Federal spending on children is a key part of the federal budget and seen by many as a critical investment in the nation’s future, supporting the next generation of productive adults.
According to the latest Urban Institute’s Kids’ Share report, spending on children is shrinking as a percent of gross domestic product (GDP). Let’s take a look at federal spending on children and what programs are used to distribute these benefits.
$377 billion was spent on children in 2016, comprising 10 percent of the federal budget (and another $108 billion was provided through tax reductions for families). In comparison, 46 percent of the federal budget went towards Social Security, Medicare, and Medicaid for adults, 15 percent to defense, and 6 percent to interest on the federal debt.
While total federal spending is projected to increase by 65 percent over the next decade, children’s programs will account for just 1 percent of that increase. Over this period of time spending on children is projected to decrease from 2.1 percent of GDP to 1.8 percent in 2027.
Medicaid, the Earned Income Tax Credit (EITC), the child tax credit, and the dependent exemption make up half of all federal expenditures on children. Medicaid spending on children totaled $89 billion in 2016 and the three tax provisions cost $41 billion. Other major programs that benefit children include the Supplemental Nutrition Assistance Program (SNAP) and other nutrition programs, Social Security benefits for dependents and survivors, and health coverage such as the Children’s Health Insurance Program.
One of the most damaging effects of rising debt is rapidly growing interest costs. Under current law, CBO projects that interest payments will climb from 1.4 percent of GDP in 2017 to 2.9 percent in 2027, reaching 6.2 percent by 2047. By 2020, interest payments on the national debt will be greater than total federal spending on children and by 2027 interest costs will be more than double what we spend on kids.
18 percent of children live in poverty, as compared to 9 percent of those 65 and older and 12 percent of those 18–64.
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