The folks at the Penn Wharton Budget Model have produced some striking numbers about where the federal government spent its money last fiscal year. Their latest report is based on extensive, AI-driven analysis of budget numbers from a slew of sources.
Of the money that can be assigned to beneficiaries from specific age groups, people under the age of 26 receive about $4,300 in spending apiece. Working-age adults through age 64 get $7,300.
Seniors? $43,700 per capita, about ten times what’s spent on children and young adults.
Overwhelmingly and unsurprisingly, this discrepancy comes from the old-age entitlement programs. Of the $2.7 trillion directed to seniors in total, about $800 billion runs through Medicare and $1.3 trillion through Social Security. Children and young adults’ paltry $450 billion, meanwhile, comes mainly via health care (roughly $200 billion) and income-security programs ($150 billion).
The analysis certainly captures the zeitgeist, in which the young have become attuned to public policy’s strong tilt in favor of the old. In a recent essay, Russ Greene famously dubbed that problem “Total Boomer Luxury Communism.”
But are federal outlay disparities by age really a good way to measure the system’s fairness? As a huge entitlement-reform booster I hate to do this, but I’ll offer three caveats I think are important to consider when those thinking through the numbers.
The first: in light of America’s longstanding (and still popular) commitment to supporting the elderly, should we be concerned that we’re spending more on the old than on the young—or worry more about whether we’re spending more on the old than we can afford?
We’ve made a deliberate choice to provide financial help and health care to the elderly—who are not expected to work, may not have family around to help them, and may not have saved much voluntarily during their working years—in a way we don’t for the rest of the population. We do this through a system that has elements of “forced savings,” where folks pay in while they work (with no ability to opt out) to earn the right to this support later.
Federal outlays for seniors would be relatively high even in a well-structured system of this nature, and cranky old folks aren’t completely wrong to see these “contributory” programs, which in part substitute for private saving, as a bit different from other types of spending.
Don’t get me wrong. The programs are poorly designed, they wind up giving people “back” far more than they put in, and they desperately need reform. I just don’t think Americans can complain about higher outlays for seniors, in and of themselves, when this is the type of system we’re intent on having, which we clearly are.
My second reservation is that a lot of government spending on kids, particularly for education, is handled through state and local governments rather than the federal government. In other words, even if you’re fine with high spending on seniors but want a lot of taxpayer money for kids too, the analysis doesn’t quite capture what kids are getting already.
The Penn analysis shows only $50 billion being spent on education for those 25 and under. But when you include lower levels of government, public K-12 spending is around $1 trillion, and don’t forget a more than a hundred billion in state and local spending on higher ed. Public K-12 schools spend more than $16,000 per student each year. It’s not that taxpayer dollars never go to kids—quite to the contrary, kids are supervised and taught extensively for more than a decade each at public expense. It’s just that this spending generally isn’t federal spending.
My third, smaller complaint is that some federal support for kids takes the form of tax credits, which reduce tax revenue rather than producing outlays. The Child Tax Credit reduces parents’ taxes about $80 billion, for example.1
The age skew in federal outlays is interesting, but it’s not high on my list of reasons for supporting entitlement reform. I’m much more troubled by the simple fact that these programs don’t take in enough money to fund themselves and are going to bankrupt the country if we don’t fix them.
From the Manhattan Institute
Connor O’Brien and Liena Zagare have suggestions for making cities more family-friendly.
Other Work of Note
A debate on the biology of sex featuring the Manhattan Institute’s Colin Wright.
An effort to replicate more than 150 empirical social-science papers succeeded only about half the time. However, things look quite a bit better in political-science journals with strong data- and code-sharing policies.
Ideas for fixing the “prevailing wage” system for foreign workers. And why are immigrants increasingly highly educated?
“About 9% of U.S. births in 2023 were to unauthorized or temporary legal immigrant mothers.”
Why young men say they’re struggling.
Are “disconnected” youth—neither in school nor working—rarer in more “compact” counties?
A lot of kids are overoptimistic about their chance of graduating from college.
Remember The Race Between Education and Technology, the 2008 book arguing that putting more people through college was the way to reduce inequality? (Maybe it’s just me; I was just out of college and editing an education-focused blog at the time.) At any rate, a new paper dissects the empirical methods underlying the book and related studies, and extends the analysis.
Some attempts to get kids to engage more with remote schooling.
From Econ Journal Watch, reconsiderations of the China Shock and Sweden’s COVID results.
Can the right social-media algorithms reduce polarization?
What conditions should industrial-policy subsidies come with?
Signing a non-compete agreement apparently reduces future wage growth.
Did Democrats’ economic-policy shifts cause them to lose less-educated voters?
Did the Biden administration’s warning letters to suspect gun dealers reduce gun homicides?
Evaluating the LAPD’s effort to restrict pretextual stops.
Some findings about adding women to military combat units.
Was the U.K.’s sugar rationing good for kids?
Economists and other experts predict, on average, that AI could boost annual GDP growth to 3.5 percent by 2030.
“We show that the full-scale launch of Tinder led to a sharp, persistent increase in sexual activity, but with little corresponding impact on the formation of long-term relationships or relationship quality.”
This is the non-refundable part only. However, in the Penn analysis, even the refundable portions of the child and earned-income tax credits, which are paid out to beneficiaries instead of reducing taxes, are treated as part of the residual category not assigned by age—in other words, they appear as part of total outlays, but not as spending directed toward kids. In the downloadable spreadsheet, the $84 billion category they belong to is called “Income Security 609 residual: refundable tax credits and other mixed payments.”