit, and stabilize the debt; this debate includes proposals to alter the overall size and composition of federal spending and revenues. “Human resources” programs account for the majority of federal outlays (67% in FY2011) and would be affected by these proposals. Six categories comprise the human resources “superfunction”: education, training, employment, and social services; health (largely Medicaid); Medicare; income security; Social Security; and veterans programs.
President Obama submitted a detailed FY2013 budget proposal to Congress in February. The House subsequently passed an FY2013 budget resolution (H.Con.Res. 112), based on a proposal by Budget Committee Chairman Ryan. Several proposals have been offered by Members of the Senate, including a resolution by Budget Committee Chairman Conrad that is based on recommendations of the National Commission on Fiscal Responsibility and Reform (Simpson- Bowles Commission). Although the House and Senate have not agreed on a budget resolution, the FY2013 appropriations process is underway. The House has also passed a reconciliation bill (H.R. 5652) intended to replace an automatic budget reduction (i.e., “sequestration”) scheduled to occur on January 2, 2013, under provisions of the Budget Control Act of 2011.
Spending for human resources peaked in FY2010 at 16.6% of Gross Domestic Product (GDP) and, according to the Congressional Budget Office (CBO), will have dropped to 15.5% in FY2012. This decline reflects the assumed economic recovery, lower spending for programs that respond automatically to economic conditions (e.g., Unemployment Insurance, Supplemental Nutrition Assistance Program), and expiration of funding under the American Recovery and Reinvestment Act of 2009. CBO projects that human resources spending will rise again as a share of GDP and reach 16.1% in FY2022, due to continuing effects of the baby boom’s retirement and enrollment in Medicare and Social Security, real growth in Social Security benefits, medical cost inflation, and spending under the Affordable Care Act (ACA) of 2010. (Note that CBO’s baseline does not yet reflect any potential impact of the Supreme Court’s June 28 decision on the ACA.)
Reflecting these trends, all projected growth in human resources spending will occur in three categories: health (i.e., Medicaid), Medicare, and Social Security. CBO estimates that spending for income security (which includes Unemployment Insurance, the Supplemental Nutrition Assistance Program, and selected low-income, retirement, and disability programs) will contract as a share of GDP over the next decade, as will the two smallest human resources categories (i.e., education, training, employment, and social services; and veterans benefits and services).
Both the Administration and Conrad/Fiscal Commission budgets assume human resources spending over the next 10 years at levels close to the CBO current law baseline, although the President requests increased spending in the initial years for economic stimulus. The House resolution assumes gradually decreasing spending for human resources as a share of GDP, but also assumes that spending would rise slightly at the end of the decade. As noted above, CBO projects human resources spending will equal 16.1% of GDP in FY2022 with no change in policy. This compares with 16.1% under the Administration proposal, 16% under the Conrad/Fiscal Commission resolution, and 14% under the House resolution. The most significant reductions from the CBO baseline assumed by the House would occur in three categories: education, training, employment, and social services; Medicaid (which would be converted into a block grant); and income security. The House also assumes conversion of Medicare into a “premium support” program starting in FY2023, which is beyond the budget resolution’s 10-year window.
Date of Report: July 13, 2012
Number of Pages: 54
Order Number: R42605
Price: $29.95
Document available via e-mail as a pdf file or in paper form.
To Order:
For email and phone orders, provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Posts
