presentation on the distribution of federal spending and taxes in 2006

Congressional Budget Office

The Distribution of

Federal Spending and Taxes in 2006

NTA Spring Symposium

Molly Dahl, Microeconomic Studies Division Kevin Perese, Tax Analysis Division

Full Report: http://www.cbo.gov/publication/44698

May 15, 2014

C O N G R E S S I O N A L B U D G E T O F F I C E

Overview

Extends prior CBO distributional analyses by including spending Snapshot of a single year: Calendar Year 2006 Examine Distributions by: 1) Three household types

Elderly Nonelderly with children Nonelderly without children

2) Five income groups among the nonelderly Market income quintiles

C O N G R E S S I O N A L B U D G E T O F F I C E

Federal Spending and Revenues, 2006

Federal Spending

$2.4 Trillion

$2.3 Trillion

Federal Revenues

$2.7 Trillion

$2.4 Trillion

88% Allocated in CBO’s Analysis

98% Allocated in CBO’s Analysis

C O N G R E S S I O N A L B U D G E T O F F I C E

Categories of Federal Spending, 2006

Cash and Near-Cash Transfers

$785 Billion

Cash Transfers Refundable Tax Credits SSI UI TANF Means-Tested Veterans’ Benefits Black Lung Disability

Near-cash Transfers SNAP Housing Assistance Pell Grants Child Nutrition Programs WIC LIHEAP

Social Security

C O N G R E S S I O N A L B U D G E T O F F I C E

Categories of Federal Spending, 2006

Cash and Near-Cash Transfers

Health Care Transfers

$785 Billion

$481 Billion

Medicaid and CHIP Means-Tested Veterans’ Health Benefits

Social Security

Medicare

C O N G R E S S I O N A L B U D G E T O F F I C E

Categories of Federal Spending, 2006

Cash and Near-Cash Transfers

Health Care Transfers

Other Goods and

Services

$785 Billion

$481 Billion

$1,080 Billion

Other HHS Education OPM Transportation Other Veterans Affairs

Agriculture Justice Energy Other

National Defense

Social Security

Medicare

C O N G R E S S I O N A L B U D G E T O F F I C E

Categories of Federal Spending, 2006

Unallocated Spending

Cash and Near-Cash Transfers

Health Care Transfers

Other Goods and

Services

Social Security

National Defense

Medicare

Interest on Debt

$785 Billion

$481 Billion

$1,080 Billion

$312 Billion

Total Spending $2.7 Trillion

Interest On Debt

C O N G R E S S I O N A L B U D G E T O F F I C E

Spending on Cash and Near-Cash Transfers, by Type of Household, 2006

0

100

200

300

400

500

Other

(Billions of dollars)

Elderly

Social Security

Nonelderly Without Children

Nonelderly With Children

C O N G R E S S I O N A L B U D G E T O F F I C E

Spending on Health Care Transfers, by Type of Household, 2006

0

100

200

300

400

500(Billions of dollars)

Elderly

Medicare

Medicaid and Other

Nonelderly Without Children

Nonelderly With Children

C O N G R E S S I O N A L B U D G E T O F F I C E

Federal Taxes, by Type of Household, 2006

0

400

800

1,200(Billions of dollars)

Elderly Nonelderly Without Children

Nonelderly With Children

C O N G R E S S I O N A L B U D G E T O F F I C E

Average Transfers, Taxes, and Transfers Minus Taxes, by Type of Household, 2006

-20,000

-10,000

0

10,000

20,000

30,000(Dollars per household)

Elderly Nonelderly without Children

Nonelderly with Children

Transfers minus Taxes

Taxes

Transfers

C O N G R E S S I O N A L B U D G E T O F F I C E

Average Market Income Plus Transfers Minus Taxes by Type of Household, 2006

0

20,000

40,000

60,000

80,000

100,000

120,000(Dollars per household)

Elderly Nonelderly without Children

Nonelderly with Children

UP 25% DOWN 17% DOWN 20%

C O N G R E S S I O N A L B U D G E T O F F I C E

Federal Spending, 2006

Unallocated Spending

Cash and Near-Cash Transfers

Health Care Transfers

Other Goods and

Services

$785 Billion

$481 Billion

$1,080 Billion

$312 Billion

Total Spending: $2.7 Trillion

C O N G R E S S I O N A L B U D G E T O F F I C E

Federal Spending on Other Goods and Services, by Type of Household, 2006

0

200

400

600(Billions of dollars)

