How the Federal Budget Process Works — and What Happens When It Doesn’t

September 12, 2014 at 11:21 am

With Congress expected to approve a stopgap funding bill before October 1 to keep the government running for the next few months, this is an appropriate time to review how the federal budget process is supposed to work.  Our newly updated backgrounder does just that, describing the laws and procedures under which Congress decides how much money to spend each year, what to spend it on, and how to raise the money to pay for that spending.

More specifically, our backgrounder explains:

  • the President’s annual budget request, which is supposed to kick off the budget process;
  • the congressional budget resolution — how it is developed, what it contains, and what happens if there is no budget resolution;
  • how the terms of the budget resolution are enforced in the House and Senate;
  • budget “reconciliation,” an optional procedure used in some years to facilitate the passage of legislation amending tax or entitlement law; and
  • statutory deficit-control measures — spending caps, pay-as-you-go requirements, and sequestration.


It also explains the differences between discretionary and mandatory programs and between budget authority and outlays, as well as other concepts that aren’t widely known but are critical to understanding the budget process.

Noting that in recent years the budget process hasn’t always worked as envisioned, our backgrounder describes what happens if, for example, Congress fails to complete a budget resolution or to pass appropriations bills before the October 1 start of the fiscal year.

5 Facts to Help You Understand Next Week’s Poverty Figures

September 12, 2014 at 9:51 am

Our new report provides context for the official poverty and income figures for 2013, which the Census Bureau will release on Tuesday.  Here are the highlights:

  1. As in other recent recoveries, poverty has been slow to decline.  Over time, poverty rates tend to move roughly in tandem with economic indicators, which generally improved slightly in 2013.  Thus, the poverty rate — which jumped from 12.5 percent in 2007 to 15.1 percent in 2010 and remained essentially unchanged at 15.0 percent in 2011 and 2012 — may start to improve in 2013 as well, although the improvement might not be statistically significant.A return to pre-recession poverty levels is unlikely soon.  To replace the millions of jobs lost in the Great Recession anytime soon and keep up with population growth, the economy must create jobs faster than it has to date.  Although the economic recovery (which officially began in June 2009) is not uniquely disappointing in this regard, it is still problematic — and because the economic downturn was so deep, there is much more ground to make up.  Recoveries in the 1960s, 1970s, and 1980s featured quicker reductions in poverty (see graph).
  1. Austerity policies likely hampered progress against poverty in 2013.  The economy almost certainly would have improved more in 2013 had austerity policies not reduced the government’s contribution to the economy.  These included the “sequestration” spending cuts of the 2011 Budget Control Act and first implemented in 2013 and the expiration of the payroll tax holiday, which reduced most workers’ take-home pay by 2 percent of earnings.
  2. Unequal wage growth also slowed progress.  Between 2009 and 2013, inflation-adjusted hourly wages rose by 1 percent for workers at the 95th percentile (workers whose wage levels exceed those of 95 percent of all workers but are less than the remaining 5 percent), but fell by about 4 to 6 percent for workers in the bottom 60 percent of the wage scale, according to the Economic Policy Institute.
  3. Income inequality tied a record-high level in 2012.  The income gap between rich and poor as measured by the Gini index — the Census Bureau’s main summary indicator of inequality in pre-tax cash income — tied a record in 2012, with the data going back to 1967.  Other inequality measures also stood at or near record levels in 2012.
  4. Most poverty figures released on Tuesday won’t reflect non-cash benefits.  The Census figures will focus on the official poverty statistics, which are based on pre-tax cash income and omit support such as food assistance and rental subsidies as well as tax-based assistance such as the Earned Income Tax Credit (EITC).  An alternative Census Bureau poverty measure, the Supplemental Poverty Measure (SPM), includes these types of assistance, and experts generally consider it a more reliable tool for measuring changes in poverty over time as well as the safety net’s impact on poverty.  Unfortunately, Census will not release SPM figures for 2013 until later this year.  However, Census will release a table on Tuesday providing data on the poverty-reducing effects of certain programs, including SNAP (formerly food stamps) and the EITC.

Click here for the full report.

What to Know About Next Week’s Health Coverage Data

September 11, 2014 at 4:25 pm

The Census Bureau will release estimates Tuesday of the number and share of Americans without health coverage in 2013, based on its annual Current Population Survey (CPS).  While the CPS is the most widely used source of health coverage information, significant changes in its health coverage questions instituted for 2013 — the result of a multi-year Census initiative to improve the reliability and accuracy of the survey’s health coverage estimates — mean that the 2013 results cannot be compared to those for prior years, as we explain in a new report.  Moreover, because the CPS estimates are for 2013, they will not show the effects of health reform’s major coverage expansions, implemented starting in January 2014.

