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.

Weekend Edition
April 29-31, 2016
Andrew Levine
What is the Democratic Party Good For? Absolutely Nothing
Roberto J. González – David Price
Anthropologists Marshalling History: the American Anthropological Association’s Vote on the Academic Boycott of Israeli Institutions
Robert Jacobs
Hanford, Not Fukushima, is the Big Radiological Threat to the West Coast
Ismael Hossein-Zadeh
US Presidential Election: Beyond Lesser Evilism
Dave Lindorff
The Push to Make Sanders the Green Party’s Candidate
Ian Fairlie
Chernobyl’s Ongoing Toll: 40,000 More Cancer Deaths?
Vijay Prashad
Political Violence in Honduras
Pete Dolack
Verizon Sticks it to its Workers Because $45 Billion isn’t Enough
Richard Falk
If Obama Visits Hiroshima
Margaret Kimberley
Dishonoring Harriet Tubman
Deepak Tripathi
The United States, Britain and the European Union
Peter Linebaugh
Marymount, Haymarket, Marikana: a Brief Note Towards ‘Completing’ May Day
Eva Golinger
My Country, My Love: a Conversation with Gerardo and Adriana of the Cuban Five
Moshe Adler
May Day: a Trade Agreement to Unite Third World and American Workers
Paul Krane
Where Gun Control Ought to Start: Disarming the Police
David Anderson
Al Jazeera America: Goodbye to All That Jazz   
Rob Hager
Platform Perversity: More From the Campaign That Can’t Strategize
Pat Williams
FDR in Montana
Dave Marsh
Every Day I Read the Book (the Best Music Books of the Last Year)
David Rosen
Job Satisfaction Under Perpetual Stagnation
John Feffer
Big Oil isn’t Going Down Without a Fight
Murray Dobbin
The Canadian / Saudi Arms Deal: More Than Meets the Eye?
Gary Engler
The Devil Capitalism
Brian Cloughley
Is Washington Preparing for War Against Russia?
Manuel E. Yepe
The Big Lies and the Small Lies
Robert Fantina
Vice Presidents, Candidates and History
Mel Gurtov
Sanctions and Defiance in North Korea
Howard Lisnoff
Still the Litmus Test of Worth
Dean Baker
Big Business and the Overtime Rule: Irrational Complaints
Ulrich Heyden
Crimea as a Paradise for High-Class Tourism?
Ramzy Baroud
Did the Arabs Betray Palestine? – A Schism between the Ruling Classes and the Wider Society
Halyna Mokrushyna
The War on Ukrainian Scientists
Joseph Natoli
Who’s the Better Neoliberal?
Ron Jacobs
The Battle at Big Brown: Joe Allen’s The Package King
Wahid Azal
Class Struggle and Westoxication in Pahlavi Iran: a Review of the Iranian Series ‘Shahrzad’
David Crisp
After All These Years, Newspapers Still Needed
Graham Peebles
Hungry and Frightened: Famine in Ethiopia 2016
Robert Koehler
Opening the Closed Political Culture
Missy Comley Beattie
Waves of Nostalgia
Thomas Knapp
The Problem with Donald Trump’s Version of “America First”
Georgina Downs
Hillsborough and Beyond: Establishment Cover Ups, Lies & Corruption
Jeffrey St. Clair
Groove on the Tracks: the Magic Left Hand of Red Garland
Ben Debney
Kush Zombies: QELD’s Hat Tip to Old School Hip Hop
Charles R. Larson
Moby Dick on Steroids?
Alice Donovan
Cyberwarfare: Challenge of Tomorrow
FacebookTwitterGoogle+RedditEmail