Welcome to Extreme Investor Network, where we provide you with valuable insights on personal finance to help you make informed decisions for your financial future. Today, we are diving into the topic of federal spending on children and how it has evolved in response to the Covid-19 pandemic.
According to research from the Urban Institute, federal spending on children reached a peak of $11,690 per child in 2021 as a result of Covid relief efforts. However, since then, there has been a significant decline in those expenditures, with spending falling to $8,990 per child in 2023. This trend is expected to continue in 2024, with spending leveling off at $8,760 per child.
The pandemic-era changes, including tax provisions, social services, training, and housing programs, had a profound impact on poverty levels among children. In 2021, child poverty fell to 5.2%, down from 12.6% in 2019. However, the expiration of aid led to an increase in child poverty to 12.4% in 2022.
One of the key aspects of federal spending on children in 2021 was the expansion of the child tax credit. Families received larger maximum payments, with up to $3,600 per child under age six. However, as we look ahead, there are uncertainties about the future of the child tax credit, especially with the potential expiration of the Tax Cuts and Jobs Act in 2025.
Lawmakers are expected to discuss the long-term future of the child tax credit and other tax code changes that are set to expire. There is bipartisan interest in maintaining current policies, such as the expanded child tax credit established in 2017. However, there is no consensus on the specific changes that should be made to the credit in the future.
As we consider the future of federal spending on children, it’s important to recognize that it will have to compete with other budget priorities. By 2034, federal expenditures on children are projected to decline below current levels, as other areas, like interest payments on the national debt and spending on programs like Social Security, Medicare, and Medicaid, are expected to increase.
While the federal government had a larger role in spending on children during the pandemic, traditionally, states and localities have been the primary sources of funding for children, particularly in education. As we navigate the post-pandemic landscape, it’s crucial to understand the evolving dynamics of federal spending on children and how it impacts families and communities.
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