Econintersect: The Congressional Budget Office’s (CBO) Associate Director for Economic Analysis, Jeffrey Kling, spoke to the National Lieutenant Governors Association this week focusing on the federal budget outlook. This post includes a summary of the elements of revenue sharing with the States, and a presentation slide show.
Medicaid and the Children’s Health Insurance Program – account for the largest share of federal grants to states—is projected to increase from 1.7 percent of the nation’s output (gross domestic product, or GDP) in 2012 to 2.5 percent of GDP by 2022.
Income Security Programs – federal spending on child nutrition programs will grow nearly as much as economic output over the next ten years. In contrast, spending in nominal terms for Temporary Aid for Needy Families (TANF) will be essentially unchanged—so as prices rise and the economy grows, spending on TANF will become a smaller share of output. For the five types of income security programs providing the largest amounts of federal aid to states and localities (child nutrition programs, Temporary Assistance to Needy Families, administrative funds for the Supplemental Nutrition Assistance Program, foster care and permanency, and child support enforcement), spending as a share of output will decrease by 35 percent—from 0.8 percent of GDP in 2012 to 0.5 percent in 2022—under current law.
Discretionary Programs – the total amount of nondefense discretionary spending will fall by 35 percent as a share of output—from 4.1 percent in 2012 to 2.6 percent in 2022.