Small Slice of Budget Goes to Children

Blog Post
Tuesday, September 11, 2018

With congressional elections two months away, voters are hearing a great deal from the candidates about the high priority that Americans place on their children and the nation’s future.

The lofty rhetoric on this subject, however, is hard to square with the relatively small part of the federal budget that is currently spent on children. Projections based on current law also show children’s programs losing ground across the board in the coming years.

“Under current law, the children’s share of the budget is projected to drop from 9.4 percent to 6.9 percent over the next decade, as spending on Social Security, Medicare, Medicaid, and interest payments on the debt consume a growing share of the budget,” said a recent report from the Urban Institute.

By 2020, the report says, the federal government is projected to spend less on children than it will pay in interest on the federal debt.

The Urban Institute’s report is its12th annual assessment of federal spending on children.

“Public spending on children aims to support their healthy development, helping them fulfill their human potential,” the report says. “As such, federal spending on children is an investment in the nation’s future.”

Few Americans would disagree with those sentiments. Yet the report says that last year only about 9 percent of the federal budget -- $375 billion out of $3.9 trillion -- was directly spent on people under the age of 19.

In addition, tax reductions for families with children totaled $106 billion in 2017. But that’s only a sliver of the total amount of special tax breaks that favor certain individuals, companies and industries.

The largest source of federal support for children is Medicaid.The Urban Institute says the share of federal spending on children that is targeted to low-income families has been growing; it reached 61 percent last year.

“Looking forward,” the report says, “children’s programs are projected to receive just one cent of every dollar of the projected $1.6 trillion increase in federal spending over the next decade.”

The report adds that over the next 10 years, under current law, “every major category of spending on children (health, education, income security, and so on) is projected to decline relative to GDP.”

Such statistics underscore the need for broad fiscal reforms in Washington. This must include changes in the entitlement programs that primarily benefit older Americans.

While these programs are important, they are not on sustainable paths. They already claim a large share of the federal budget and are growing rapidly because of the aging population and rising health care costs.

Elected officials also need to ensure that the tax system raises sufficient revenue to pay for the services that Americans want from their government -- and to meet the government’s mounting interest payments.

These are all difficult challenges. Short-changing our children, however, is not the answer.