Monthly Archives: October 2011

The Status of Children in 2011

The Evolving Background: Children and Intergenerational Equity
            It is not unusual for people in the here and now to be blind to the later judgment of human history. From any era, a view of prior history has hindsight and perspective often lost in contemporary passions.  Here in 2011, we certainly look back to find a sordid human history that includes ineffable cruelty to people who are a bit different—often in the name of righteousness.  In its time each such cruelty was, for at least a large population, insulated from the harsh judgment of cruelty and hypocrisy that the distance of time will bring.  We look back now and easily condemn numerous historical acts accepted in their time, from witch burning and the inquisition to imperialistic wars, to unspeakable genocide.  For Americans, we have some basis for national pride in our history of relative tolerance, democratic values and assistance to others.  And we also largely agree about our own egregious errors: Slavery and violent racism, the massacre of Sioux women and children at Wounded Knee, the Japanese internment camps, and other affronts to our own values that we quietly concede from the wisdom of later reflection.
            So how will current adults be viewed through that future lens, in fifty or one hundred years?  We honor our predecessors partly because of the legacy they left us—we have the feeling that we were somehow in their thoughts.  We know that the founders of America were generally wealthy, comfortable adults who risked much for political ideals, and the American generations over the last 230 years since have similarly earned our admiration and gratitude.  What Tom Brokaw called the Greatest Generation, in particular, has our deserved respect: Overcoming a depression, defeating fascism, rebuilding Europe, and then creating a system of public education that was the envy of the world for their children, and at the same time creating a national system of transportation, water development, parks and many other investments in their nation and children.  They enacted civil rights laws and created a safety net for children and for the elderly.  They built a nation of productivity, one that reveres human freedom and has a tradition of sacrifice for its children and grandchildren.
            But the current generation of Boomers does not appear to closely follow their precedent.  On the environmental side, there is substantial disregard for future impacts, ranging from wasteful exploitation of one billion years of accumulated oil, gas and coal accumulation, to the creation of non-biodegradable waste, over-population, ocean degradation and a host of serious future costs.  Beyond the concern over our permanent imprint on the planet is an equally troubling indicator of debt imposition on those who follow us. The collection of pension and extraordinary medical care by the Boomers as they reach senior status may have strong social justice foundations—where and if the generation benefitting pays for its costs.  Data from the U.S. Government Accountability Office published in 2008 projects an accumulating deficit, primarily for Medicare and Social Security, which will exceed $52 trillion in obligations over the following 75 years.  Related obligations (Medicare, Medicaid, Social Security and debt interest) subsumed 48% of the federal budget in 2006 and now make up the majority of it.  Discretionary spending has declined from 67% of the budget in 1967, to less than 38% today (see   
            And it now appears that these numbers have been overly conservative.  More recent data suggests that the total projected debt may be closer to $60 trillion rather than $52.  Those factors include a $4 trillion increase in the national debt since the 2006 data.  That now $56 trillion assumes little increase in medical costs when the opposite has been the pattern.  Indeed, these costs for the elderly know little likely limitation.  It does not include unfunded increases that are likely from trends in prescription benefits and a plethora of new medical benefits — from routine hip replacements and major eye surgeries to power chairs, Viagra, and organ replacement options.  Any limitation on what could easily be an account to subsume all other accounts is subject to demagogic references as “rationing” health care, or to government “death panels” who will kill Grandma.  This focus on one group is interesting in light of the effective denial of all health care coverage to eight million children (at one-seventh the per capita cost).  But that is little discussed and is apparently quite tolerable.  
            The $56 trillion does not include unfunded, sometimes extraordinarily generous pensions for local and state employees, teachers, utility workers and others with substantial presence in state capitals.  The total is now approaching $60 trillion and is likely to grow at over $1 trillion per year through 2011 and beyond.  How much is $60 trillion?  It comes out to over $500,000 per American family.  To carry this understated sum of at a modest 4.5% (not to pay any of it off), our grandchildren will have to pay over $24,000 per family per year in current dollars, about one-half of total median family income before taxes.  
