Net interest payments on the national debt is projected to reach $390 billion in 2020, expanding to $807 billion in 2029, according to an analysis by the Peter G. Peterson Foundation. Interest will cost taxpayers nearly $6 trillion over the next decade, the foundation notes, more than federal spending on children, which is at its lowest levels in a decade.
According to a recent Urban Institute report, Kids’ Share, annual federal spending on children fell to 1.9 percent of the gross domestic product (GDP) in 2018, the lowest in a decade.
Research for the annual accounting of government spending on children was funded by the Annie E. Casey Foundation and the Peter G. Peterson Foundation (PGPF).
In 2018, the child poverty rate of 16 percent was higher than that of adults (11 percent) and seniors (10 percent), and the second highest among 29 developed countries.
In 2018, $379 billion, or 9 percent of the federal budget, was spent on children, the report states, with another $106 billion provided through tax reductions for families. They totaled, on average, about $6,200 per child.
“Federal spending on children is a key part of the budget and is seen by many as a critical investment in the nation’s future, helping to alleviate child poverty and supporting the next generation of productive adults,” PGPF says, but it pales in comparison to other priorities.
Roughly 45 percent of the 2018 federal budget went toward health and retirement benefits for adults through Social Security, Medicare, and Medicaid; 15 percent went towards defense spending; 8 percent to interest on the national debt.
Earlier this year, the nonpartisan Congressional Budget Office projected that interest payments will climb from 1.8 percent of GDP in 2019 to 3 percent in 2029. Based on this rate, interest payments on the national debt will surpass total federal spending on children by 2020.
“The federal budget is a statement of the nation’s priorities – and we are on pace to spend more on interest on the debt than we are on the next generation of Americans,” the Urban Institute says.
“As we borrow more from tomorrow to pay for today, interest will consume a larger and larger part of the budget, limiting our options and threatening economic opportunities for the next generation,” PGPF CEO Michael Peterson said in a statement.
As Congress continues to extend the debt ceiling to finance short-term budget appropriation funding, the next generation loses, Peterson argues.
“We’re already heading toward trillion dollar annual deficits, so adding more to the debt is the last thing we need,” Peterson says. “There’s just no reason to be piling so much debt onto our kids and grandkids, especially during a strong economy, and when they will already face many daunting challenges like automation and climate change.”
Total federal spending is projected to increase by $1.5 trillion over the next decade, the Urban Institute points out, with only 3 cents of every additional dollar directed toward children’s programs. About 67 cents of every additional dollar will go toward Social Security, Medicare and Medicaid and 28 cents toward interest on the debt. Over the next decade, spending on children is projected to shrink from 9.2 percent of federal outlays to 7.5 percent.
This article was first published by The Center Square.