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Stop citing spending ratios!
There is a lot to like about David Brooks’s column today in The New York Times. I do want to respond briefly to his point about spending on children and seniors. Brooks cites a recent study by Julia Isaacs at the Brookings Institution that lists the ratio of federal spending between seniors and children at 7:1. Various other columnists have picked up this headline-generating ratio. Notice, pundits rarely use the 2.4:1 ratio for all government spending — most government spending on children is at the local and state level — since it plays less into their selected narrative. More broadly, it does not matter what ratio they cite; they are both deeply flawed.
The ratio of spending tells you almost nothing about the actual well-being of children and seniors, or how well we support families. Programs are not easily divided into those that support children and those that support seniors. Children don’t live in an isolated bubble, they live in families. Robert Gordon, associate director at the Office of Management and Budget, recently made this point at an Urban Institute event, where he said it is unclear whether supports designed specifically for children help families any more than those designed to help families care for an aging parent do. It doesn’t make sense to separate children from their families.Henry Aaron, also with Brookings, has written excellent response to Isaacs’s paper challenging the usefulness of trying to separate spending by children and seniors. Isaacs lists Social Security spending as a payout to seniors even though they paid for their pension benefit through payroll taxes:
If workers pay taxes into a public retirement fund, such as Social Security, the pension they later receive is simply a return of taxes they were required to pay throughout their lives. If workers have paid taxes equal in present value to the pensions they later receive, as is now the case with Social Security, it is not clear why one should regard the public pension any more than the private pension as a gift to the elderly. It is simply nonsensical to lump such payments together with transfers financed out of general revenues.
However, Social Security is small potatoes compared to what the federal government spends on healthcare, but this is a function of the structure of Medicare and the reality that healthcare spending costs more for older people than it does for children. It does not follow that this ratio represents some intrinsic selfishness on the part of seniors.
The views expressed in this blog do not represent the views or opinions of Generations United.
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