            Changing demographics makes these future consequences both more likely and of greater concern.  As noted, we have promised to the current generation of elderly (those now age 50 and above) a legally enforceable commitment to provide benefits that vastly exceed their contribution to its financing.  Adding to this unusual imbalance are two demographic changes — longer lives and smaller families. A much reduced population of young and producing adults per elderly beneficiary will now be paying their unfunded liability.  The pyramid allowing four or five persons in productive adult years to pay for each senior citizen is suffering substantial reduction.  The population pyramid is looking less like a broad Egyptian structure and more like the Washington Monument — with a lot of weight on the bottom part.
            Adding to the concern is the disastrous consequence of either another economic downturn or even a small increase in required interest payments to finance these current and future deficits. A two percent increase in the amount needed to print more money based on government bond sale would have a momentous impact on the burden of these unfunded obligations — as if they are not already frightening enough.  How ironic that the major source of current security for the United States is the full faith and credit from the People’s Republic of China, a totalitarian regime.  Our officials rightly warn of the pitfalls of dependency on Middle Eastern nations and the OPEC cartel, but less attention is paid to our supine posture before a communist regime with nuclear weapons that is now our largest national creditor.  The share of U.S. debt held by foreign investors was 28% as recently as 1996.  It is now over 50%.
            Our political vision has been clouded by the anti-government, anti-deficit demonstrations of the “tea party” movement, which has distracted from this legitimate critique with class warfare rhetoric.  The problem we have is that some of these conservatives eschew contribution to the next generation, and glorify — or at least rationalize — self-indulgence.  It is as if we are not somewhat of an interdependent community, as if we have no obligation to others, as if everything we have achieved we each accomplished alone and without assistance.  Public schools did not educate us or our colleagues or customers, the roads beneath our vehicles magically appeared, the water running through our showers was arranged by each of us acting alone, the monopolies generating our electricity are best left to exact what they will, our parks will occur through private charity alone, our cities will develop best by unimpeded market decision (until the guy next door decides to put in a gas station), and so on.  They buttress this theme with anti-government rhetoric that is the longstanding hallmark of American demagoguery.  Certainly skepticism about “the state” is well warranted, but not blind, categorical rejection.  And the “tea party” folk do not help their cause by objecting primarily to the $14 trillion federal budget deficit — which is of concern, but has some justification — while largely ignoring the much larger unfunded liability for politically sacrosanct Social Security and especially Medicare.
            In return, liberal America ignores the critique wholly.  Representative Ryan will introduce a certainly flawed Medicare reform proposal in early 2011.  But rather than acknowledge the deficit problem or propose a less flawed alternative that might involve some additional contribution from the Boomer beneficiaries, the left will seize upon the tried and true demagoguery of the right.  Mark these words: They will use the same rhetoric about “attacking health care for the elderly” that was used unfairly by the right against the President’s health care reform statute.  One part of this dilemma is the large number of high-voting/contributing elderly entitlement beneficiaries.  Another part is the excessive influence over Democrats of public employee unions — with their protection of often untenable pension burdens to be imposed on future taxpayers.
            Children suffer from a double whammy — their interests are not advanced by either political party. Democrats eschew personal responsibility and government accountability, and sign off on virtually unlimited future debt for our children.  Meanwhile, Republicans rationalize public disinvestment, except for a blank check to the Department of Defense (leading to a nation with 4% of the world’s population now expending about as much on military accounts as the rest of the world combined).
            The current political debate is a distractive argument between two “teams.”  Each of them is willing to mislead about the other.  It seems to be a reflection of human character: The love of allegiances with “groupings” and “labels” so our team can compete and vanquish their miserable adversaries.  The Yankees will prevail!  The Cardinals will win!  The Packers, with their tradition and character, will return as champions!  It is as if forty-year-old baseball or football fanatics have formed political teams and are immaturely filtering all reality to promote their side.
