Roughly 72%, or $540 billion, of all federal program funding aimed at developing human capital, raising work effort, and/or encouraging saving, benefits mainly middle and upper income households. This is according to a study of the federal government’s “mobility budget” prepared by the Economic Mobility Project, an initiative of The Pew Charitable Trusts.
The researchers identified 10 broad categories of federal spending and tax programs aimed at enhancing economic mobility. Of the categories, expenditures on homeownership programs represented almost $158 billion of the $746 billion in the mobility budget in 2006, second only to employer-related work subsidies.
Within the homeownership programs, only $3 billion in expenditures benefited lower income households while more than $154 billion in tax subsidies – primarily the mortgage interest and real estate property deductions and the capital gains exclusion on home sales – benefited middle and upper income households almost exclusively.
Of the federal funds spent on mobility, $534 billion was in the form of tax subsidies, which generally do not benefit lower and moderate income households. Tax expenditures aimed at mobility expanded from 3.3% of GDP in 1980 to 4.1% in 2006 while direct outlays declined from 1.8% of GDP in 1980 to 1.6% in 2006. To the detriment of lower income households, these trends are expected to continue through 2012.
The study also analyzes budgetary trends for programs that the authors consider “income maintenance,” which includes public and subsidized rental housing, as well as programs considered “public goods.” The full report is available at www.economicmobility.org/assets/pdfs/EMP_Mobilty_Budget.pdf