The False Choice of Old Versus Young in American Budgetary Politics

Posted in: Politics

The magazine Harper’s has a feature in each issue called the “Harper’s Index,” which presents an eclectic array of statistics in provocative ways. For example, in February’s issue, the Index reported the following sad facts: “Number of days former Texas district attorney Ken Anderson spent in jail for withholding evidence in a 1987 murder trial: 4. Number of days spent in prison by the innocent man Anderson helped convict: 8,995.”

In that same index, Harper’s reported the following: “Estimated per capita amount the federal government spends on programs for children each year: $3,822. On programs for the elderly: $25,455.” Just as the disparate statistics in the Texas murder case tell a powerful story, so too are the numbers on federal spending meant to feed a very specific, though false, narrative: We spend too much money on senior citizens.

There is, in fact, a widespread belief in this country that we spend too much money on seniors and too little on children. Conservatives and “centrist” Democrats claim that, because of this supposed disparity, Social Security and Medicare are too generous and must be cut.

This is, in fact, a gross misuse of statistics. Properly understood, the fact is that our country puts a lot more of its resources into children than we generally understand. Most of that investment is, however, hidden from view. We have figured out how to give seniors money directly, in order to give them independence in their retirements, but we continue (for good reasons) to provide for our children in other ways.

More importantly, the argument should not be a zero-sum game between older and younger Americans. The real story is that we spend too little on both seniors and children. This is one of the sad consequences of our indulgence in mindless anti-tax and anti-government sophistry. As a result, too many politicians use spending on seniors simultaneously as an excuse to underinvest in children (“We can’t afford it, because we spend so much on older people!”) and as a reason to cut spending on seniors (“We can’t afford it, because it’s forcing us to spend so much less on children!”).

Before we can fully develop that argument, however, we need first to understand why the statistics on spending are so misleading, and to see how we really devote resources to the care of non-working Americans, both old and young. Then we will see how it is possible that we can be spending too little on both groups, and how we can put an end to that destructive divide-and-conquer strategy that has been promulgated by apologists for the wealthiest Americans.

The Kids and the Geezers: A Divide-and-Conquer Strategy From Fiscal Scolds

One of the easiest applause lines among politicians and the pundit class is the claim that we spend too much on “entitlements.” By this, they mean programs for which people qualify on the basis of various criteria (age, years of work, health, and so on), entitling the citizen to certain legally mandated benefits.

It is easy, moreover, to throw around impressive-sounding numbers when one talks about the big entitlement programs: Social Security, Medicare, and Medicaid. In fiscal year 2012, for example, the federal government’s official budget was $3.5 trillion, of which $773 billion, or 22 percent, went to Social Security benefits. So, as the anti-entitlement story goes, more than one in every five federal dollars went directly into seniors’ pockets. Add in the $472 billion spent that year on Medicare, and seniors received more than a third of all federal money!

That the average Social Security benefit totals just over $15,000 per year, of course, is barely mentioned. The completely incorrect picture that we are meant to see is a huge cohort of aging Baby Boomers who are enjoying a cushy retirement, heedlessly bankrupting the country in the process.

Moreover, the proponents of cutting benefits to seniors have a political story that supposedly backs up their assertions. They argue that the reason we supposedly overspend on seniors is that older people are so single-minded and politically active. Retirees are bored, so we are told, and they end up spending lots of time on political activities, especially including getting their fellow senior citizens to vote to protect their pocketbook interests.

This, the story continues, explains why the same politicians who dutifully decry the spending levels for entitlement programs never do anything about it. And it also purports to explain why we simultaneously underinvest in children: Kids don’t vote.

It is a seductively simple story, and it is even consistent with the fact that Republicans bitterly attack Democrats every time the Democrats suggest policies that would reduce future spending on Medicare. That is, the Republicans are also scared of alienating senior citizens, and thus they are willing to be fiscal hypocrites to win seniors’ votes.

Even though many of the facts underlying that narrative have some element of truth to them, however, the larger story is simply false. Among other things, there is no explanation for why parents, who do vote, would tolerate this spending disparity. Moreover, if the senior citizens are so selfish and greedy, why do they reject even those plans that politicians have designed specifically to exempt seniors from cuts?

For example, both George W. Bush in 2005, and the Romney/Ryan ticket in 2012, proposed future cuts in retirement-related programs with the explicit guarantee that all people currently retired or near retirement would be protected. Perhaps the continuing popularity of these programs—which have added up to the most successful anti-poverty program in history—is based on more than just self-interest.

Even so, very well funded right-wing groups continue to instigate generational conflict, promoting the claims that the fight for the future is the “kids versus the geezers.” This myth has been dutifully promoted by right-wing pundits (for example, here), right-wing politicians (for example, here), and even some nominally liberal commentators as well (for example, here).

The Facts About Spending on Children and Seniors

The statistics quoted above from Harper’s indicate that the federal government spends $6.66 on senior citizens for every $1.00 that it spends on children. The first thing to note in assessing this statistic, however, is that this is only federal spending, not spending by all levels of government combined.

In our system, the most important direct spending that benefits children is funding for schools. In 2011 (the most recent year for which I could track down the statistics), total expenditures by states for public elementary and secondary education were $604.2 billion. Spending on state colleges and universities adds about another $300 billion. Add that to the federal spending on children, and total government spending on children easily surpasses one trillion dollars per year.

Of course, some cynics argue that the money spent by states on education is not really received by children, but rather by teachers, professors, and school administrators. That, however, betrays a gross misunderstanding of how these things must work, as I will discuss below. Moreover, we do not hear those same cynics discounting the amounts of money spent by Medicare, even though those dollars are paid to (non-retired) doctors and hospitals, not the seniors themselves.

