Spending on Children Ages 8 and Younger

Research Report

Spending on Children Ages 8 and Younger

Abstract

Investments in young children can positively influence childhood well-being and long-term social and economic outcomes.

To provide a better understanding of public spending on young children, this report tackles questions about federal, state, and local investments. We provide information on how much the federal government spent on children ages 8 and younger in 2006 and 2016 and estimate projected spending in 2026. We also address where and how those funds are used.

How much does the federal government spend on children ages 8 and younger?

  • In 2016, federal spending on young children totaled $247 billion.
  • Total federal expenditures were $6,817 per child age 8 or younger in 2016, with 78 percent spent through outlays and 22 percent through tax reductions.
  • Federal outlays on Social Security, Medicare, and Medicaid for adults were nearly 10 times the total outlays on young children.
  • Tax reductions related to young children are dwarfed by other tax reductions, such as the capital gains tax and the home mortgage interest deduction.

How have federal investments changed over the past decade, and how will they change in the next decade?

  • Federal outlays and tax reductions for children ages 8 and younger increased in real dollars over the past decade but are projected to decline.

How do federal outlays on children compare with state and local outlays?

  • States and localities provide the majority of public outlays for all children, particularly through spending on K–12 education.
  • State and local sources provided 59 percent of total public spending for children ages 8 and younger in 2006.

What programs and purposes do federal investments support, and how is this changing?

  • Ten programs account for 77 percent of federal expenditures on young children.
  • Medicaid is the largest program in terms of spending, with $48 billion spent on this age group in 2016.
  • The next three largest programs are tax programs: the earned income tax credit (EITC), the child tax credit, and the dependent exemption.
  • Federal expenditures on children ages 8 and younger increased in nearly all categories over the past decade, with the fastest growth in health and nutrition programs.
  • In the next decade, federal spending on young children is projected to decline in every category except health.

To what extent are federal expenditures targeted to low-income children?

  • In 2016, 67 percent of federal expenditures on children ages 8 and younger, including tax expenditures, were on means-tested programs.
  • In 2006, only 15 percent of state and local expenditures on young children were on means-tested programs.

What forms do federal expenditures on young children take?

  • Sixty-two percent are mandatory outlays, including the portions of tax credits paid out to families as a tax refund (16 percent). In 2016, 15 percent were discretionary outlays, and 22 percent were tax reductions.
  • The same year, 56 percent were in-kind payments, such as health, education, housing, and nutrition Tax expenditures were the next largest, including tax reductions (22 percent), such as the dependent exemption, and tax outlays (16 percent), such as the refundable portion of the EITC. Cash payments, such as Temporary Assistance for Needy Families cash assistance or Social Security survivors’ benefits, are the least common type of expenditure at just 6 percent.

This report provides relevant information to inform a national discussion about how best to invest future resources to support children during this critical time in their development.

Cross-Center Initiative

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