Federal Expenditures on Elementary-Age Children in 2008

The Brookings Institution and the Urban Institute just released its study on Federal Expenditures on Elementary-Age Children in 2008 (Ages 6–11). (download at: http://www.brookings.edu/reports/2010/0415_public_investment_isaacs.aspx

The researchers report they are providing “first-ever estimates of federal expenditures” for this age group, and conclude that “the federal government spent $113 billion in outlays and on reductions in taxes on elementary-age children in 2008.”

It is no easy task to locate all possible federal dollars that are spent on children aged 6-11. Often times, this information may not captured.  Medicaid and welfare, for example, do not break down its expenditures based on ages of these children. The researchers acknowledge that they made estimates.

They added up outlays along with what I would call tax expenditures (the taxes that would have been collected if federal tax law did not grant exemptions, tax credits and deductions) to get to their total.

I was surprised to see tax expenditures included here–the $23 billion in reductions in taxes and another $23 billion in refundable portions of tax credits. I have a hard time seeing this as a federal expenditure–there is no clear program or intended purpose specific to these children. The purpose of these tax expenditures is to ease the tax burdens of families.

But they include them and perhaps it does make sense to add tax expenditures to the total spending of the federal government.

For context– tax expenditures for individuals is about $800 billion. (The Congressional document provides lots of detail but no totals http://www.jct.gov/s-2-08.pdf.)  I have seen one estimate that if the tax expenditures for individuals were included in the budget, the budget would be at least 30% more.

Tedious work, to be sure, but they present it all in a table that also shows the percent of the total program spending. For example, they estimate that the federal government spent $11 billion on elementary- age children, which represents 6% of all expenditures on Medicaid.  The federal government spend $190 billion on Medicaid. It is always tricky to make estimates about the amount of Medicaid dollars that go to specific groups for which Medicaid does not report.  We do know that about 2/3’s goes for health services for the blind, disabled and aged.   This means that $65 billion goes to all children and adults. I assume that they knew that and took a percent of the children’s portion that would be likely to represent the proportion of 6-11 year-olds. Estimates are difficult and this may be as good as it gets.

Some programs are clearly specifically targets children children–such as Education for the disadvantaged and the handicapped–at $14 billion.  Another estimated $3.6 billion goes to social services.

Other spending is indirect. For example they estimate that $4.3 billion of the federal assistance for housing goes to elementary-age children. While this is likely true, it may be that the families would have still received housing assistance if elementary-age children were not in some homes.  It does not strike me as a very clean measure.

They then present that $113 billion as a percent of the federal budget of $2.8 trillion: the federal government spends 4% on elementary–age children. This is where the wheels come off their analysis because all tax expenditures have not been added back into the federal budget before calculating the percent. As mentioned early, there was about $800 billion in tax expenditures in 2008.

Ah–the details. They really matter once we are looking to make decisions about public policy. So, we always need to look at what exactly was measured, exactly how estimates were made, and the base of even as simple a calculation as percent of the federal budget.

Of course, there are other factors that have to be kept in mind. There is an implicit normative question here–what is the appropriate amount of federal dollars that should be spent on elementary-age children? And this raises the political question: what should the role of the federal government be in providing money and services to this age group?

The researchers do acknowledge that their research cannot determine the impact of the federal government spending on these children.

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