Why the U.S. may soon spend more on its debt than on kids

• The share of federal spending on America's children dipped to 9.2% last year — the lowest since 2007, according to the Urban Institute.
• Instead, the U.S. government is spending more on Social Security, Medicare, Medicaid and interest payments on the national debt.
  
• "We are not making children a priority," one public policy expert said.
  

If children really are the future, their outlook looks underfunded. Government spending on America's kids has dipped to its lowest level in more than a decade, according to a new report from the Urban Institute. 

The share of the federal budget allocated to children dipped to 9.2% in 2018, the lowest since 2007, the nonpartisan think tank found. That trend is likely to continue under current law, with the analysis projecting that federal spending on children will shrink to 7.5% of the budget by 2029.

The analysis underscores concerns among child advocates that a vulnerable population, which has a higher poverty rate than adults or the elderly, will suffer from a lack of investment in programs like early education, food stamps and children with disabilities. At the same time, there's a growing body of evidence that spending on kids pay off in the long term, helping lift lifetime earnings, boosting college graduation rates and reducing crime. 

"There's a rhetoric that of course we care about our children, but there is no other source that looks at how are we actually investing in our children across the federal budget," said Heather Hahn, senior fellow at the Urban Institute's Center on Labor, Human Services, and Population and a co-author on the report. "We are not making children a priority."

The reasons for the decline in kids' spending in recent years isn't entirely due the country's aging population. By 2029, the share of federal money spent on children will decline by one-fifth, but the share of the population under age 19 will shrink slightly, from 24% to 23%. 

The bigger cause, the report noted, is that three major federal programs — Social Security, Medicare and Medicaid — consume ever larger shares of the budget. Forty-five percent of the federal budget went toward those programs last year, a figure that will reach 51% in 2029, the report projects. 

That's not to suggest that these programs should be cut in order to increase spending on children, Hahn noted. Social Security alone is credited with lifting more than 15 million seniors out of poverty. Rather, it suggests a need to examine health care spending in Medicaid and Medicare, Hahn said, adding that the subject is beyond the scope of the current report.

Swelling payments on the national debt

By 2020, interest payments on the nation's debt will exceed federal spending on children, the report found. The Urban Institute forecasts that annual interest payments on the national debt will reach $740 billion in 2029, compared with $420 billion for spending on children.

"That statistic is a result of our expenditures exceeding our revenue every year," Hahn said. "It's hard when we talk about trillions of dollars to even think about debt and deficits and interest payments, but the fact that our interest payments are expected to exceed spending on children brings that home."

With the share of spending on children shrinking, some programs are feeling the impact more than others. Federal outlays on education fell nearly $2 billion last year and is down 48% from its post-recession peak in 2010. Much of that decline was felt in Title I funding, which is dedicated to schools with a high share of poor children.

Food-stamp cuts

Spending on food stamps has also dropped dramatically, although that's partly due to an improving economy that's lifting household income. But the Trump administration also has taken aim at what it portrays as the program's "loopholes," such as a July proposal to push 3.1 million people from its rolls. 

More than 2 million households with kids could lose access to food stamps if the proposal is adopted, according to an Urban Institute report published earlier this month. On top of that, about 500,000 children could lose access to free lunch programs that are linked to the Supplemental Nutrition Assistance Program, the formal name for the food-stamp initiative.

Voters need to understand "how little we spend on children," Hahn said. "It's just over 9% of our budget and that will shrink to over 7% in the next decade. That is a fundamental message to raise awareness about our investments in children."