Adam Carasso, an Urban Institute research associate, is co-author of "Kids' Share 2007: How Children Fare in the Federal Budget." More than 100 major programs enhance children's lives through health care, cash assistance, food and nutritional aid, housing, and education—and through tax credits and exemptions. Over the next decade, this report shows, the kids' share of the federal pie may shrink.
Five Questions Archives
March 15, 2007
1. Define spending on children's programs?
Government spends money on children in different ways. Some programs go entirely to children, like SCHIP [State Children's Health Insurance Program] or Head Start. With Food Stamps, Medicaid, or TANF [Temporary Assistance for Needy Families], however, only a portion goes to kids.
Major tax programs—EITC [Earned Income Tax Credit], Child Tax Credit, and the Dependent Exemption—are often ignored when spending on kids is tallied. Yet, these programs comprised one-third of the 333 billion federal dollars spent on children in 2006.
The bulk of government spending on children occurs at the state level. States spent about $510 billion on children in 2006, mainly on education.
Our report examines federal spending—apart from any state spending—to provide a sense of national priorities. We tracked federal spending from 1960 to 2006 and projected activity through 2017 under current law.
The findings illustrate how the mix of children's programs has evolved over the past half-century from broad-based assistance into very targeted aid.
2. What's happened to children's spending since 1960?
In 1960, most spending on children was administered across the board. The workhorse federal program was the dependent exemption that our parents checked off at tax time. Everyone got it.
Spending on children remains very universal at the state and local level. Currently, over 90 percent goes for K-12 education and the funds benefit every child regardless of household income levels or health status.
But, federal dollars for children have increasingly been funneled into poorer quarters, making the federal government a social safety net backstop for kids' spending. We've seen the addition of targeted programs—like Special Education, Food Stamps, housing assistance, and Foster Care—that aid low-income and disabled children.
We seem to be spending more money on kids overall. Federal spending on children has grown sixfold over the last 46 years. However, as a share of GDP [gross domestic product], kids' spending has merely inched up—from just under 2 percent of GDP in 1960 to about 2.6 percent of GDP today.
How do children's programs relate to other priorities in the federal budget? Spending on the major adult entitlement programs—Social Security, Medicare and Medicaid—has far outpaced growth in spending on children.
Many children's programs are discretionary. That means they continue from year to year at the whim of Congress. Even those children's programs that are mandatory and so do not require annual appropriations may only grow with inflation, or may not grow at all. The major adult entitlement programs, meanwhile, are mandatory and grow automatically with the economy and health care prices, bypassing the annual congressional appropriations process.
3. Where might current trends take us?
As the budget expands with the economy, one would expect spending on children to grow as well. But spending on children barely keeps up with inflation. Since inflation tends to lag economic growth, over the next decade, children's spending will decline as a share of GDP.
New initiatives are the only reason the children's budget hasn't declined already. Thirteen major new programs enacted between 1960 and 2006—including Medicaid, the EITC, and the Child Tax Credit—account for 65 percent of all spending on children today.
Projecting forward, we can't predict what new programs might be introduced to stimulate children's spending. Today's programs and growth forecasts by CBO and the White House all point to the decline of spending on children as a share of GDP.
If we steer our current course, children's spending will fall from 2.6 to 2.1 percent of GDP, while Social Security, Medicare, and Medicaid will rise from 7.6 to 9.5 percent. Equally concerning, the kids' share of economic growth is shrinking too. Our analysis reveals that children are a diminishing national priority.
4. Are children's needs being met?
What we show is how children's concerns are reflected in the federal budget and how they compete with other national priorities. Although our paper doesn’t assess children's well-being, per se, the funding trends do raise concerns about children's future.
The federal government and state/local governments have, to a large extent, divided responsibilities. Children's basic right to schooling is offered close to home through local school districts while federal agencies ensure that children don't fall between the cracks, whether it's providing nutrition, health care, or protection against abuse or neglect.
National policymakers appear to aid children in triage-fashion. In 1960, for instance, the federal government spent about $788 per child, almost uniformly; today, that amount is nearly $4,000 per child, but it's very targeted. A healthy middle-class child, for instance, might see little of that federal chunk.
5. Any advice for the new Congress?
I would ask the new Congress to examine the growth that's built into entitlement programs and to decide if that's how they want to allocate scarce budgetary resources going forward. At the least, policymakers should acknowledge to the public that mandatory and discretionary programs in the federal budget do not compete on a level playing field. Mandatory programs for the elderly clearly have the advantage.
Congress could legislate changes that place all federal programs—and the select group of Americans each program serves—on equal footing. That would take political will. Once lawmakers realize that today's status quo cannot continue, they're going to have to legislate reforms creating both winners and losers. Politically, designating losers is tough.
Lawmakers excel at coming up with ways to make everyone a winner in the short term while pushing the costs of winning into the long term, onto generations yet unborn. But they won't be able to push the can down the road much longer. Even faster economic growth and higher revenues will just raise the costs of Social Security, Medicare, and Medicaid in kind.
Without action, budget pressures just around the bend—triggered by the graying of America and too many promises on spending and taxes—will most certainly squeeze children out of the budget.
