What do you think? Leave a respectful comment.

Why this economist is ‘giddy’ about Biden’s plans to invest in low income families

One of the major themes from President Joe Biden's first address to a joint session of Congress Wednesday will be plans to substantially expand programs affecting children, families and reducing poverty. Amna Nawaz dives into those proposals and the questions around them with Melissa Kearney, an economist at the University of Maryland, and director of The Aspen Institute Economic Strategy Group.

Read the Full Transcript

  • Judy Woodruff:

    As we have been hearing, one of the major themes from the president tonight will be plans to substantially expand programs affecting children, families and reducing poverty.

    Amna Nawaz dives into that part of Mr. Biden's proposals and the questions around it.

  • Amna Nawaz:

    Judy, if these programs are eventually approved by Congress, the scope could be dramatic.

    They include new subsidies to cover childcare for lower- and middle-income parents for children five and younger, universal pre-K education, regardless of income, and a permanent expansion of larger child tax credits.

    Melissa Kearney focuses on these issues closely. She's an economist at the University of Maryland and the director of the Aspen Economic Strategy Group.

    Melissa Kearney, welcome to the "NewsHour."

    And let me start by asking you about those child tax credits, talking about a monthly check, up to $300 per child, for all but the richest families in America. The argument often made against these is, it's a short-term fix; it disincentivizes paid employment, so it has a long-term negative impact.

    What does the evidence show on this?

  • Melissa Kearney:

    Yes, the evidence on this is quite unequivocal, that increasing the income for low-income families has wonderful benefits, long-term benefits for children.

    So, I think the arguments against this on the grounds that it would be counterproductive in the long run really don't find support in the research.

    We know that expanding income support for low-income families means those kids do better in school, they have better health outcomes and they have higher earnings as adults. Furthermore, we really have seen in these kinds of programs very limited reduction in work effort from parents.

    I will also say the design of this particular credit is such that it doesn't penalize earnings. So, where some programs in the past did that and explicitly disincentivized work among parents, the design of this won't do that.

    So, this one seems like a real no-brainer in terms of good policy that would advance economic security for families, both in the short term and in the long term.

  • Amna Nawaz:

    Let me ask you about the early childhood development proposals here, specifically universal pre-K for all 3- and 3-year-olds. That's through a national partnership with states. Critics again point to long-term concerns here, right?

    They point to some studies that say, yes, universal pre-K gives individuals an advantage early on going into kindergarten, but, long-term, those advantages diminish over time.

    Is there consensus on the benefits here?

  • Melissa Kearney:

    So, I do think there is consensus in this literature that some of the great early improvements that we have see in kids' outcome from early childhood education stayed over time.

    But I think that is more an indictment of school systems that don't capitalize on these early gains and help students progress at good rates. The early childhood programs do seem to have really beneficial impacts, again, in particular, in particular for low-income children, who don't otherwise have access to high-quality early childhood programs and environments.

    So, this is another place where the evidence, to my mind, is quite clear that making this type of investment in early childhood education would have long-term benefits, if our schools capitalize on these early gains. And it would also go some distance in closing class gaps.

    Right now, kids from high-income homes get to school at age 5 with much greater levels of school readiness. And making this a universal program free for all kids would help address those class gaps.

  • Amna Nawaz:

    When you look at the slate of proposals here, especially those specific to children and the impact there, what are your concerns, I mean, especially when we are talking about the sheer amount of money here?

  • Melissa Kearney:

    Yes, so I will say, I am giddy about this proposal, honestly, because so many policy experts, we have been arguing for years that our country does far too little to invest in children.

    And so this is a real recognition that we need to do more to invest in children, to make sure all children get to school with the ability to succeed. The price tag on these proposals, to my mind, are just not that great, when held up against the benefits that evidence suggests we will see from them.

    If I have a concern, it's that this is a lot of money, as you pointed out. And so a lot of measures are going to need to be put in place to make sure that the money is well-spent. So, universal preschool is not going to deliver universal benefits if it is low-quality, right?

    Access to childcare is not going to be good for kids and families if it is not high-quality. When we look from lessons from other well-targeted programs that have yielded benefits or for other countries, they spend a lot of money on these programs.

    And so they are going to be a trade-off in terms of targeting it on the kids who would really benefit, targeting these programs on families who wouldn't otherwise afford them to make sure that the programs are well-funded and well-designed and really high-quality. Otherwise, we're just going to be wasting a lot of money.

  • Amna Nawaz:

    Melissa Kearney, I have less than a minute left.

    But I do want to ask you about any historical example here. Can you look to some point in history when there has been a similar effort in scope and in scale to potentially change the lives of American children to compare this to?

  • Melissa Kearney:

    Sure.

    The last major effort of this size that I can think of is the 1996 welfare reform, which was really broad in scope. And it was aimed at increasing family self-sufficiency. In the short run, it reduced welfare caseloads. We saw increased work among single mothers.

    In the long run, we have not seen an increase in the material security or the stability of families, and we have seen a gutting of the safety net. So, 25 years after welfare reform, this seems like an ideal time to do something equally bold, take a new approach, and make a large investment in our families and children in this country.

  • Amna Nawaz:

    Melissa Kearney of the University of Maryland and the Aspen Economic Strategy Group, thanks so much for joining us.

  • Melissa Kearney:

    Thank you.

Listen to this Segment