The major need-tested programs discussed in this report provide cash, food, housing, and educational and medical assistance to families and individuals with limited financial resources, and they had collective FY2013 federal outlays of $606 billion. 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, beyond that the programs differ considerably in their target populations, benefits, services, and focus. These programs also tend to be substantially larger (in spending) than need-tested programs. The Earned Income Tax Credit (EITC) represents the refundable portion of the earned income tax credit. 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 total, spending for low-income assistance in inflation-adjusted terms has been higher at the end of each decade. 111-5 )), in response to the deep recession from 2007 to 2009. Federal outlays for selected programs declined from FY2011 to FY2012. The temporary increases in funding for these programs under ARRA expired during this period. Total federal outlays for these programs again increased from FY2012 to FY2013. 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. Non-cash benefits or services, particularly health care, began to account for an increasing share of aid to low-income families and persons. The projected health outlays include the estimated costs of the expansions made in the 2010 health reform law, such as 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 subsidizes health insurance purchased through state exchanges for those with incomes under 400% of the federal poverty level. The 1990s

The 1990s was the decade of welfare reform. In that decade, total spending on non-health low-income assistance programs increased. 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. However, aid to working poor families with children was increased during the 1990s through other programs. 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. Recent Years

There were large increases in spending for low-income aid in recent years in response to the 2007-2009 recession. Federal Outlays for Low-Income Assistance Programs as a Percentage of the Gross Domestic Product

Federal outlays for major low-income assistance programs measured as a percentage of gross domestic product (GDP) provide a sense of how large these programs are relative to the size of the national economy. All of that increase reflects the growth of health care spending. 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. CRS Report R42505, Supplemental Nutrition Assistance Program (SNAP): A Primer on Eligibility and Benefits , by [author name scrubbed]. 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. Additionally, the Congressional Budget Office (CBO) makes its baseline budget projections in terms of outlays for each budget account.
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 were particularly large increases in need-tested outlays during the FY2007 through FY2011 period, attributable to the effects of the recent deep recession (which increased the number of people eligible for aid) and policy responses to it that increased federal funding and benefits for certain programs. Spending for these programs declined from FY2011 to FY2012, as the effects of many of the temporary funding increases for these programs made in response to the recession expired. Total outlays for these programs began to rise again from FY2012 to FY2013. The Congressional Budget Office (CBO) forecasts that under current law, federal outlays for need-tested programs would 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 from FY2013 through FY2024.
Different programs also have different spending trends. Cash benefits—to the aged, blind, and disabled and needy families with dependent children—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." 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).
Outlays for major low-income assistance programs continued to increase in the 2000s even before the onset of the recent recession. This increase stemmed from increased spending on the refundable EITC and child tax credits, SNAP, education programs, and Medicaid.