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Contact: Elizabeth Cronen, (202) 261-5723, ecronen@ui.urban.org
WASHINGTON, D.C. September 10, 2007—Federal investment in children is likely to decline markedly within the next decade, according to a new Urban Institute study for the Partnership for America's Economic Success. The share of the federal budget for programs that enhance kids' future productivity or income—by improving education, promoting good health, supporting parents' ability to work, and more—is forecast to drop from 1.6 percent of the gross domestic product in 2006 to 1.3 percent by 2017, under current policies.
The decline would be even steeper but for increased federal spending on children's health care, an aspect of the budget that report authors Eugene Steuerle, Gillian Reynolds, and Adam Carasso attribute largely to spiraling medical costs rather than to deliberate investment in children and their futures.
In "Investing in Children," the authors note that spending for future proceeds and well-being, as opposed to spending on current consumption, has long been recognized as a primary driver of economic growth. "In an increasingly knowledge-based economy, investment in human capabilities rises in ever-greater importance," write Steuerle, Reynolds, and Carasso. Nonetheless, the researchers find, domestic spending is likely to rise by about $647 billion by 2017, with less than half of 1 percent of the increase going to investment in education and research.
The report's authors point to large federal programs with built-in growth mechanisms to explain why the slice of the federal budget pie assigned to investment in children is so slim. "Social Security, Medicare, and Medicaid do not require annual appropriations and the benefits they pay grow automatically each year with changes in wages, life expectancy, and medical costs. Programs that invest in children seldom grow or expand by design. Increasing investment in kids' programs is a much more difficult process," observe Steuerle, Reynolds, and Carasso.
The researchers conclude, "Reorienting the budget toward investment in children is one way of trying to both increase their future well-being and to give them greater economic capacity to finance the programs that support their parents' and grandparents' needs."
"Investing in Children" charts U.S. federal spending on investment in total and for children from 1965 to 2017. It was written by C. Eugene Steuerle and Gillian Reynolds of the Urban Institute and Adam Carasso, formerly with the Institute and now with the New America Foundation, and is available at http://www.urban.org/url.cfm?ID=411539. Funding was provided by the Partnership for America's Economic Success, a project of the Pew Charitable Trusts.
The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance challenges facing the nation.
The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
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