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Kids’ Share of the Domestic Budget

In contrast, spending on the non-child portions of So- cial Security, Medicare, and Medicaid has doubled, rising from 22 to 44 percent of domestic spending.14

To get a sense of how children’s programs have competed for resources against other domestic priorities in the past, we analyze total children’s expenditures (including tax expen- ditures as well as outlays) as a share of domestic spending. For this special kids’ share analysis, we exclude spending on defense and international affairs, and we include spending on children’s tax expenditures, as in past reports. Under this comprehensive measure that includes tax expenditures

Trends in Children’s Expenditures, 1960–2009

We move now from broad trends in federal outlays to a closer look at children’s expenditures over the past nearly half-cen- tury, including both outlays and tax reductions on children. During the 1960s and early 1970s, federal programs serving children and families expanded considerably. Spending on federal programs rose as new programs were introduced, including the Food Stamp Pro- gram (1964), Medicaid (1965), Education for the Disadvantaged/Title I (1965), Head Start (1966), Supplemental Security Income (1972), and public housing (1974). Between 1975 and 2008, however, spending on these and dozens of other programs benefitting children rose only moderately as a percent- age of GDP, and that aggregate growth was solely because of growth in Medicaid spend- ing. In 2009, with the enactment of the American Recovery and Reinvestment Act, as well as the impact of the recession, spend- ing on federal programs increased sharply (figure 10). Expenditures associated with tax provi- sions have increased dramatically since 1985, with the expansion of the earned income tax




without substantial expansion in total federal outlays relative to the size of the economy. Such a trend cannot continue much longer; even if defense spending were slashed in half somehow, the resulting outlay savings would be only a little over 2 percent of GDP, which is not enough to finance the projected increase in spending on the elderly and disabled under Medicare, Medicaid, and Social Security over the next decade, let alone increases in any other areas. The nation also cannot continue to spend 25 percent of its GDP on the federal government, while raising only 15 percent in rev- enues,as it did in 2009; such a pattern,while widely believed by economists to be beneficial in an economic crisis, would cripple our economy with staggering debt if continued indefinitely. In other words, the rate of increase in spending on both children and elderly, while providing substantial benefits over the past half-century, will be difficult to sus- tain without a substantial increase in revenues.

as well as outlays, the children’s share of domestic federal spending has actually shrunk over time, from 20 percent in 1960 to 14 percent in 2009 (figure 9). In other words, the children’s share of the budget has shrunk by 29 percent. This result is driven mainly by a steep decline in the value of the dependent exemption, which is discussed further in the next section.

Under a comprehensive measure that includes tax expenditures as well as outlays, the children’s share of domestic federal spending has actually shrunk over time, from 20 percent in 1960 to 14 percent in 2009.

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