Children and the Federal Budget

The Urban Institute held an event today (video here) on children and the federal budget, which involved CRFB Senior Policy Director Marc Goldwein and board members Eugene Steuerle and Dan Crippen. The centerpiece of the event was Urban's newest "Kids' Share" report and what it means for policies related to children going forward.

For background, Kids' Share estimates how much the federal government spent on children in 2011 and how much they are projected to spend through 2022, including both outlays and tax expenditures. Total expenditures declined by $2 billion in real terms from 2010 to 2011, leaving them at $445 billion or about 10 percent of the budget. Through 2022, spending will stay roughly flat after accounting for inflation. Of course, the rest of the budget will be growing in real terms through 2022 and beyond.

Goldwein remarked that the relative restraint of spending on children reflects past choices that have been imposed on the current budget. He noted that spending per person for Social Security and Medicare is more than twice as much as spending per person for children (including state spending) and that those programs, especially Medicare, would grow faster than the economy in the future. Steuerle pointed out that nominal spending levels will rise in the future as the economy grows and more money can be dedicated to programs, but that growth was biased towards mandatory spending programs rather than discretionary programs, where a sizeable amount of childrens' spending lies.

As executive director of the National Governors' Association, Crippen viewed the budget through the lens of rising health care costs in Medicaid, arguing that spending at the state level will be crowded out if its growth is not addressed. Although Medicaid does give some benefits to children, its growth would hurt education spending, which directly benefits children. In addition, Crippen saw potential threats to state spending on children if the federal government cut its revenue stream to states as part of a deficit reduction plan.

Both Goldwein and Steuerle stressed the fact that just because there is a deficit issue doesn't mean that we must squeeze all of the budget. Certainly, there will need to be a measure of restraint but that does not determine where the money is spent. Both of them believed that there was certainly more room for investments in areas where needed. The nation will have to figure out if they prioritize spending on children more than the 10 percent that is currently alotted. As Goldwein said, "Sometimes this country's greatest challenges lead to our nation's greatest triumphs. We have this huge debt it's a real opportunity to re-prioritize our tax and spending code to do the right things that we should be doing anyway."