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Federal Spending on the Elderly and Children 1 (July 2000)

handle is hein.congrec/cbo06691 and id is 1 raw text is: Page 1 of 6 FEDERAL SPENDING ON THE ELDERLY AND CHILDREN The Congressional Budget Office (CBO) recently completed a preliminary analysis of federal spending on people over age 64 and under 18, which concluded the following: In fiscal year 2000, the federal government will spend a little over one-third of its budget-- about $615 billion--on transfer payments and services for people age 65 or older. Federal spending on children in 2000 will total about $148 billion, or $175 billion if payments to the children's parents are included. In 10 years (under current policies), spending on the elderly and children combined will account for more than half of total government spending, with the elderly's share making up roughly four-fifths of that amount. Entitlement programs account for the overwhelming share of spending on the elderly (97 percent in 2000) but a much smaller portion of spending on children (about two-thirds). Federal spending on the average person 65 or older will rise from nearly $17,700 in 2000 to more than $21,100 in 2010 (in constant dollars, which exclude the effects of inflation). Federal spending per child will increase from about $2,100 in 2000 to about $2,500 in 2010 (or $2,500 and $3,000, respectively, if spending on parents that is solely attributable to having children is included). THE DISTRIBUTION OF SPENDING Programs carried out by the federal government focus much more heavily on assisting the elderly population than families with children. In 2000, CBO estimates, spending on selected programs for the elderly will reach $615 billion--more than four times the amount spent directly on children and three and one-half times the amount spent on families because of the presence of children. Whereas the federal government takes the lead in supporting older people, state and local governments have historically provided substantial support for families with children through spending on elementary and secondary education and other programs. In a 1998 study, CBO estimated that state and local governments spent about $4,000 for each child in fiscal year 1995 compared with about $700 for each elderly person.UI (A significant portion of that spending occurs through programs such as Medicaid and Temporary Assistance for Needy Families, for which federal matching funds are available.) Nevertheless, because federal spending dwarfs state and local figures, total government spending for the average person 65 or older is still much greater than for the average child. (A more detailed examination of total government spending on older people and families with children is beyond the scope of this analysis.) Federal Spending on the Elderly CBO estimates that the federal government will spend roughly three and one-third times more on the elderly this year than it did three decades ago (in constant dollars, excluding the effects of inflation). Since 1971, per capita spending on older people (in 2000 dollars) has risen at an annual rate of 2.4 percent a year, although over the past decade that rate of growth was 1.5 percent.

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