Ezra Klein, a prominent Washington Post blogger whose work I generally respect and enjoy, recently put up a post (Feds spend $7 on elderly for every $1 on kids) on federal spending on young versus older Americans. His post was a reanalysis and interpretation of a recent Urban Institute report on spending on kids, funded by the Annie E. Casey Foundation, that analyzed spending on children in a post American Recovery and Reinvestment Act and budget reduction world.
The Urban Institute report had very little invidious comparison between kids and older adults, but Klein has highlighted what little there was and added new factoids of his own. And I just don’t get it.
I’m sure that Mr. Klein means to be advocating for increased spending on children so as to help create the future we all want to have in our country. For example, in addition to tweeting the inflammatory title of this piece, he also tweets that spending on children will soon be less than interest payments on the debt—another rhetorical comparison intended to show that we need to invest more in kids than we currently do.
However, I don’t think this rhetoric will work to increase support for children as it is remarkably silent on the key issue of whether their needs are being met. Rather, it seems most likely to me to strike an unthinking visceral reaction to federal “spending” on older adults and be used to support cuts on their side.
Once again, advocates for kids and the media are fanning the flames of intergenerational conflict because it is easy to do so, makes for good sound bites/tweets, and plays into a cultural narrative particularly of those on the left that we are sacrificing our children (disproportionately poor and non-white, and non-voting) in favor of greedy geezers (who are the past, disproportionately rich, disproportionately white, and self-interested).
Since I have both older relatives and young children, I am particularly interested in understanding this situation and trying to be sure we have our facts straight. Among other things, the conventional narrative that older adults are rich greedy geezers is just plain wrong. The median income for what the U.S. Social Security Administration quaintly calls “aged units” (family units of either older couples or single people) is $25,757. And, because of high costs of health care among older adults, sophisticated measures of poverty, which consider both non-discretionary spending and non-cash benefits, peg the poverty rate at 15.1 percent among older adults versus 18.1 percent among children—not enormously different.
Moreover, the average Social Security payment in this country is $1,230 a month or $14,760 a year. This constitutes 50 percent or more of income for 53 percent of older couples and 74 percent of income for older singles. Social Security is 90 percent, virtually all, of cash income for 22 percent of older couples and for 46 percent of singles. I have written about this before (Man Bites Old Dog), but the myth of the greedy geezer seems to be hard to kill.
Given how important these issues are and how timely issues of government spending are given that the sequester has kicked in, I want to give some serious consideration to the actual numbers and be sure we are comparing apples to apples. But I also want to consider the most important question: What do the numbers mean? Are we meeting people’s needs? Are we meeting some people’s needs at the expense of others?
Mr. Klein’s accounting of federal spending includes outlays for Social Security to retired persons, payment for health care services through Medicare, and Medicaid payments (Older Americans Act spending barely counts in an analysis like this) for those older adults also eligible for that low-income program. On the children’s side are the federal government share of Medicaid for low-income kids, special school supplemental programs (e.g., Race to the Top, school lunch subsidy), and various miscellaneous funding (e.g., Head Start).
On the face of it, this is bizarre since it is clear and well understood that our federal system allocates responsibility for education to the states. Moreover, since Medicaid is a state and federally co-funded program, the state share of Medicaid funding also needs to be added for both children and older adults. Indeed, despite the inflammatory article title, Mr. Klein does present a chart using this more inclusive analysis, adding state spending as well as federal spending, which shows that the difference declines to a ratio of about 2 to 1 in favor of older adults, down from the hyperbolic 7 to 1.
Going beyond using sensible math, I think we can also see that the analysis is foolish in that it gives no consideration to the nature of the programs—what needs they meet and how they come to be funded by revenues collected by governments at the state and federal levels.
For example, Social Security—while technically a transfer program from current workers to current retirees—is something that working Americans have paid into all their lives through a dedicated payroll tax, and represents a social compact as to how Americans will fund retirement.
Counting this money as part of the federal “spend” on older adults and not on children is tantamount to suggesting that children should be considered retired and supported by Social Security rather than by the earned incomes of their parents. Or it implies that somehow today’s children will never retire and so never benefit from the program. (Despite rumors to the contrary, Social Security solvency is one of the easiest fixes in our current set of economic challenges and there is no reason to think that it won’t be around in 50 years.)
Let us also consider health care spending. As with Social Security, part of the reason that federal (or even federal plus state) spending in health care on older adults is higher than on kids is that we as a society decided in 1965 that private health insurance for older adults was not working and that Medicare, supported by another dedicated payroll tax, was a good solution.
Our continuing national “consensus” is that working-age families should get their health insurance from employers, buy on the private market (perhaps with subsidies through exchanges), or—if low enough in income—be covered by Medicaid. I am very happy that relatively few kids are poor enough to be on Medicaid and therefore show up in Mr. Klein’s accounting. I wish it were even fewer.
But another reason that health care spending on older people is so much higher than on children is that older adults have much higher rates of illness and use more services to stay functional and even alive. Per capita spending on Medicare beneficiaries is around $11,000 per year, many times that for children in the Medicaid program. This high cost is why we made health insurance for older adults a tax-supported program (along with beneficiary premiums, deductibles, and co-pays) through a universal Medicare program.
That we spend less on children doesn’t mean that we love them less. When we look at the specific programs, it often means that children need less or will get their turn later. Fairness doesn’t mean that everyone gets the same thing. It means that everyone gets what they need.