The American Government’s Declining Investment in Children
Federal spending is falling precisely as the racial diversity of the country’s youngest cohorts is rising.
American politics, especially in the Donald Trump era, increasingly resembles a slow-motion civil war between the nation’s past and its future. One of the best places to track the state of battle is the federal budget.
Federal spending is steadily tilting toward the preponderantly white senior population and away from the increasingly diverse youth population. Put another way, precisely as the racial diversity of America’s youngest cohorts is rising, the level of federal investment in children is falling. That has ominous implications for both the nation’s economic competitiveness and its social stability.
This steady shift in federal resources was quantified in an annual Urban Institute study released last week. In 1960, the study reported, programs that benefited kids represented only about 3 percent of the federal budget. That poked past 5 percent in 1970 after the creation of Medicaid, Head Start, and Title I, which supports low-income schools, during the Great Society, the flurry of domestic programs passed by Lyndon B. Johnson during the 1960s. In 1990, programs for kids still represented about 5 percent of federal spending.
But over the next two decades, the kids’ share of the budget grew rapidly. Congress under Bill Clinton expanded tax credits targeted to low-income families and created the Children’s Health Insurance Program, which provides coverage for the children of the working poor. Barack Obama channeled fully one-fourth of his massive 2009 economic-recovery program into programs benefiting kids, particularly health-care coverage, support for local education, and early-childhood programs. The result was that in 2010, spending on kids reached 10.6 percent of the federal budget, a modern high.
But the bitterly negotiated budget agreements between Obama and the Republican majority that seized the House in 2010 reversed this growth. Those fiscal deals focused on cutting discretionary spending, which funds most investments in future generations, while largely exempting the entitlement programs that mostly benefit the elderly, including Social Security and Medicare. Need-based programs that benefit kids, such as food assistance, also spent less as the economy recovered. By 2017, the Urban Institute reports, spending on kids had slipped back to 9.4 percent of the federal budget.
Now all of the trend lines are pointing down for kids. The Urban Institute forecasts that spending on children will fall below 7 percent of the federal budget by 2028. Over the next decade, it estimates that total federal spending, in dollars adjusted for inflation, will increase by about $1.6 trillion, but that programs for kids will receive only 1 percent of that massive flow.
Spending on kids is being squeezed primarily by two other rapidly growing categories—both of which represent an obligation to the past. The first is the portion of Social Security, Medicare, and Medicaid targeted to adults. Those programs represented about 30 percent of federal spending in 1990, but they have soared to 45 percent of the federal budget today. Washington now spends almost six times as much for every senior as it spends on each kid. Over the next decade, that disparity is unlikely to improve: The Urban Institute projects that the adult portion of the big three entitlements will consume more than three-fifths of all new federal spending. By 2028, for the first time, the adult share of those programs will constitute fully half of the federal budget.
The other rapidly growing source of federal spending is interest on the federal debt. By all projections, the huge tax cuts passed last year by Trump and the Republican Congress—which primarily benefit top earners, who are themselves clustered in older generations—will vastly enlarge the federal debt that younger generations must shoulder in the decades ahead. Increased interest costs are expected to consume a daunting 30 percent of all new federal spending through 2028. By contrast, defense, like kids’ programs, is expected to command only about 1 percent of those increased outlays.
Julia Isaacs, an Urban Institute senior fellow and a co-author of the study, notes that the tax cut undermines younger generations from two directions. “It’s like a double whammy,” she told me. “We are not spending very much [on them] today and we are unable to raise revenues to pay for what we are spending, [so] we are also leaving them a debt, which they will be paying off.”
All of these fiscal choices have stark racial implications. Whites now comprise more than three-fourths of the senior population, according to calculations by William Frey, a Brookings Institution demographer. That number is projected to decline only slowly in the coming decades. By contrast, as Frey reported in a recent study, kids of color already represent a majority of the population aged 9 and under, and are expected to compose a majority of all Americans under 18 by 2020.
These two giant cohorts—the preponderantly white seniors and the increasingly diverse generations of Americans born since 1980, groups I’ve called “the brown and the gray”—represent the contending poles of U.S. politics. Older whites anchor the Trump coalition, while younger, nonwhite voters are inexorably becoming the center of the Democratic coalition. Everything points toward escalating political conflict between them, particularly since Trump so overtly presents America’s minority communities as cultural and security threats to his base of older, blue-collar, evangelical, and rural whites.
But through the 21st century, the growing and predominantly white senior population will depend on an increasingly nonwhite workforce to fund the payroll taxes that support their Social Security and Medicare. By starving that future workforce today of investments that could equip them to reach the middle class, Republican-leaning older whites are increasing the risk that the retirement programs they rely on will face cuts tomorrow. A federal budget—and political movement—that favors the past over the future threatens a bleak outlook for both.