            It is interesting that respected Nobel Prize winning economist Paul Samuelson, who passed away in December of 2009, is often cited for legitimate government deficit spending in times of recession.  He also took the lead in warning about the combined deficit we are imposing on future generations. Neither party is really paying attention to both sides of his legacy either.
            Exacerbating the problem, it is a diffuse and gradual dilemma steeped in economics and jargon, and so it evokes little interest from the media, or from the short-sound-bite culture we have become.  A thought too long to be thumbed into a twitter message confines political discussion to sloganeering and name calling.
            And children are otherwise not at the table where political and budget decisions are being made.  One thing we at CAI have learned over the past twenty years is that government is primarily a mediator between those who contend before it.  And it is irresistible to come up with a benefit that kicks the can down the road to those who will follow — and who are not at the table.
            To add to the political weakness, children are lightly represented where decisions are made.  For example, one study has established that the American Association of Retired Persons (AARP) alone spends more than 25 times as much on federal registered lobbying as do all of the child advocates at the U.S. Capitol combined (over $25 million per annum versus just under $1 million).  The elderly vote heavily, and the median age of large campaign contributors is over 68 years of age.
California’s Continuing Child Disinvestment
            California not only reflects the ethical problems of the Boomers, but it accentuates them.  California is among the wealthiest jurisdictions in the world, but we complain about our rather average burden, including property tax levels that are among the lowest in the nation.  The structure of the state’s property tax reflects the intergenerational inequity outlined above.  It is an ad valorem tax (Latin for a tax on market value).  But we have substantially frozen real property at just above 1977 levels for us older folks (rates can increase no more than 2% per annum while market growth since 1977 is many, many times that rate). This means that young adults who do not have parents to inherit property from or cannot otherwise maintain the artificially low market value assessment, commonly pay five to ten times what Boomers pay in taxes for the same value property and the same public services.  The Proposition 13 limitation of taxation to 1% of a property’s value is not the problem — instead, it is how it is assessed, on a dishonest market value basis, so the elderly who owned in 1977 and before, can take billions from younger generations.[1]  The practice of wildly disproportionate taxation favoring those who were here earlier than others is a rather naked violation of the American tradition of fairness and intergenerational equity.  The exploitation of our young by the Boomers in our state is not only unquestioned, any criticism of the arrangement is considered political suicide by those in both parties.                    
            California is perhaps the worst offender nationally in its unfunded pension and medical coverage benefits for public employees.  It has joined the ubiquitous “defined benefit” format of current public pensions.  California adds to the national unfunded liability of $60 trillion discussed above with high additional unfunded liability for state workers, school district teachers and employees, and city and county personnel.  The City of San Diego alone has an over $2 billion unfunded public pension/medical obligation liability.  Teachers, special district employees and even utility retirees have piled up substantial pension/medical obligation deficits for our children to pay.  Some public employees are now able to retire at age 55 or younger at full salary — and some make substantially more than full salary upon retirement.
            Regrettably, the California example of adult self-indulgence reaches beyond long-term debt deferral practices.  The year 2010 was the state’s fifth straight year of public child-investment contraction. The 2009–11 federal subsidies to states are not in prospect for 2011–12.  Some recovery, evident in early 2011, is likely to reduce the projected $20 billion deficit, but only marginally.  Cuts are likely to hit the child safety net yet again, as they have since 2006.  As noted in last year’s message, the Legislature’s “Suspense File” process shoves any bill costing public funds into a special category in the Senate and Assembly Appropriations Committees.  The vast majority of them die without vote or accountability — as has now been the case since 2007.
            Our manifestation of generational self-indulgence has taken many forms, as updated below from last year’s discouraging message:

