NCPA - National Center for Policy Analysis


March 19, 2007

The spiraling cost of benefits for seniors is limiting the federal government's ability to invest in kids.  Despite Democrats' plans to boost spending on education and children's health insurance, the projected $2.9 trillion federal budget's tilt toward older Americans will only increase, according to a study from the Urban Institute.

Other findings:

  • Federal spending on children, adjusted for inflation, grew from $53 billion in 1960 to $333 billion in 2006; however, as a share of the economy, spending on children rose from just 1.9 to 2.6 percent of gross domestic product (GDP).
  • By comparison, spending on the big three entitlement programs—the non-child portions of Social Security, Medicare and Medicaid -- nearly quadrupled from 2.0 to 7.6 percent of GDP over the same period (or from $58 billion to $993 billion).

Over the next ten years, spending on children under current law is scheduled to shrink relative to other programs that have more rapid, built-in growth and thereby command ever-increasing shares of projected government revenues.

  • By 2017, if current spending and revenue policies continue, children's spending will decline from 2.6 to 2.1 percent of GDP, while Social Security, Medicare and Medicaid will rise from 7.6 to 9.5 percent.
  • In 1960, the children's share of domestic federal spending was roughly 20 percent (or $53 billion out of $263 billion); by 2006, despite some recent increases, its share was little more than 15 percent; by 2017, current law projections indicate it will drop to about 13 percent.

Source: Richard Wolf, "Benefits for seniors eating up kids' share," USA Today, March 14, 2007; based upon: Adam Carasso, C. Eugene Steuerle and Gillian Reynolds, "Kids' Share 2007," Urban Institute, March 15, 2007.

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