With the expiration of COVID relief, poverty rose substantially in 2022, despite strong labor market gains that helped hold inflation-adjusted pre-tax cash incomes steady for the lowest-income one-fifth of households. These programs reduced the extent of poverty for millions more, even when not bringing them above the poverty line. population would have had incomes below the poverty line in 2021 this was triple the poverty rate of 7.8 percent using the SPM. Not counting any government benefits and tax policies, 23.8 percent of the U.S. COVID relief and other government assistance lifted a record 53 million people above the poverty line in the pandemic, including a record 12 million children in 2021, a CBPP analysis found using Census data and the Supplemental Poverty Measure (SPM), which accounts for government benefits and taxes. Such programs keep millions of people above the poverty line each year. Economic security programs include: the refundable portions of the Earned Income Tax Credit and Child Tax Credit, which assist low- and moderate-income working families programs that provide cash payments to eligible individuals or households, including unemployment insurance and Supplemental Security Income for low-income people who are over age 65 or disabled various forms of in-kind assistance for low-income people, including the Supplemental Nutrition Assistance Program (formerly known as food stamps), school meals, low-income housing assistance, child care assistance, and help meeting home energy bills and other programs such as those that aid abused or neglected children. Three other categories together account for one-quarter of spending:Įconomic security programs: About 8 percent (or $522 billion) of the federal budget in 2023 supports programs that provide aid (other than health insurance or Social Security benefits) to individuals and families facing hardship. About 95 percent of the spending in this category reflects the underlying costs of the Defense Department, largely for operations and maintenance military personnel procurement of weapons and research, development, testing, and evaluation. Defense: Another 13 percent of the budget, or $806 billion, will be paid for national defense activities.In February 2023, 14.3 million of the 15.7 million people estimated to be enrolled in health insurance through ACA marketplaces received subsidies that lower their premiums and out-of-pocket costs, at an estimated cost of about $88 billion. Enrollment is projected to decline by about 15 million by October 2024, but projections are highly uncertain. That is elevated from 71 million people prior to the pandemic due to a temporary pandemic-related coverage protection that expired in April 2023. In May 2023, Medicaid and CHIP provided health care or long-term care to about 94 million low-income children, parents, older adults, and people with disabilities. (Both Medicaid and CHIP require states to pay some of their total costs.) The rest of this category funds the federal costs of Medicaid, CHIP, and ACA subsidy and marketplace costs. One-half of this amount, or $828 billion, goes to Medicare, which provides health coverage to around 66 million people who are aged 65 and older or have disabilities. Health insurance: Four health insurance programs - Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and Affordable Care Act (ACA) marketplace health insurance subsidies - together account for 24 percent of the budget in 2023, or $1.5 trillion. Social Security also expects to provide benefits to 2.7 million spouses and children of retired workers, 5.9 million surviving children and spouses of deceased workers, and 8.8 million disabled workers and their eligible dependents. Social Security: In 2023, 21 percent of the budget, or $1.4 trillion, will be paid for Social Security, which will provide monthly retirement benefits averaging $1,836 to 48.6 million retired workers.The remaining amount will be financed by net borrowing.Īs the chart below shows, three major areas of spending make up the majority of the budget: Of that $6.3 trillion, over $4.8 trillion is estimated to be financed by federal revenues. In fiscal year 2023, the federal government is estimated to spend $6.3 trillion, amounting to 24.2 percent of the nation’s gross domestic product (GDP).
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