In any case, the dramatic statistics that purport to show a huge spending advantage for seniors over children are cherry-picked to support a political narrative. If the question is how much money is spent on each group, the answer is that the totals are surprisingly similar.

But other than the simplistic notion of “One for you, one for me,” why should any of that matter? Moreover, we need to understand that our society has developed a way to “monetize aging”—spending money directly or indirectly on senior citizens—whereas much of our caring for children remains non-monetized, because it takes place largely inside the home.

The Way We Treat Our Vulnerable Citizens: Money for the Old, Attention to the Young

The very notion of retirement is a relatively recent phenomenon in human history. For millennia, and even to this day in many countries, people worked until they died, unless they were fortunate enough to have someone take care of them when they became enfeebled. The notion that people deserve to stop working while they are still relatively healthy, and to continue to consume goods and services that they have not helped to produce, has only been accepted as a general right for the last few decades, even in most wealthy economies.

Of course, the notion of childhood is also fairly recent. The adoption of child labor laws, roughly a century ago, was necessary because the norm was to put most children to work at very young ages. They never had a childhood, in the sense that we now know it. Once it became possible to invest in children’s long-term productivity, rather than putting them to work right away, modern societies started to see the wisdom of allowing children not to work until late in their adolescence.

We now, therefore, have created two groups of people that, as a matter of social commitment, we have deemed worthy of the right not to work, but still to share in the economy’s bounty. By its nature, this policy commitment requires that working people consume less than they otherwise could, in order to help their children and their parents.

“Monetizing” aging, as I noted above, means that we have decided that most senior citizens can be given a check, and the right to see doctors, and then sent off to live independently. The alternative, of course, is for our parents to live with us, after they retire. As a matter of policy, retirees and their children have overwhelmingly decided that they prefer to live apart, even though that means that working adults have to work to produce more goods and services than they otherwise would have to.

Even when senior citizens become truly ill, the norm in the U.S. is for them to spend their last years in retirement homes, extended-care facilities, and so on. Non-retirees still write checks, therefore, to obviate the need to provide care directly to the elderly.

We have monetized some aspects of childhood. The growing use of day-care facilities, for example, allows single parents and working couples to increase their earnings in the paid workplace. The money spent on schools, moreover, allows parents who do not want to home-school their children to hire specialists (known as teachers) to take care of that important child-rearing task.

Beyond those examples, moreover, it is surprising when one stops to think how much human effort—that is, how many resources could have been used for other purposes, if there were no children to rear—is put into turning children into functioning adults.

At the most basic level, think about how much effort parents of very young children put into keeping their infants and toddlers alive and healthy. All of the feedings, diaper changes, and so on, would not be necessary if parents did not decide that someone else’s needs were more important than their own.

As children grow up, the form of the human effort by their parents changes, but it is still essential. Even seemingly trivial things, like teaching a child not to talk with his mouth full of food, require time and effort on the part of the parent. Teaching children not to steal, not to fight (and the limited circumstances in which it might be acceptable to fight), to consider sexual decisions carefully, and so on, is not easy work. When adults fail to do any of those things, moreover, we as a society see the consequences in the form of anti-social children (who then become anti-social adults).

There have, over the years, been some efforts to compute the cost of parenting. According to one source: “It will cost an estimated $241,080 for a middle-income couple to raise a child” born in 2012 to age 18. Even this, however, simply adds up the various costs of clothing, food, summer camps, and so on. It does nothing to measure the non-monetized costs of parenting.

The Real Issue: Adequate Spending, Supported by Adequate Tax Revenues

The standard argument from fiscal conservatives, as I suggested above, is that young people should be angry at how much money is being spent on the elderly. Perversely, however, this argument is then used to try to rally younger voters’ support to cut Social Security and Medicare benefits in the future.

That is, for very good reasons (not just political ones), even the people who want to make retirement still more difficult are “grandfathering in” the current generation of retirees, and even some older non-retirees. These policy proposals would cut Social Security and Medicare spending for the very generations (the so-called millenials and post-millenials) who are being told that the system is currently ripping them off.

The issue is, therefore, not actually old versus young. Young people are all the “marks” in a con game, with hucksters telling young Americans to stick it to old people, all the while trying to trick young people into supporting policies that would actually stick it to young people themselves.

Meanwhile, it is true is that we could and should spend a lot more money on the support and development of children. Sadly, not all families are equally capable of nurturing their children, because of lack of money, poor health, and other reasons. Policies like President Obama’s call for universal pre-kindergarten programs are only the beginning of what we should be doing to bring some minimal measure of equality of opportunity to our children.

Many of these programs, moreover, have been demonstrated to more than pay for themselves. Just like scientific research spending, and investments in more productive machinery for businesses, spending to give children adequate nutrition (to support brain and body development), and to provide them with minimally adequate health care and better schools, pays off handsomely.

At a fundamental level, we have to decide whether we really want to hold our children hostage in an unnecessary generational war. We are not overspending on our seniors, but we have, over the last few decades, created an economic system in which the luckiest members of society reap ever-larger rewards.

No matter how one feels about how those huge incomes were generated, the conversation cannot continue on its current course. We need not limit ourselves to a grim choice between taking money away from retirement programs in the future, so that current 35-year-olds are poorer when they retire, or taking money away from current 5-year-olds, so that too many of them are never able to work in the first place. Our society will be healthier, and the economy will prosper, if we understand that the resources are there to support a decent life for all, if only we can muster the political will.