Sunday, September 23, 2018
Education

The US spends less on children than almost any other developed nation

The federal government now spends less than it did about 30 years ago on some of the country’s poorest children, the result of cuts to federal welfare programs, according to a new research paper.

In 1990, the government spent about $8,700 on every child whose family took in no income from work. By 2015, accounting for inflation, it spent less than $7,000 on children from these impoverished families, the paper calculates.

Much of the drop was driven by cuts to direct welfare payment programs, which once went to 76 percent of poor families with children but now goes to only 23 percent of them.

Federal spending on all children, when measured as a portion of the economy as a whole, has increased since the 1990s, but it has not grown quickly enough to keep the United States from falling behind other countries with similarly developed economies.

In 1995, America ranked ahead of nine developed nations in the share of the economy the federal government spends on children. Since 2004, America has ranked third-to-last in spending, with only Mexico and Turkey lagging behind, as other countries have increased their spending on family benefits.

The small increase in U.S. spending on childhood programs comes in large measure from multiple expansions of the Earned Income Tax Credit, a tax credit tied to work that has increased more than fivefold since the 1990s. That tax credit has helped reduce child poverty in America, although one in seven children - or 11 million of them - still remain in poverty. (Some estimates have put the number higher.)

"The U.S. isn’t frugal or miserly with every group, but we’ve allowed millions of children to remain in poverty," said Diane Schanzenbach, director of the Institute for Policy Research at Northwestern University, who wrote the study with Hilary Hoynes, of the University of California, Berkeley.

Overall, U.S. spending on social programs has grown since the 1980s. Federal spending on the elderly has ballooned, with Social Security and Medicare consuming an increasingly large share of the American economy.

"Elderly people vote, children do not," Schanzenbach noted.

The findings come as Republicans in Congress push cuts to the federal food stamps program that accounts for about 8 percent of spending on children. The Trump administration has also granted states permission to overhaul how they administer Medicaid, the nation’s health program for the poor that accounts for another big chunk of childhood safety net spending.

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America spent 2.7 percent of its gross domestic product on children in 2015 but about 9 percent of it on the elderly. That puts America roughly in the middle of the pack internationally. Per capita spending on the elderly rose from 6.93 percent to 8.65 percent, or by about two percentage points, from 1995 to 2015.

Direct spending on children only rose by about half a percentage point over the same period of time. That amount stays approximately the same when education spending and tax benefits for families are included.

These conclusions about safety net for children are broadly similar to those reached in a 2010 paper by Yonatan Ben-Shalom of Mathematica Policy Research, Robert Moffitt of Johns Hopkins University and John Karl Scholz of the University of Wisconsin, Madison. But the new paper uses federal administrative records, rather than survey data dependent on people’s responses, to produce its results.

"It gives us a better picture without having to worry that problems with the data are driving the conclusions," said H. Luke Shaefer, director of Poverty Solutions at the University of Michigan. "This is perhaps the best evidence to date that there’s a group at the bottom being left out because of the way refundable tax credits are tied to work."

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