The Planned Parenthood Abortion-Funding Fallacy
The string of undercover Planned Parenthood videos released over the last several weeks has reignited congressional attempts to defund the organization, long a target of pro-life activists. According to proponents of defunding, taxpayers should not have to contribute to practices they find abhorrent—namely, Planned Parenthood’s abortion programs.
Planned Parenthood’s defenders respond by pointing out that Congress already prohibits federal funding for abortions, so defunding the organization would not accomplish pro-lifers’ central goal of curtailing its abortion program. They are correct on the letter of the law but wrong about its effectiveness. A ban on federal funding for abortions still leaves room for taxpayer support of abortion.
The reason for this is a concept economists call “crowd-out:” when the federal government increases funding for a certain activity, the private sector will spend less on that activity and more on other things. The Supplemental Nutrition Assistance Program, also known as food stamps, provides an example. Recipients must spend food stamps on food, hence the name. But a study by Columbia University professor Neeraj Kaushal and Fordham University professor Qin Gao published by NBER suggests that increasing food stamp generosity does not significantly increase household expenditures on food. Why?
Imagine a person who initially spends $50 on food out of his own pocket, but then receives another $50 in food stamps. He could spend the full $100 on food, but he might take advantage of his slightly richer situation to spend some of the first $50 on other things. If he ends up spending $70 on food and $30 on other goods, the provision of food stamps will have “crowded-out” $30 of private spending on food. Here we see the unintended consequences of government spending: the food stamp program has essentially paid for things which might be completely unrelated to food.
Economists observe crowd-out everywhere from health insurance to religious charities. But what does this have to do with Planned Parenthood? When the federal government funds the organization’s non-abortion services, that frees up more privately acquired money to spend on its abortion programs. Planned Parenthood receives $528 million, or 41 percent of its revenues, from government sources. Removing these funds would almost certainly result in across-the-board budget cuts, including to abortion programs.
Similarly, a boost in federal funding, even if earmarked for other programs, would allow Planned Parenthood to shift some of its private revenues from the permitted programs to abortion services. Uncle Sam’s generous checkbook crowds out Planned Parenthood’s spending on these permitted programs; the result is an accounting trick that still forces taxpayers to subsidize abortion.
My research did not turn up any studies that measure the size of this crowd-out with regard to Planned Parenthood or comparable organizations, but given the size of crowd-out elsewhere in the medical industry, I suspect it is significant. The only way to ensure taxpayers do not subsidize abortion is to fully defund Planned Parenthood, or ban it from performing abortions while it receives federal money.
It is beyond the scope of this article to comment on the morality of federal funding for abortions. But those who wish to have the debate should recognize economic realities before making their claims.
Preston Cooper is a Policy Analyst at Economics21. You can follow him on Twitter here.
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