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CRFB on Facing the Future: Federal Investment in Children is Dwindling

Jun 11, 2018 | Other Spending

Children are getting an increasingly small share of the federal budget, even as we are burdening them with immense debt. In an episode of the Concord Coalition's radio show and podcast "Facing The Future" on WKXL Concord News Radio, CRFB senior vice president and senior policy director Marc Goldwein discussed an ongoing series by CRFB on children and the federal budget entitled, "Budgeting for the Next Generation." The episode was hosted by the Concord Coalition's Chase Hagaman.

In the podcast, Goldwein explained how children are getting shortchanged by the budget. While one of out every ten dollars in the budget goes to children, spending for adults on Social Security, Medicare, and Medicaid makes up nearly half of the budget, with most of that money going to the elderly. Tax breaks designed to support children follow a similar path as spending.

The federal government spends more than it brings in in tax revenue, which incurs debt that will be a further disadvantage for the next generation. Not only is the federal government spending very little on children, we are also burdening our children with substantially more debt. Debt could reach an all-time record of 107 percent of the economy by 2028.

High debt leads to high interest costs, which results in the federal government spending more servicing past spending than on future investment. Interest is the fastest-growing part of the budget and is expected to pass children’s spending in just a few years. At the same time, spending on children is projected to capture an increasingly smaller share of the federal budget and a smaller share of gross domestic product (GDP) over the next decade.

The budget process is biased against children and in favor of the elderly, as the elderly mostly benefit from programs that grow automatically. Goldwein explained how the starting presumption for Social Security and Medicare is that they are going to grow by roughly 8 percent per year. Any proposal that grows them at a smaller percentage, such as 7 percent, is considered a cut. On the other hand, the starting presumption for many discretionary spending programs that benefit children, such as education, is effectively zero nominal growth. So if they are given just an inflation adjustment year by year, it is considered an increase.

Large programs that benefit the elderly are supported by dedicated funding sources and tend to be permanent, while programs that benefit children mostly draw from general tax revenue and need to be regularly reauthorized every few years or funded each year. Spending on the elderly continues to grow rapidly as a share of the budget, whereas children’s programs peaked in 2010 and have been declining ever since. If no changes are made, this disparity will continue to grow well into the future.

The full podcast is available here. The Committee for a Responsible Federal Budget recently released the second paper in its series on children and the budget, entitled "Budgeting for the Next Generation: How Do Kids Fare?"