Short-Changing Programs for Children

This piece from the Urban Institute’s Kids’ Share discusses how cuts to federal programs will have a negative impact on all children benefiting from federal programs. That is a given. However it will be a much larger impact than thought. Such programs make up a smaller percentage of the Federal Government spend. There is little to be gained overall by cutting them. Such has a larger negative impact on children over time. I took the portion of the report which concentrates on the impact of cutting programs for children. More tomorrow.

Trump’s attack on Federal programs to pay for tax cuts will have a long range impact on children’s issues.

“Federal Budget Priorities Overlook Our Greatest Investment ‘Children’,” Urban Institute

Spending on programs benefiting children made up just 8% of the more than $6.75 trillion the federal government spent in FY 2024. Yet substantial evidence shows investing in programs serving children yields benefits for kids, society, and the economy at large, with some estimating a $7 return for every $1 spent.

New findings from the Urban Institute’s Kids’ Share project indicate spending on children will make up an even smaller portion of federal spending moving forward—an estimated 6% spent on children by FY 2035.

Existing spending laws have deprioritized children

The 2025 One Big Beautiful Bill Act (OBBBA) implemented changes to Medicaid, SNAP, and the Child Tax Credit. The three federal programs contribute a large portion of overall spending on children. The changes are expected to result in losses of Medicaid and SNAP coverage. This may contribute to the projected reduction in federal spending on children as a share of the budget. Even changes not directly targeting children (such as work requirements for some Medicaid enrollees that exempt parents of children younger than age 14) could threaten parents’ and children’s coverage and family well-being.

The OBBBA also established 530A accounts (or Trump Accounts), through which children born between 2025 and 2028 automatically receive a $1,000 investment. Families with children already born can opt in, with the child able to access the funds once they turn 18. Early evidence indicates families with lower incomes may benefit less from these accounts. The program will cost an estimated $14.6 billion over the next 10 years. At the same time, lower tax revenues will increase deficits and interest payments on the national debt, leaving less funding available to invest in children.

Accounting for changes in spending and assuming moderate projected economic growth , we estimate the investments in children will fall from 1.8 percent of the country’s gross domestic product (GDP) in 2024 to 1.4 percent of GDP in 2035. At the same time interest on the national debt will increase from 3.1 percent to 4.5 percent of GDP. In other words, federal spending priorities mean children will benefit less from the country’s economic productivity even as the government spends three times more on interest payments.

Sources: Authors’ estimates based primarily on Congressional Budget Office (CBO), The Budget and Economic Outlook: 2026 to 2036, the Office of Management and Budget (OMB), Technical Supplement to the 2026 Budget: Appendix (PDF), (US Government Publishing Office, 2025), and past years of these reports. Estimates are adjusted for inflation and presented as a share of GDP based on OMB, Budget FY 2026 – Historical Tables, Budget of the United States Government, Fiscal Year 2026, (US Government Publishing Office, 2026) and CBO, Key Budget and Economic Data: Economic Projections, dataset for February 2026, accessed February 12, 2026.

Notes: Spending on children and payments on the debt are included as components of total outlays and displayed separately. Data from 1960 to 1995 are captured every five years; data from 1996 onwards are captured yearly. Data through 2024 capture actual expenditures, while data for 2025 through 2035 are projections and are delineated by the gray shading. Projections reflect current law as of January 14, 2026, and economic developments as of December 3, 2025.

Proposed federal spending priorities could worsen this downward trend

The president’s FY 2027 budget request and congressional debate over the past month have centered on two priorities: allocating more discretionary spending to defense and targeting fraud in federal programs.

President Trump has requested $1.5 trillion for the Department of Defense a $441 billion or 44 percent increase over 2026—while cutting nondefense discretionary spending by 10 percent. This leaves a smaller pool of funding to allocate for children, who are primarily served by programs funded through discretionary spending.

The nation’s aging population means spending on mandatory programs like Social Security and Medicare will increase in both real terms and as a share of GDP. Our estimates indicate that in FY 2024, the federal government spent nearly six times more on adults 65 and older than on children.

Earlier this month, the House Budget Committee Chairman expressed support for the White House’s focus on reducing fraud in federal programs. There has been speculation that some of the increased attention on targeting fraud in certain states might be motivated by reducing support for federal Medicaid spending more than by reducing actual cases of fraud.  

If misperceptions about the prevalence of fraud in programs that serve families with low incomes ultimately erode support for federal funding, there will be less funding available to serve beneficiaries, including children. Programs serving children in families with low incomes have increasingly contributed to the federal government’s spending on children, making up 59 percent of spending in FY 2024 and a projected 63 percent by FY 2035 under existing spending laws.

Sources: Authors’ estimates based primarily on Congressional Budget Office (CBO), The Budget and Economic Outlook: 2026 to 2036, Office of Management and Budget (OMB), Technical Supplement to the 2026 Budget: Appendix (PDF), (US Government Publishing Office, 2025), and past years of these reports. Estimates are adjusted for inflation based on OMB, Budget FY 2026 – Historical Tables, Budget of the United States Government, Fiscal Year 2026, (US Government Publishing Office, 2026) and CBO, Key Budget and Economic Data: Economic Projections, dataset for February 2026, accessed February 12, 2026.

Notes: Percentages may not sum to totals because of rounding. Data from 1960 to 1995 are captured every five years; data from 1996 onwards are captured yearly. Data through 2024 capture actual expenditures, while data for 2025 through 2035 are projections and are delineated by the gray line. Projections reflect current law as of January 14, 2026, and economic developments as of December 3, 2025.

If the administration and Congress continue to reduce funding and change requirements for social safety net programs, the children who benefit the most from these investments won’t receive them. With no influx of funding for other universal programs expected, the overall amount the federal government spends on children will likely decline further.

State and local spending on children can help, but won’t replace federal investments

State and local governments fund about 60 percent of spending on children across all levels of government and could help counteract any reductions in federal spending. However, about 88 percent of state and local spending on children is done exclusively through education programs, providing fewer opportunities to address gaps in the social safety net.

With many states experiencing declining tax revenues and being legally unable to run budget deficits, it will be difficult for states to counteract the projected reductions in federal spending on children, let alone any additional future cuts.

Moving forward, federal policymakers do not consider the risks of reduced investments in children:  higher rates of child poverty, worse health and economic outcomes, and lower economic productivity in the long run.