Analysis: Kids' programs feel the squeeze

WASHINGTON, March 16 (UPI) -- Entitlement programs are crowding out federal spending on children, a new study says.

"Medicare, Medicaid and Social Security are growing so fast they are going to pretty much eat away all resources available for domestic spending," said study author Adam Carasso, a research associate at the Urban Institute.

"Children's programs are already feeling that squeeze," he told United Press International.

As a slice of the federal domestic budget, spending on children will decline under current law from 15.4 percent in 2006 to 13.1 percent in 2017, a nearly 15 percent drop, Carasso and colleagues write.

That predicted drop comes on the heels of an already significant drop from 20 percent in 1960 to 15.4 percent in 2006.

Children's spending is now just 2.6 percent of GDP, while the non-child portion of Social Security, Medicare, and Medicaid is 7.6 percent and will hit 9.5 percent by 2017, the study says.

With so much of the federal budget accounted for by programs like Medicare that have built-in spending growth, it is already becoming increasingly difficult to find funding for children's needs, Carasso said. The State Children's Health Insurance Program that covers 6 million low-income children, for example, "has no room to grow.

"Kids' share of the budget pie is shrinking."

The way federal dollars are spent on children has also changed, the study says. In 1960, only 11 percent of federal spending on children was specifically targeted toward low-income children. Now, 61 cents of every federal dollar spent on kids' programs is in programs for the poor.

While on the one hand poor children need help, that trend could also be hurting families who manage to increase their income -- and then lose eligibility for Medicaid and other programs, Carasso said. "You could get a $2,000 promotion, but then suddenly effectively earn less."

Spending on children has also moved from spending on children's general needs to spending on healthcare.

Just three programs -- the child tax credit, the earned income tax credit, and Medicaid -- were responsible for 38 percent of the spending in 2006, the authors write.

"Some growth in Medicaid is helpful to children," Carasso said, but it can "hurt other programs" like foster care, school lunches, and after-school programs.

The solution, Carasso and his co-authors said, is to make entitlement programs compete on equal footing with children's programs in the budget process. Currently, Medicare, Medicaid and Social Security spending automatically increase every year, while most spending for children must be reauthorized by Congress in each budget.

"If all programs had to compete," he said, "you would get a clear indication of what our national priorities are."

"There's no question Medicare and Medicaid are expanding at the expense of children," said Michael Petit, president of the Every Child Matters Education Fund, and author of the recent book "Homeland Insecurity: American Children at Risk."

By Petit's calculations, the United States spends seven times more per senior than per child.

The lack of spending on children has led to an "unfolding crisis in the lives of children and families," he told UPI.

One solution would be to eliminate "ridiculous tax breaks" and sufficiently fund children's needs, Petit said. "We have millions of children not being attended to and a federal government crying impoverishment with the budget."

States that have higher taxes and spend more on children have better health and welfare outcomes, he said.

Another solution would be to rein in the skyrocketing cost of healthcare, he added. When health spending on children goes up, it is mainly to cover medical inflation, which means that doctors are paid more, not that more kids are getting more care.

The nearly $2 trillion dollars the U.S. spends on healthcare each year, he said, is "completely out of control."