Written by Lorian Eades   

"Generational Theft," is a battle cry of the deficit hawks in their attempt to gut entitlements. Like most slogans, it is powerful in it's emotion and weak in it's credibility.

The basis of the current version of this idea comes from a study from the Urban Institute stating that the federal government spends $7 on the elderly for every $1 spent on kids. Now this has become the embodiment of Joseph Goebbels' statement that, "If you repeat a lie often enough, it becomes the truth." Moreover, anyone who questions this immoral deprivation of our children is a degenerate freeloader and should be stoned to death.

While the Urban Institute number is true, it is based solely on federal expenditures. The bulk of spending by government on children is supported by state and local expenditures. On a per capita basis, state and local governments spend 8 times as much on children as the federal government. Also their are twice as many children than elderly. When you add up the numbers, old farts get about $1 trillion and rug rats get $936 billion - almost a 1-1 ratio in direct government spending per capita in each group.

Also, remember that very few elderly people have private health insurance through an employer. Almost 60% of children are covered by private insurance provided by their parents' employers and not taxed as income. This allows a minimum of $165 billion to be removed from federal and state income tax basis. In essence, tax free income for those families who have employer provided health insurance of about $3,600 per year per child.

Children are also indirectly funded by income tax savings for their parents. Each child earns a $3,900 federal tax exemption. Up to $4,000 in tuition and fees deduction for all but the most wealth families. Up to $2,500 deduction for student loan interest. A $1,000 child tax credit. A child care credit valued up to $1,050 per child. The American Opportunity credit worth up to $2,500 per year for parents helping pay for college. A lifetime learning credit worth up to an additional one time savings of $2,000. Tax exempt plans for covering out of pocket healthcare costs and child care costs. Finally, an adoption credit worth up to $12,970 for any adoption costs.

With 76.1 million kids, these programs allow a minimum of $500 billion to be removed from federal income tax basis. To some degree these or similar exemptions are also in effect at the state and local levels. This isn't exactly the same as tax free income but does reduce federal income taxes for many families to bare minimums and often leads to a tax refund in excess of their withheld totals.

Any way you want to sum it up, kids get more direct and indirect government support than geezers.

Also, kids don't generate much wealth for the nation but old folks have spent a lifetime adding to GDP and paying into the insurance programs (social security and medicare) that are incorrectly referred to as entitlements.

Finally, it is simply incorrect to characterize deficit spending as stealing from our children. Deficit spending is financed by selling bonds. The bonds will be paid back in the future when today's children are tomorrow's bond owners. If anything, bonds are just another way of transferring wealth from the poor to the rich since only rich folks can afford to invest in bonds.

Some of these issues are discussed in this article from the LA Times:
http://www.latimes.com/business/la-fi-hiltzik-20130227,0,1359954.column