  •      Child poverty is increasing and the public safety net is being withdrawn in a steady pattern of strangulation.  One generation ago, the basic safety net of Temporary Aid to Needy Families (TANF) and Food Stamps approximated the federal poverty line in California; it has since fallen to  less than 50% of that benchmark.  The federal poverty line itself represents less than one-half of the California Budget Project’s calculated “self sufficiency” budget for California.
  • California has one of the lowest levels of participation in federal food stamps in the nation — as its state government gives those who need food help little priority — even when the funds to provide it are entirely federal.
  • Child care assistance is in jeopardy for 2011–12, including especially for the many single parents who require such care in order to maintain employment.
  • Despite the passage of federal health reform legislation in early 2010, almost one million California children lack basic health care coverage — while coverage is universally assured for the elderly (who cost seven times as much each).  Indeed, the state General Fund was unable in 2010 to provide even the one-third state match for new child enrollment in Healthy Families, and has had to expropriate funds intended for other purposes, including the special fund approved by voters to help children ages 0–5. 
  • For families whose children remain uncovered, this means little preventive care and reliance on emergency-room care — with billing at three to five times the cost paid by private and public insurers.  An operation and short stay in the hospital means financial ruin for working poor families.  Taking a child in for treatment continues to feed the largest source of personal bankruptcy in the state: collection of medical bills.
  • The new federal health care reform law will extend private insurance dependency coverage of children to age 26 (the median age of self-sufficiency).  And California is among the first to create an “Exchange” under the new law — one that will give families the bargaining power to buy affordable coverage.  It might help.  And Massachusetts has proved it is possible.
  •   California’s foster children suffer alarming outcomes upon reaching adulthood.  A large percentage of them do not obtain a high school diploma, and only about 3% obtain any post-high school degree.  They are substantially unemployed, have very high arrest rates, and the largest group in our homeless shelters are not military veterans, but former foster youth.   California’s dependency court judges assume parental jurisdiction of all of these children.  In a democracy, we together are their parents — and we are neglectful.
  • Our payments to family foster care providers — from which adoptions most often occur — stand at about 1/10th the amount per child paid to the commercial group homes who have skilled lobbyists at the Capitol. The amount paid to foster families is 35% below the enumerated out-of-pocket costs that federal law requires they be paid. And the number of foster children in the more desirable family foster care homes has gone from 15,000 to below 5,000 in the past eight years — as costs have increased and compensation has not. There can be little supply when taking on a child will require the sacrifice of your savings and pension — as has increasingly been the case in our state.  We hope that 2011 will rectify that violation, as the Ninth Circuit has commanded in CAI’s Wagner case (discussed below). 
  • Another fiscal shortfall occurs as foster children age into adulthood at 18.  While we all as individual parents provide about $50,000 as a median amount for our children after age 18, the state provides less than 1/5th this amount, and it is skewed to a small number.  The few former foster youth able to reach college might be able to access Cal Grants, the Guardian Scholar program, or the Transition Housing Placement Program that gives limited, temporary funds in a “top down”, social worker-administered application for a small number of youth.  This scheme is well-intentioned, and it helps some — but these programs do not approach the help we give our own children who are not parented by us through the state.  Nor is the recent federal Fostering Connections Act implementation likely to seriously rectify this shortfall as it is likely to be implemented under California’s AB 12 vehicle (discussed below).
  • K–12 education investment is in sharp decline. The state has dropped to 47th among the 50 states in per pupil spending — and class sizes now fall to 49th, with thousands more teacher lay-offs now in process. The state is also near the bottom of the nation in non-teacher support at its public schools: librarians, nurses and counselors.
  • Higher education fees and tuition are at record levels as state officials, eschewing evil “tax increases”, make an exception by increasing higher education tuition (as well as increasing fees for child care and foster care licensure).  General Fund spending on prisons used to be much less than higher education investment.  Today the General Fund spending on correctional programs is $10 billion — double the General Fund commitment to the once-famed UC and California State college systems.  Apart from General Fund retraction, federal Pell grants have now fallen to a small fraction of annual tuition.  College kids now graduate with unprecedented debt.  The Cal Grant system has not kept pace with higher education costs for the students covered.
  • Symptomatic of the overall malaise, public higher education capacity (especially classes offered) is being slashed.  And a substantial percentage of public higher education loan amounts are now directed at “for profit” vocational schools that advertise heavily, do not disclose often dismal employment success of graduates, and leave their students with six figure debts and growing default rates against public accounts.  The sacrifice here demanded of California’s adults is far less than our parents’ performance for us. 

