The Brookings Institution and The Urban Institute

Kids’ Share 2010: Report on Federal Expenditures on Children Through 2009

EXECUTIVE SUMMARY

Federal budget outlays totaled $3.5 trillion in 2009, of which somewhat less than 10 percent ($334 billion) was devoted to children. Despite increased spending on children under the American Recovery and Reinvestment Act of 2009 (ARRA), the kids’ share of total outlays actually fell modestly to 9.5 percent in 2009, down from 9.8 percent the previous year. The children’s share of the tax expenditure budget also declined between 2008 and 2009, from roughly 9 to 8 percent.

This fourth annual Kids’ Share report examines federal expenditures on children during an unusual year, when unemployment averaged 8.5 percent and total federal spending hit a post–World War II high of nearly 25 percent of the economy. This year’s report adds a special focus on the effects of ARRA, with new analyses showing how the infusion of funds appropriated in 2009 will spend down over the next few years under current law. As our analysis shows, many children’s programs are projected to reach peak spending in 2010, after which outlays will drop off—assuming that temporary ARRA outlays end as scheduled and other policies continue unchanged. Our analysis does not include the projected effects of the health reform legislation passed in 2010, which are not yet incorporated in Congressional Budget Office (CBO) projections.

While federal spending in total and on children climbed in 2009, much of the Recovery Act’s spending substituted for or cushioned spending cuts in states and localities, hard-hit by the recession. We do not know how much of the increased federal spending on children merely offset reductions in state spending on children, and therefore we are unable to say whether total federal-state spending on children increased or decreased in 2009. We will be able to provide this analysis in the future but are limited by the state and local data available at the time of this report to an analysis of total spending on children in 2007. Over the 1998 to 2007 period, which saw a recession but not one with the same impact on state revenues, the state share of spending on children has varied from 67 to 71 percent, according to our supplemental analysis of state and local expenditures.

After an initial section explaining the methodology for estimating children’s expenditures across more than 100 federal programs and tax provisions, the report presents findings in three major areas, corresponding to the present, the past, and the future. For the present, we examine outlays and tax expenditures in 2009, relying on the detailed budget data released in February 2010. Our analysis of the past includes a comparison of children’s spending to the budget as a whole from 1960 to 2009, as well as trends within children’s spending. Our future projections extend from 2010 through 2020.