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Programs to support children are a key component of the federal budget and represent a critical investment in the nation’s future. The latest Kids’ Share report from the Urban Institute provides a view of federal resources targeted to children, placing such spending in the larger context of the country’s budget. In 2022, federal resources dedicated to children totaled $761 billion — that support can help alleviate child poverty and support the development of the next generation of productive adults.
Here are the top six takeaways from the latest Kids Share report, with further detail below:
Those expenditures consist of two major categories:
The amount of federal resources dedicated to children decreased $1,450 from 2021 primarily due to declines in COVID-19 relief measures that targeted children and families, such as the Economic Impact Payments (stimulus checks) and the expanded CTC. The decline in such resources was partially offset by higher spending on other programs (nutrition, health, and education).
Tax provisions constituted 35 percent of all federal expenditures on children in 2022, the largest such category. Tax provisions that benefit children — primarily the child tax credit and the earned income tax credit — totaled $264 billion in 2022 (including $112 billion in refundable tax credits that are classified as spending).
Health programs — largely stemming from Medicaid and the Children’s Health Insurance Program — were the second largest category, comprising $146 billion, or 19 percent, of federal expenditures on children. Other major categories include:
Other programs that benefit children — such as early education, social services, housing, and training — received about 9 percent of federal expenditures on children.
Federal spending on children (which excludes tax reductions) totaled $609 billion in 2022, or 10 percent of the federal budget. In comparison, 39 percent of outlays went towards health and retirement benefits for adults 18 years of age and older, 12 percent went towards defense spending, and 8 percent went to interest on the federal debt.
As a result of the expanded federal aid provided to children from pandemic relief, child poverty fell in 2020 and 2021 according to the supplemental poverty measure (SPM), which accounts for government programs designed to assist low-income families. Child poverty dropped from 12.5 percent in 2019 to 9.7 percent in 2020 and 5.2 percent in 2021. However, as federal aid for children waned, child poverty increased to pre-pandemic levels in 2022. Poverty rates for adults also fell during the pandemic but to a lesser extent.
Since the early 2000s, federal spending on children as a portion of the budget has been around 10 percent. However, that share is projected to decline significantly over the next decade from 9.8 percent in 2022 to 6.2 percent by 2033: a 37 percent decline in the share of the budget devoted to children. The largest share of federal spending will continue to go towards the adult portions of Social Security, Medicare, and Medicaid — with such spending in those programs set to increase from 39 percent in 2022 to 48 percent by 2033.
One of the most damaging effects of rising debt is growing interest costs, which makes it harder to invest in our nation’s future. In 2022, spending on interest payments totaled $476 billion — nearly two-thirds the amount of federal spending on children. However, interest costs are expected to rapidly outpace spending on children in the next 10 years.
By 2033, the Congressional Budget Office projects that interest costs will increase to $1.4 trillion. That growth would crowd out spending on other national priorities including America’s children. The federal budget is a statement of the nation’s priorities, and the United States is on track to spend more on net interest costs than the next generation.
Government resources dedicated to children was bolstered by pandemic relief aid, but as that relief waned, federal expenditures on children decreased in 2022. In the coming years, the share of the federal budget devoted to children is projected to further decline. As the nation’s fiscal outlook continues on its unsustainable path, it is important that policymakers understand the way debt, deficits, and interest costs affect the federal government’s ability to invest in priorities, including the nation’s children.
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