Tuesday, February 02, 2010

Spending Ratios Don't Show The Whole Picture

Donna hopes to say more about David Brooks’ column today in the New York Times later (there’s a lot to like about it). I do want to respond briefly to his point about spending on children and seniors.

Brooks cites a recent study by Julia Isaacs of 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. However, no matter what ratio they cite, this comparison is deeply flawed.

The ratio of spending tells you almost nothing about the actual wellbeing of children and seniors, or how 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 (OMB) recently made this point at an Urban Institute event. It is unclear, he said, whether supports designed specifically for children help families any more than those designed to help families care for an aging parent. When creating public policy, it doesn’t make sense to separate children from families.

Further reading:

Henry Aaron wrote an excellent response to the Brookings paper, challenging the value of trying to separate spending by children and seniors.

Also, I want to point folks to the excellent post by Ezra Klein. Klein correctly argues that it’s the structure of Medicare that is actually driving spending, not some intrinsic selfishness on the part of seniors.

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