FacebookTwitterGoogle+RedditEmail

Are American Parents Really Stealing From Their Kids?

by DEAN BAKER

A common refrain in debates over Social Security and Medicare is that these programs are putting seniors ahead of children. The implication is that there is a fixed pool of tax revenue. If more of this revenue goes to seniors to pay for their benefits, there is less to cover the cost of child nutrition and health care, daycare, education and other programs that benefit the young. To put in crudely, in this view, a dollar spent on the elderly is a dollar taken away from spending on children.

There is an alternative perspective. The amount of money that the government collects in tax revenue may not be fixed. Understood this way, people’s willingness to pay taxes may depend on their perception of the usefulness of the services provided. This could mean, for example, that if the public believes that the government services being provided to both seniors and children are valuable and should be expanded, they would be willing to pay higher taxes to support those services.

If we look at the situation historically in the United States, we have vastly increased the share of GDP going to government programs for both seniors and the young over the last 60 years. In 1950, Social Security payments were less than 1 percent of GDP and Medicare and Medicaid did not even exist. By comparison, we are now spendingalmost 5 percent of GDP on Social Security, and more than 5 percent of GDP on Medicare and Medicaid.

This growth in federal spending for programs that primarily benefit seniors has been accompanied by a huge expansion in programs intended to primarily benefit the young, such as Head Start; the Women, Infant and Children Nutrition Program; and the State Children’s Health Insurance Program. In addition, state and local funding for education and other programs that benefit the young has also hugely increased relative to the size of the economy over the last six decades. People have been willing to pay more in taxes to finance programs that benefit both the elderly and the young.

There is a similar story if we look across countries. If the tradeoff view were correct, we should find that countries that are more generous in their support of seniors are stingier when it comes to public support for their children and vice versa. However, the opposite appears to be the case. If we control for the relative income of different countries, it turns out that a dollar of additional spending per kid is associated with 67 cents of additional spending for each senior. (This relationship is statistically significant at the 5 percent confidence level.)

In short, the data suggest that more spending on seniors is associated with more spending on kids. Presumably this indicates that countries where people rely on the government to ensure that their seniors have a decent standard of living are also inclined to provide the government with resources necessary to ensure that their children’s needs are also met.

This evidence suggests that cuts to programs for seniors may be unlikely to end up benefitting our kids. Rather such cuts may be associated with reduced spending on kids as well. If the public does not trust the government to provide good care for seniors, it may also not trust the government to provide good care for children.

In that case, there would be no tradeoff between spending on seniors and spending on kids. If we care about both our seniors and our kids, and trust the government programs designed to provide support at both ends of life, then both sets of programs are likely to be adequately funded. In the opposite case, neither set of programs is likely to be adequately funded. The world where just one set of programs, either those supporting seniors or those supporting kids, receives adequate funding seems largely the invention of politicians.

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of Plunder and Blunder: The Rise and Fall of the Bubble Economy and False Profits: Recoverying From the Bubble Economy.

This essay originally ran in the The Business Desk (PBS NewsHour).

 

Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.

More articles by:
May 24, 2016
Dave Welsh
Police Chief Fired in Victory for the Frisco 500
May 23, 2016
Conn Hallinan
European Union: a House Divided
Paul Buhle
Labor’s Sell-Out and the Sanders Campaign
Uri Avnery
Israeli Weimar: It Can Happen Here
John Stauber
Why Bernie was Busted From the Beginning
James Bovard
Obama’s Biggest Corruption Charade
Joseph Mangano – Janette D. Sherman
Indian Point Nuclear Plant: It Doesn’t Take a Meltdown to Harm Local Residents
Desiree Hellegers
“Energy Without Injury”: From Redwood Summer to Break Free via Occupy Wall Street
Lawrence Davidson
The Unraveling of Zionism?
Patrick Cockburn
Why Visa Waivers are Dangerous for Turks
Robert Koehler
Rethinking Criminal Justice
Lawrence Wittner
The Return of Democratic Socialism
Ha-Joon Chang
What Britain Forgot: Making Things Matters
John V. Walsh
Only Donald Trump Raises Five “Fundamental and Urgent” Foreign Policy Questions: Stephen F. Cohen Bemoans MSM’s Dismissal of Trump’s Queries
Andrew Stewart
The Occupation of the American Mind: a Film That Palestinians Deserve
Nyla Ali Khan
The Vulnerable Repositories of Honor in Kashmir
Weekend Edition
May 20, 2016
Friday - Sunday
Rob Urie
Hillary Clinton and Political Violence
Andrew Levine
Why Not Hillary?
Paul Street
Hillary Clinton’s Neocon Resumé
Chris Floyd
Twilight of the Grifter: Bill Clinton’s Fading Powers
Eric Mann
How We Got the Tanks and M-16s Out of LA Schools
Jason Hirthler
The West’s Needless Aggression
Dan Arel
Why Hillary Clinton’s Camp Should Be Scared
Robert Hunziker
Fukushima Flunks Decontamination
David Rosen
The Privatization of the Public Sphere
Margaret Kimberley
Obama’s Civil Rights Hypocrisy
Chris Gilbert
Corruption in Latin American Governments
Pete Dolack
We Can Dream, or We Can Organize
Dan Kovalik
Colombia: the Displaced & Invisible Nation
Jeffrey St. Clair
Fat Man Earrings: a Nuclear Parable
Medea Benjamin
Israel and Saudi Arabia: Strange Bedfellows in the New Middle East
Ted Rall
Trump Isn’t Bluffing, He’ll Deport 11 Million People
Kent Paterson
Death in a Shopping Aisle: Jonathan Sorensen’s Fatal Encounter with Kmart
Lisa Sullivan
Venezuela’s Crisis From Up Close
Clancy Sigal
Trump’s Rasputin: What the Donald Learned From Roy Cohn
Manuel E. Yepe
Think Tanks and the US Power Elite
Kathleen Wallace
$25 vs $30, Hats Off to the Two-Party System!
Terry Simons
Mob Politics: the Democrats Have a Problem and It’s Not the Sandernistas
Franklin Lamb
U.S. Financial Regulations Increase Starvation Among Syria’s Children
James Cronin
The Pope and Mercy: the Catholic Church has not Abandoned Its 400 Year War on Science
Linn Washington Jr.
Islamophobia on the Rise in England
Thomas Mountain
25 Years of Struggle Building Socialism in Eritrea; Fighting the Cancer of Corruption
David Wilson
Who Speaks for the Refugee Children of Calais?
Michael Welton
Terry Eagleton: the Cheeky Marxist
David Mattson
Disserving the Public Trust: the Despotic Future of Grizzly Bear Management
FacebookTwitterGoogle+RedditEmail