The pandemic, at first, left many American parents feeling stranded, cut off from school and other support systems. But then something momentous happened. The government invested billions of dollars in children, including cash payments to families, free school meals and money for child care centers and public schools.
In 2021, the federal government spent $10,710 per child, through a mix of programs and tax changes, up from $6,810 in 2019, according to the latest installment of the Urban Institute’s annual Kids’ Share report, released Thursday. It amounted to $834 billion, invested in 78 million children.
It didn’t last. The investments were meant to respond to an emergency, and as it eases and most of the investments expire, government financial support for families will largely return to prepandemic levels by 2024 — and in some categories, will decline from those levels.
“In my career, I’ve never seen anything so dramatic as the shift in resources to families with kids during the pandemic,” said H. Luke Shaefer, a professor at the University of Michigan School of Social Work studying poverty and social welfare.
“Now we have much more evidence that these types of provisions can really work, and almost all of it is going away.”
Excluding tax reductions, federal spending was $8,240 per child. By comparison, similar spending on adults 65 and older last year was $35,200 per person. In typical times, for every $1 the federal government spends on children, it spends $6 on older adults. This is largely because of health costs, through Medicare and Medicaid as well as Social Security.
Spending on older adults is set to increase: One-third of the federal budget now goes to them, and that share is projected to grow to half in a decade, the Urban Institute found. Children, by comparison, get 9 percent of the budget now — and that’s expected to shrink to 6 percent in a decade.
“The simple story there is that the entitlement spending on Medicare, Medicaid and Social Security for adults is growing, it’s continuing to grow and squeezing out everything else in the budget, including children,” said Heather Hahn, a co-author of the report, who studies welfare and children’s well-being at the Urban Institute.
As pandemic relief for families with children expires, she said, “all the fiscal challenges we had are still there waiting for us.”
Some researchers say the investments were justified at the time, but were too expensive and covered too many people to be made permanent, since many did not have income thresholds or work requirements.
“It is right for these things to expire, considering they were not paid for and Congress should not fund permanent expansions to government programs by adding to the federal debt,” said Angela Rachidi, a senior fellow in poverty studies at the American Enterprise Institute. “Increased spending on children could be worthwhile, but only when balanced with the realities of the country’s current finances.”
The investments came through dozens of programs. The largest expenditure was the child tax credit, which came as direct payments to parents, up to $3,600 per child. Next was expansions in health care, through Medicaid and the Children’s Health Insurance Program.
The next largest investment was in nutrition — via free school meals and greater eligibility for food stamps — and welfare programs for poor parents. There was a similarly large investment in child care centers and public schools.
The government also increased funding for job training for young people, housing assistance and other social services. Of all of these, health spending on children is the biggest area expected to keep growing (because of rising health care costs, not the number of children served).
For every dollar spent by the federal government, state and local governments spend about $2 more, mostly through public school and health care.
Federal spending on social services was not always such a large share of the budget. In 1960, the government spent 3 percent of its budget on children, and 11 percent on older adults, according to the new report. That began to change in the 1960s, with the establishment of programs like Medicaid, Medicare and Head Start, and increases in Social Security, food stamps and housing assistance.
In the late 1980s, the government increased the use of tax reductions and credits as a major source of support for children and low earners. In the pandemic years, they became the single largest category of spending on children.
Before the pandemic, the majority of federal dollars for children went to those in low-income families. That changed with the pandemic, when more than half of benefits were universal or nearly so, meaning they went to all but the richest families. As those programs expire, investment will again be directed toward poor families.
When it comes to designing family policies, these kinds of questions — whether support should be for poor families or for everyone, and whether it should be provided through cash grants or good and services — are areas of disagreement. But the outcomes are not. The evidence is clear that government support for families during the pandemic benefited children: In 2021, child poverty fell to the lowest rate on record.
“It became glaringly obvious during this time that parents faced this impossible burden,” said Nate G. Hilger, an economist and author of “The Parent Trap: How to Stop Overloading Parents and Fix Our Inequality Crisis.” “But it’s always been true, before and after the pandemic.”
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