The voices of Urban Institute's researchers and staff
April 10, 2013

The Kids' Share of the Federal Budget

April 10, 2013

playground

What will be the kids’ share of the budget in the future? How can we maintain or grow investments in children in the face of ever-rising costs in health and retirement programs and political opposition to raising additional revenue?

The detailed numbers accompanying this year’s budget release will allow us to analyze how we’re spending federal dollars on children. Last year’s Kids’ Share report found that outlays on children dropped in 2011, the first such decline in nearly 30 years. An even sharper decline in federal dollars spent on children is expected in 2012, as funds provided under the American Recovery and Reinvestment Act of 2009 (ARRA) are nearly exhausted. And the kids’ share of the budget is at risk of declining further over the next decade.

The president’s budget proposes steps to reduce the long-term federal deficit. Such broad-based budgetary packages carry the risk of cutting important children’s programs. Yet, if our country does not adopt budgetary reforms, spending on children and families is at risk of being squeezed by structural forces in the federal budget. Inaction on the budget also saddles our children with a growing long-term debt.

The Budget Control Act of 2011 offers an example of the mixed effects of broad budgetary packages on children. On the one hand, according to our analysis, the Act reduced spending on children in real dollars, but did not cut spending on children in the aggregate by as large a percentage as the overall reduction in the federal budget. The result was a slight increase in the kids’ share of the budget. However, the BCA selectively hits hardest some of the programs most likely to be counted as investments, particularly education.

Programs for children might be cut more radically in future budget plans, if the sequestration and spending caps under the Budget Control Act are replaced by spending restraints that spare defense spending and cut more from non-defense programs. Spending on children also would be harmed if future budgetary packages drop the current exemption of low-income programs from automatic budgetary sequestration, because this exemption protects many children’s programs.

Children’s programs would fare better if we had the political will to enact a package that includes both tax and spending provisions rather than focusing exclusively on the spending side of the budget ledger. I also believe that we should protect future investments in children by adopting proposals that slow the growth in Social Security and Medicare, while still protecting current recipients most dependent on those benefits. The president’s proposal to change the measure of inflation used to calculate future increases in Social Security benefits is a step towards that goal, if it’s adopted with protections for the most vulnerable and as part of a broader budget package.

Photo by Flickr user Listener42 used under Creative Commons license (CC BY-SA 2.0)

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