Making children, families, and the economy thrive: The power of investments 


July 22, 2022

Affordable child care, tax credits for families with children, and offering nutritious meals, particularly to children in families with low incomes, are the three vehicles best suited for driving families, young children, and the nation’s economy down a pathway to success. 

That’s the testimony offered this week by two academicians and one child advocate who appeared before the House Budget Committee. That Committee convened a hearing entitled “Examining the Powerful Impact of Investments in Early Childhood for Children, Families, and Our Nation’s Economy.” 

You can watch the Committee hearing, which ran just under two and a half hours, here. 

Rep. John Yarmuth (D-KY), Chairman of the House Budget Committee, opened the hearing by noting several programs that – in addition to helping children – return to the economy more money than they cost the federal government in the first place. “We call these programs investments because they pay off – literally – for children, for their families, for our society, and for our economy,” he said. 

Example: the Special Supplemental Nutrition Program for Women, Infants, and Children – more commonly known as WIC – leads to fewer premature births, fewer infant deaths, and healthier babies. Yarmuth said WIC saves lives, but it also leads to other dividends – for every dollar spent, WIC results in approximately $2.48 in reduced medical costs and productivity gains. 

Another example: the Supplemental Nutrition Assistance Program – more commonly known as SNAP – not only provides access to healthy food to 44 million children – it also gives an important boost to local communities during economic downturns. “Each SNAP dollar generates more than $1.70 of economic activity, supporting jobs and local businesses,” Yarmuth said. 

Among witnesses testifying at this week’s Committee hearing were Rasheed A. Malik, Director, Early Childhood Policy, at the Center for American Progress; Hilary Hoynes, Professor of Economics at the University of California Berkeley; and Maureen Black, Professor of Pediatrics at the University of Maryland School of Medicine.  Also testifying, with a negative view of these investments, was Newt Gingrich, former Speaker of the House. His testimony is here. 

Malik stressed the need for robust federal government intervention to make child care more affordable. He linked access to child care to the issues of women’s participation in the work force as well as broader economic expansion in the U.S. 

“Before I even touch on the stresses that the COVID-19 pandemic has placed on our child care sector, it should be noted that most communities have had a systemic undersupply of child care options for decades,” Malik said. “While the positive effects of high-quality child care have been studied for years by economists and other social scientists, little public funding has followed to scale up these models to reach American families.” 

He added that one of every ten early childhood educators have left the field during the pandemic and have not returned or been replaced. “Fundamentally, the numbers don’t work for child care businesses. They can’t pay their teachers any less and they can’t charge parents any more than they already do,” he said. “This funding gap is begging for a public investment so that supply can meet demand. Without it we will continue to have educator shortages, diminished maternal labor force attachment, and ever-widening inequality of child outcomes.” Malik’s testimony is here. 

Hoynes discussed social safety net programs overall and examined which ones are most effective in reducing child poverty. She said the most effective anti-poverty programs for families with children are the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC). Those two tax credits, she said, have combined to reduce child poverty by 5.9 percentage points. Her testimony is here. (These findings assess the CTC before its temporary 2021 expansion, which over a six- month period reduced child poverty by about one-quarter. One month after the expanded monthly CTC expired, child poverty surged by 40 percent, an increase of over 3.6 million children in poverty.) 

The next most effective anti-poverty program, she said, is SNAP, which has reduced child poverty by 5.2 percentage points. Other effective programs are Supplemental Security Income (1.8 percentage points), Social Security (2.2 percentage points), and housing subsidies (1.8 percentage points). “Taken together, government tax credits and transfers reduce child poverty from 25.5 percent (no taxes or transfers) to 13.6 percent, lifting 8.7 million children (including 2.7 million White, 2.1 million Black and 3.0 million Hispanic children) out of poverty,” she said. 

Black focused her comments on the WIC nutrition assistance program, which launched in 1969 with the help of strong, bipartisan support in Congress. She said the program has withstood recent challenges brought on in part by the pandemic. 

“WIC’s responsiveness to unprecedented and unanticipated environmental challenges, including the COVID-19 pandemic, the infant formula shortage, and the increase in children’s excess weight gain, illustrates the critical role that WIC plays in promoting equity and preventing further disparities by protecting young children in low-income families,” she said.  “Innovative advances, such as revised food packages, remote registration and access, increased access to fruits and vegetables, and the electronic benefit transactions are examples of the dynamic aspects of WIC in responding to the needs of the American society.” 

Although there is little dispute that the programs discussed at this week’s hearings work, witnesses and some committee members noted that there remains a disconnect between those who say they want to nurture America’s children, and those who refuse to vote to allocate the dollars to actually do so – a disconnect that has been with us for some time. 

“President Biden has a quote that he attributes to his father, and it seems appropriate to end my testimony on it here,” Malik said. “As the President says, ‘Don’t tell me what you value, show me your budget, and I’ll tell you what you value.’ For a very long time in this country, there has been a significant divergence between our stated values and our public budgets. It is my hope that this hearing can be a step in the direction of reconciling that imbalance.”