States Looking Ahead to 2013

January 5, 2012 at 1:13 pm

Legislative sessions begin in 14 states this week, and a number of governors will propose their budgets for the upcoming fiscal year later this month, bringing new attention to continued problems with state budget conditions — including the large cuts in public services that states have imposed in the past few years.  The CBPP reports below summarize the cuts in education and other areas that states are implementing in the current fiscal year.

  • State Budget Cuts in the New Fiscal Year Are Unnecessarily Harmful.  The cumulative effect of four consecutive years of lagging revenues has led to budget-cutting of historic proportions. Our analysis of enacted state budgets shows that budget cuts are hitting education, health care, and other state-funded services harder in the current fiscal year — which runs through June 2012 — than in any year since the recession began.

Next week, we’ll issue an updated estimate of state budget shortfalls.

The Latest on Inequality

January 4, 2012 at 2:16 pm

As our colleague Jared Bernstein has discussed (here and here), an informative new Congressional Research Service (CRS) report analyzes the rise in income inequality between 1996 and 2006.  Like other recent reports, CRS found that income growth at the top far outpaced growth elsewhere on the income ladder.

As Jared also explains, the CRS report finds:

  • The single biggest contributor to the growth of inequality during that period was the growth in capital gains and dividend income, which are highly concentrated at the top of the income scale.
  • The tax system did less to alleviate rising inequality in 2006 than it did a decade earlier.

The CRS study echoes findings by the Congressional Budget Office that income inequality has grown dramatically in the past three decades.

For more on income inequality, see our recent blog series.  For more on why the tax system is doing less to counter rising inequality than it used to, click here.

Defense Squeeze Tight, Non-Defense Squeeze Tighter

January 3, 2012 at 3:46 pm

As Defense Secretary Panetta prepares to offer a strategy for cutting the defense budget over the next decade, a new CBPP report shows that the tight annual funding limits scheduled for 2013-2021 will squeeze non-defense appropriations even more than defense.

This finding contradicts claims by House Armed Services Chairman Buck McKeon (R-CA) and others that the required cuts disproportionately affect the military.

Scheduled Non-Defense Cuts Will Exceed Defense CutsAs our report shows:

  • Between 2011 and 2021, non-defense discretionary funding — the part of the budget that includes education, veterans’ health care, law enforcement, food safety, medical research, and many other programs — will shrink by 17.1 percent, after adjusting for inflation, while funding for defense will decline 15.1 percent (see graph).
  • As a share of the economy, non-defense funding will shrink by 1.22 percent of gross domestic product (GDP) over this period, while defense funding will decline 1.17 percent of GDP.
  • Over the two-decade period from 2001 to 2021, non-defense discretionary funding will shrink by 0.96 percent of GDP, while defense funding will shrink by a little over half as much — by 0.58 percent of GDP.

Defense funding in 2021 — at 2.5 percent of GDP — will be the lowest since 1940, before the nation’s entry into World War II.  But at 2.4 percent of GDP, non-defense discretionary funding will be at its lowest level since 1930.

Click here for the full report.

Happy Holidays from the Center

December 21, 2011 at 5:48 pm

Wishing you and your loved ones a happy holiday season. Off the Charts is going on vacation, but we’ll resume posting regularly and approving comments as soon as we return in the new year.

.

.

.

.

In Case You Missed It…

December 21, 2011 at 5:42 pm

This week on Off the Charts, we focused on the federal budget and health care and concluded our special series on safety net programs.

  • On the federal budget, Kelsey Merrick discussed how the cuts to Pell Grants for fiscal year 2012 that Congress recently agreed to would make it harder for many low-income students to afford college.
  • On health care, Paul Van de Water explained why the premium support proposal from House Budget Committee Chairman Paul Ryan and Senator Ron Wyden would likely shift substantial Medicare costs to beneficiaries.
  • On our special series on safety net programs, Stacy Dean elaborated on the importance of the Supplemental Nutrition Assistance Program (i.e., food stamps) in helping families afford an adequate diet.  Chad Stone showed that unemployment insurance plays a vital role in helping families stay afloat during periods of high unemployment.  Indivar Dutta-Gupta concluded the series by noting that while the safety net works, we should do more to reduce poverty.

In other news, we held a media briefing on the Ryan-Wyden premium support plan for Medicare and released a report on the case against premium support.