Elderly Nonelderly without Children

Nonelderly with Children

Allocated by

Share of

Population

Allocated by

Share of

Market Income

C O N G R E S S I O N A L B U D G E T O F F I C E

Average Spending Minus Taxes, by Type of Household, 2006

-20,000

-10,000

0

10,000

20,000

30,000(Dollars per household)

Elderly Nonelderly without Children

Nonelderly with Children

Transfers plus Other Goods and Services (by Share of Population) minus Taxes

Transfers plus Other Goods and Services (by Share of Market Income) minus Taxes

Transfers minus Taxes

C O N G R E S S I O N A L B U D G E T O F F I C E

Federal Spending and Revenues, 2006 Allocated to Nonelderly Households

Federal Spending

$2.4 Trillion

$2.7 Trillion

Federal Revenues

$1.5 Trillion

$2 Trillion

Nonelderly

Nonelderly Elderly

Elderly

C O N G R E S S I O N A L B U D G E T O F F I C E

Federal Spending, 2006 Allocated to Nonelderly Households

Federal Spending

$2.7 Trillion

$1.5 Trillion

Cash and Near-Cash

$175 Billion

Other Goods and Services

$375 Billion

Health Care

$920 Billion

Nonelderly Elderly

C O N G R E S S I O N A L B U D G E T O F F I C E

Spending on Cash and Near-Cash Transfers for Nonelderly Households, by Income Group, 2006

0

100

200(Billions of dollars)

Lowest Quintile

Highest Quintile

Middle Quintile

Social Security

Other Cash

Transfers

Near-Cash

Transfers

C O N G R E S S I O N A L B U D G E T O F F I C E

Spending on Health Care Transfers for Nonelderly Households, by Income Group, 2006

0

100(Billions of dollars)

Lowest Quintile

Highest Quintile

Middle Quintile

Medicare

Medicaid and

Other

C O N G R E S S I O N A L B U D G E T O F F I C E

Federal Revenues, 2006 Allocated to Nonelderly Households

$2.4 Trillion

Federal Revenues

$2 Trillion

Highest Quintile

Elderly Nonelderly

C O N G R E S S I O N A L B U D G E T O F F I C E

Average Transfers, Taxes, and Transfers Minus Taxes, for Nonelderly Households, 2006

-75,000

-50,000

-25,000

0

25,000

50,000

75,000(Dollars per household)

Lowest Quintile

Highest Quintile

Middle Quintile

Transfers minus Taxes

Taxes

Transfers

C O N G R E S S I O N A L B U D G E T O F F I C E

Average Market Income Plus Transfers Minus Taxes for Nonelderly Households, 2006

0

50,000

100,000

150,000

200,000

250,000

300,000(Dollars per household)

Lowest Quintile

Highest Quintile

Middle Quintile

UP 101% DOWN 14%

DOWN 27%

C O N G R E S S I O N A L B U D G E T O F F I C E

Federal Spending on Other Goods and Services Allocated to Nonelderly Households, 2006

$920 Billion

Lowest Quintile

Allocated by Share of Population

Allocated by Share of

Market Income

Highest Quintile

Other Goods and Services Transfers

$550 Billion

C O N G R E S S I O N A L B U D G E T O F F I C E

Average Spending Minus Taxes for Nonelderly Households, 2006

-75,000

-50,000

-25,000

0

25,000

Transfers minus Taxes

(Dollars per household)

Lowest Quintile

Highest Quintile

Middle Quintile

Transfers plus Other Goods and Services (by Share of Population) minus Taxes

Transfers plus Other Goods and Services (by Share of Market Income) minus Taxes

C O N G R E S S I O N A L B U D G E T O F F I C E

Recap

Extends prior CBO distributional analyses by including spending More spending on elderly households than taxes paid by those

households in 2006; the opposite was true for nonelderly households

Among the nonelderly, more spending on lower income

households than taxes paid by those households in 2006; the opposite was true for higher income households