Analysts and policymakers should therefore look to other available data sources as well, including other federal and private surveys.  For example, the Census Bureau also will issue Tuesday the health coverage results from its American Community Survey (ACS).  Unlike the CPS, the ACS health insurance data for 2013 will be a part of a consistent data series back to 2008 and hence will allow analysis of changes in health coverage over recent years.

Preliminary results from the Centers for Disease Control and Prevention’s (CDC) National Health Interview Survey provide important clues about the upcoming Census estimate (under the ACS) of the change in health coverage in 2013.  The CDC data show that the share of Americans without health coverage remained stable between 2012 and 2013, as did rates of private coverage, Medicaid coverage, and coverage for particular groups of Americans.  These data show the uninsured rate rose from 14.5 percent in 2007 to 16.0 percent in 2010, then fell to 14.7 percent by 2012, and remained essentially unchanged (in statistical terms) at 14.4 percent in 2013.

Click here to read the full report.

Data Show TANF Didn’t Respond Adequately to Need During Recession, Contrary to New Study’s Claims

September 10, 2014 at 2:56 pm

A recent study from researchers at the Brookings Institution and the University of Nevada concludes that the Temporary Assistance for Needy Families (TANF) program responded to increased need during the Great Recession in the majority of states as a good safety net program would.  This conclusion, however, is based on seriously flawed analysis, as we explain in a new paper.

A number of assertions made by the authors — Ron Haskins and Kimberly Howard of the Brookings Institution and Vicky Albert of the University of Nevada — wilt under scrutiny.  Consider, for example, one such claim: that TANF responded to a greater degree in the 2000 and 2007 recessions than the Aid to Families with Dependent Children program (AFDC), TANF’s predecessor, did in previous recessions.  But this claim rests on inappropriate use of data.

The authors arrive at this conclusion by averaging the percentage increase (or decrease) in the AFDC “caseload” (families who received benefits) during the 1980, 1981, and 1990 recessions and comparing that to the average percentage change in the TANF caseload during the 2000 and 2007 recessions.  This metric produces highly skewed results, however.

The AFDC caseload at the start of all three of the early recessions was much larger than the TANF caseload at the start of the 2000 and 2007 recessions, making a percentage-change comparison highly misleading.  From the beginning to the end of the 1990 recession, the number of unemployed individuals rose by 1.7 million, while the AFDC caseload increased by 350,000 families.  From the beginning to the end of the 2007 recession, the number of unemployed individuals rose by 7 million, while the TANF caseload increased by just 124,000 families.

Put another way, during the 1990 recession, the AFDC caseload increased by 21 families for every 100 additional unemployed individuals, while the comparable figure for the TANF caseload during the 2007 recession was an increase of only two families for every additional 100 unemployed individuals (see chart).

We’ve monitored TANF carefully since the start of the recession and have a far less sanguine assessment of the program’s responsiveness to the recent recession than Haskins, Howard, and Albert do.  We conclude that the program fell well short of how we would expect such a basic safety net program to respond during tough economic times.

In spite of its shortcomings, TANF is often held up as a model for altering other safety net programs.  The Haskins, Howard, and Albert study is likely to be cited as evidence that TANF performs fine in recessions, so other programs (such as SNAP) can be changed to a similar block-grant structure.  But that would be a highly inappropriate conclusion based on flawed use of data.

Click here to read our full paper.

Damaging House Bill Would Undo Health Reform Protections and Raise Small Business Premiums

September 9, 2014 at 2:02 pm

The House this week is scheduled to consider a bill sponsored by Rep. William Cassidy (R-LA) that would allow insurance companies, through 2018, to continue to offer to any small employer the health insurance plans in the small group market that the insurers were selling in 2013.

In short, the bill is another attempt to undermine health reform and try to ensure it doesn’t succeed, as we explain in a new analysis:

Under the bill, such plans would not have to comply with the Affordable Care Act’s (ACA) market reforms and consumer protections that otherwise apply to all health insurance plans offered in the small group market, starting in 2014.

The bill would go well beyond the existing Administration transition policy that permits states to allow insurers to continue — through 2016 — to offer non-ACA-compliant plans in the individual and/or small group market to individuals and employers who were previously enrolled in such plans. . . [T]he Cassidy bill would likely have serious adverse effects both on premiums in the small group market — causing them to rise substantially for many small firms — and on health reform’s consumer protections, such as the reform that prevents insurance companies from charging higher premiums to firms with older, less healthy workforces.

Click here to read the full paper.