To increase revenues to address these deficiencies, the state can select from a relatively painless menu:

  • tax corporations at a level typical of other states;
  •  eliminate corporate tax avoidance;
  •  tax alcohol at the level other states commonly assess;
  •  restore the longstanding 2% vehicle license fee improvidently reduced by former Governor Schwarzenegger, an action that caused California to lose $5 billion per annum in revenues; 
  • examine closely the nearly $50 billion in annual tax credits, deductions and exemptions that currently exist (which are not examined annually — or ever — and require a two-thirds vote to end);
  •  apply sales taxation to professional services;
  •  tax internet sales and allocate to states; and/or
  •  reform property taxation by assessing all property at actual value — perhaps reducing the 1% of value tax limit to ½ of 1% in the bargain.
            Importantly, the 2001/2003 federal tax cuts gave California’s wealthy class $37 billion per year in additional income. Some combination of the measures listed above to recapture about one-third of this amount would retain most of the tax subsidy while (a) eliminating the state deficit; (b) allowing the state to capture federal matching funds otherwise foregone; (c) restoring safety net protection and educational opportunity; (d) medically covering the state’s children (as every other civilized nation accomplishes); while (e) allowing spending decisions to be made at the state level consistent with stated principles of federalism.  While fiscal conservatives properly objected to the 90% income tax rates for the wealthy brackets applicable in the 1970s, current high rates are less than half those levels, and are further undermined by credits and exceptions that lead the net tax paid as a percentage of income to be less than that assessed the lower middle class. Meanwhile, major industries have used a burgeoning tax advice legal industry to avoid contribution and route income into or through foreign tax havens. The oil industry, in particular, which should pay an add-on fee for the external cost of unrenewable resource exhaustion visited on the future, instead receives the opposite — tax subsidies to stimulate extraction.
            The Republican philosophy has some important messages to impart about the limitations of government, the importance of outcome measurement and accountability of agencies, the need to use market and self-regulating forces rather than “top down” dictation of policy by public authority, the tendency of Democrats to sequentially expand a social service establishment by hiring more and more public employees, and the failure to demand personal responsibility.  Indeed, it appears from those of us observing liberal politics over the past thirty years that the inexorable extension of what is consistently advocated is fewer and fewer children with responsible parents, and more cared for by 10, 20, 30 or more social workers, each performing a narrow task — and for whom these children are unavoidably part of a transitory “caseload.”
The personal responsibility theme of conservative concern includes the most momentous decision human beings make — to create a child.  That message is in particular order where unwed births rise from levels of 8% a generation ago to 40% today — with most of the involved children living in poverty amidst a collapsing safety net.  Interestingly, the children of married couples live in families with median incomes well above $50,000 — almost five times the family income of their contemporaries born to unwed mothers.  Absent fathers of such children pay an average of less than $60 per month per child, and almost half of that money goes to state/federal accounts as TANF compensation.
            Regrettably, both parties appear to avoid discussing these cultural problems.  The adult-centric media characterizes such subject matter as a politically incorrect insult to “single mothers” or women in general.  Or perhaps is it subtle discrimination against homosexual adults or parents.  Or perhaps it is racially biased because of the high incidence of paternal abandonment among African-Americans.  It appears that the often similar categories of the children involved — with their due share of females, homosexuals and minorities — do not count.
            It appears that Republicans have largely surrendered their principles of personal responsibility.  Instead of a partnership for children, with support for investment conditional on this list of defensible principles, they simply demand state contraction (except for the military and prisons).  They dare not offend the elderly — the welfare state there is sacrosanct.  Personal responsibility is not demanded — they will just remove the safety net for the kids.  And people do not pay their own way, they steal from those who follow. There has been an implicit deal struck that allows each party to essentially sacrifice its laudable pro-child agenda in return for the excision of the other party’s counterpart.  There has not been a “contract with America” by public officials, but an undiscussed “contract on children” by both parties.

About The Author:
Professor Robert C. Fellmeth is a tenured law professor at the University of San Diego (USD) School of Law and is Founder and Executive Director of USD’s Center for Public Interest Law and its Children’s Advocacy Institute. He is the holder of the Price Chair in Public Interest Law at the USD School of Law, one of two such chairs in the nation. In 1997-98, the School of Law honored him for his “outstanding, balanced, cumulative career contributions supporting the mission and goals of USD.” Citing his 33-year career as a tenured professor at the School of Law and his extensive scholarship, USD’s School of Leadership and Education Sciences in 2009 added him to its list of “remarkable Leaders in Education” for “legendary contributions to the field of education made by individuals from San Diego and Imperial Counties.”

A graduate of Stanford University and Harvard Law School, Fellmeth was one of the original “Nader’s Raiders,” organizing the student groups in 1968 and directing the Nader Congress Project in 1970-72. As a deputy district attorney and Assistant U.S. Attorney in San Diego from 1973 – 1981, he litigated 22 antitrust actions and founded the nation’s first antitrust unit in a district attorney’s office. 

He currently chairs the Board of Directors of Public Citizen Foundation, chairs the Board of Directors of the National Association of Counsel for Children, serves as a member of the board for First Star, and is counsel to the board of Voices for America’s Children. He has served on the board of directors of Consumers Union and California Common Cause. 

He has taught at the National Judicial College, the National College of District Attorneys, and the California Judicial College. He has authored or co-authored 14 books or treatises, including The Nader Report on the FTC (Baron, 1968), The Politics of Land (Grossman, 1970), California Administrative and Antitrust Law: Regulation of Business, Trades, and Professions (Butterworths Legal Publishers) and California White Collar Crime (LEXIS Publishing). His latest treatise is Child Rights and Remedies (Clarity Press, 2006), a text on child advocacy.

[1] The purported basis for this inequity, to prevent the elderly on a fixed income from losing their homes as the value rises, is easily resolved by delaying taxation until the death of the owning couple; the pressure from increased value is easily accommodated by a small portion of the sale of a property that will have increased many fold in value.