Feds Paid Average of $4,000 in 'Means-Tested' Benefits to Households Earning $35,500
(CNSNews.com) - The Congressional Budget Office released a report last week indicating that the federal government paid an average of $4,000 in means-tested benefits and refundable tax credits to Americans living in households with an average income of $35,500.
The CBO analysis looked at the means-tested federal payments and refundable tax credits for 2006 because that was the most recent year for which all the relevant data was available.
The CBO's overall report looked at the growth in federal spending on Medicaid, the low-income subsidy for the Medicare Part D prescription drug benefit, Supplemental Security Income, Temporary Assistance for Needy Families, the Supplemental Nutrition Assistance Program (food stamps), child nutrition programs, housing assistance programs, the Pell Grant Program, the refundable portion of the earned income tax credit, and the refundable portion of the child tax credit.
In a refundable tax credit, the government pays the full credit to the individual even if the person has not paid an amount in taxes that is equal to the tax credit itself.
Inflation-adjusted spending on these programs, CBO discovered, has grown more than ten-fold since 1972, rising from $55 billion in that year to $588 billion in 2012. CBO said this increase occurred both because of “increases in the number of people participating in these programs and increases in spending per participant.”
The CBO projected that the cost of these federal wealth-transfer programs will continue to rise in the coming decade in part because of new federal health-care subsidies enacted in Obamacare—or the Affordable Care Act.
“Spending on means-tested health care programs is projected to more than double, from $272 billion in 2012 to $624 billion in 2023 (adjusted for inflation), an average annual increase of 8 percent above the rate of inflation,” said CBO.
“That rise reflects expected growth in the cost of providing medical care; it also reflects expanded eligibility for assistance and new types of assistance to be provided under the Affordable Care Act (ACA),” said CBO. “The ACA will not only make more people eligible for Medicaid but also allow many low- and moderate-income people who do not qualify for Medicaid to purchase federally subsidized health care coverage.”
In its analysis of who got how much from federal means-tested benefits programs in 2006, the CBO divided the nation’s households into income quintiles, earning average annual incomes of $9,600; $35,500; $61,600; $96,400; $271,000.
CBO concluded that households in the second quintile, earning an average income of $35,500, received an average of $4,000 worth of benefits from federal means-tested programs.
Households in the lowest quintile, earning an average income of $9,600, received an average of $8,800 worth of benefits from federal means-tested programs. Households in the third-highest quintile, earning an average income of $61,600, received an average of $1,600 in federal means-tested benefits. Household in the fourth highest quintile, earning an average income of $96,400, received an average of $800 worth of benefits from federal means-tested programs.
Households in the top quintile, earning an average income of $271,000, received an average of $500 in benefits from federal means-tested programs.