ECONOMIC REPORT OF THE PRESIDENT

as a share of potential GDP by Presidential administrations since 1968.
For purposes of these comparisons, the major anti-inequality programs
are defined as Medicaid and the Children’s Health Insurance Program, the
Supplemental Nutrition Assistance Program, the refundable portion of the
Earned Income Tax Credit and Child Tax Credit, Supplemental Security
Income, Temporary Assistance for Needy Families and other family support,
educational assistance, Pell grants, housing assistance, and the ACA’s
Marketplace financial assistance. Social Security and Medicare are excluded
due to their universal nature and because, in the case of Social Security,
benefit increases in the last 50 years have often been accompanied by payroll
tax increases. In addition, most of the change in Medicare spending over this
period reflects changes in demographics, health care costs, and other factors,
not changes in policy. Unemployment insurance is also excluded as most
variation reflects cyclical factors, not changes in underlying policy.
Under President Obama, the Federal investment in reducing inequality
has increased by about 0.8 percent of potential GDP, more than any
previous President since the Great Society. Much of this increase reflects
the coverage provisions of the ACA and expanded tax credits for working
families first enacted as part of the Recovery Act. Federal support for
states expanding their Medicaid programs, financial assistance for families
purchasing health insurance through the Marketplace, and the Recovery
Act’s EITC and CTC expansions comprise a more than $100 billion annual
investment in reducing health and income inequality in 2016, amounting to
roughly 0.5 percent of potential GDP.
Earlier expansions of the safety net are also apparent in Figure 3-16,
including the expansion of the Supplemental Nutrition Assistance Program
(then the Food Stamp Program) during the Nixon Administration, the phase
in of Supplemental Security Income through the Ford Administration, and
the creation of the Children’s Health Insurance Program in the Clinton
Administration.
A simple comparison of spending over time combines changes in policy
with broader economic and demographic changes that affect spending
for existing programs. Thus, an increase in Medicaid spending may reflect
the introduction of a new and expensive treatment, an eligibility expansion,
or other economic changes. For example, spending on inequality-reducing
policies, largely Medicaid, rose sharply during the first Bush Administration.
However, research finds that most of the increase in Medicaid spending over
this period reflects changes in health care prices, the early 90s recession, and
other factors, not contemporaneous policy changes (Holahan et al. 1993).
An alternative comparison of each administration’s policy accomplishments
would focus only on those increases or decreases attributable
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