Stop citing spending ratios!

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.