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Comes now economist Gary Burtless of the Brookings Institution, a Washington think tank, with another view of government spending on the elderly. People like me have complained for years that government is too generous, especially toward the affluent elderly. This largesse, we argue, shortchanges the young. Not so, says Burtless.
The crucial question, says Burtless, is whether "rising outlays on programs for the aged will squeeze out spending on programs for children, especially investments in their schooling." If so, stingier policies for the elderly can be justified "to make room for spending on the young." The case is way oversold, Burtless says.
I have two problems with his analysis. First, although K-12 spending hasn't yet dropped significantly, there are signs we may be at a turning point. Second — and more important — our subsidies for the elderly threaten more than schools. They're crowding out most other governmental activities, from defense to the non-elderly safety net. Popular government (Social Security and Medicare have huge support) is penalizing good government.
Usually, I'm a big Burtless fan. Over the years, I've often quoted him. He's a rigorous researcher, going where the data take him, not where personal preferences might lead. But here, I think, he has strayed from reality.
He doesn't dispute the dominance of spending on the elderly. "Kids' Share," a report issued annually by the Urban Institute, compares federal spending on children with other federal spending. In 2011, spending per person 65 and older totaled almost $28,000, while per-person spending on children 18 and younger was about $4,900, a ratio of nearly 6 to 1.
But wait, says Burtless. Most government spending for children occurs at the state and local levels through public schools. Including this makes the imbalance "less extreme than federal budget" alone. True. Still, the imbalance is huge. Instead of 6 to 1, the ratio drops to 2.3 to 1.
More important, says Burtless, there's no evidence that spending on the elderly has actually squeezed school funding. Over "the past seven decades," he writes, spending per student has outpaced inflation and economic growth per person. That's true, too. More teachers, better pay and more services have raised spending over long periods. From 1980 to 2011, spending per student after inflation climbed almost 80 percent, reports the Education Department.
What Burtless doesn't say is that this trend may have stalled or reversed. In 2011, spending per student after inflation was 7 percent below its 2008 peak. Some federal programs are being cut. In 2014, educational grants fell 4 percent, Head Start 2.5 percent, reports "Kids' Share." We can expect more of the same. As more Americans turn 65, spending on their government programs reduces other federal spending. In any year, the shift is modest, but over time it adds up.
Here are more figures from "Kids' Share": From 2000 to 2025, spending on the elderly (Social Security, Medicare and the non-child share of Medicaid) is projected to rise from 38 percent of the federal budget to 49 percent. Meanwhile, children's share drops from 8.5 percent to 7.7 percent. Defense falls from 16 percent to 12 percent, and all other programs plunge from 28 percent to 19 percent.
The result is skewed government. No one (at least not me) wants to gut Social Security and Medicare; they are vital. But they need to be modernized to reflect longer life expectancies and more affluence among the elderly — and to lighten the burden on the rest of government. Politicians and the public have balked.
All government spending is not useful, but neither is it all wasteful. We delude ourselves if we think shrinking non-elderly programs will have no adverse consequences. As a share of the economy, defense spending is declining to pre-World War II levels. In an unstable world, is this wise? Scientists complain that curbs on federally funded research are shortsighted. Highway construction is said to be inadequate. The list goes on.
I conclude: Burtless's focus on schools is too narrow. The world we leave to our children needs balanced and competent government. Achieving that is difficult at best, but we're making it harder every day.
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