The budget proposals Democrats are debating would provide the largest increase in federal investments into young people — from child care, nutrition and early education to tax breaks for parents — since at least the Great Society during the 1960s, experts say.
“There’s no question the initial Biden proposal had a lot of great investments in kids and families that would be … forward-looking,” says Ben Ritz, director of the Center for Funding America’s Future at the Progressive Policy Institute, a centrist Democratic think tank. “It’s a question of whether they survive the process. I think there is a real risk of taking our eye off the ball.”
Those diverse younger generations (who gave Biden about three-fifths of their votes in 2020) clearly represent the Democrats’ future, but seniors remain more reliable voters today. At a $3.5 trillion price tag, Democrats had so much money to allocate that they could lavish spending on both of those huge voting blocs. But with the plan shrinking, Democrats will need to choose, in difficult ways, between supporting the younger generations moving toward them electorally and trying to woo back the older generations, which have drifted toward the GOP through the 21st century.
Nearly $1 trillion in new spending for kids?
As Democrats work to reduce the package, they are exploring many strategies, including phasing in (and phasing out) programs over the 10-year reconciliation budget window to save money and imposing more means-testing on programs to either exclude upper-income families from the benefits or charge them more for the services.
But most analysts agree those approaches are unlikely to cover the full distance between the original $3.5 trillion cost and whatever final number the party might agree on. Eventually, Democrats will need to make tougher decisions about where to target the spending.
“The people who framed the $3.5 trillion reconciliation bill live in a world without tradeoffs,” says Will Marshall, the Progressive Policy Institute’s president. But now, he adds, “you have to set real priorities.”
One of the toughest choices will center on spending aimed at children and spending targeted at seniors.
Both Biden’s budget proposal and the $3.5 trillion version of reconciliation Democrats have put forward include a huge increase in funding for programs aimed at children. Defining exactly what is considered funding for kids is more art than science, but experts cite at least four programs in the plan that would unequivocally qualify:
- A new universal preschool program for all 3- and 4-year-olds.
- New spending to improve the quality and availability of child care.
- A big increase in federal funding for child nutrition.
- Two big tax credits for families — the Child Tax Credit and a tax credit to help families cover the costs of child care.
“The child care and early learning and development have traditionally been left by the wayside” in federal spending, Hersh says. “There is a real effort to build out those kinds of programs that I see in this agenda in the ways that other advanced economies do, which enable high participation in the labor force along with all the benefits that accrue to long-term economic growth to investing in early childhood learning and development and family cohesion. Economists have long known this is really the secret sauce in investing in economic growth: investing in people.”
And that doesn’t encompass all the spending that could be defined as boosting kids: Analysts note that young people would also benefit from proposals in the package to increase the availability of public housing and to create a system of paid family leave for parents. Though not directly affecting children, proposals to expand health care coverage to more working-age uninsured adults — particularly in states that refused to expand Medicaid eligibility under the Affordable Care Act — would benefit kids by providing more security for families.
Investing in today vs. tomorrow
To say that even the core programs under consideration would represent a quantum leap in federal spending on kids would be an understatement.
Heather Boushey, a member of Biden’s Council of Economic Advisers, said an interview that channeling more money into child care, early education and other programs aimed at kids would improve the workforce both in the near and long term.
Providing more help for kids, she said, would make it easier for more parents, particularly women, to participate in the labor force today.
“We used to lead our economic competitors in women’s labor force participation … and yet that has now fallen markedly, alongside the long-standing decline in male labor force participation,” Boushey said. “One of the reasons, we know from empirical research, is other countries support families with children and the United States does not.”
At the same time, providing more help for kids will enhance the skills and labor force participation of tomorrow’s workers.
“I feel like I can fill my office with research studies that show investments in those first few years of life matter to future well-being,” Boushey continued. “Setting aside whether we care about how much someone enjoys their life, just looking at someone’s labor force participation, employment and earnings, we know that young children who have access to higher quality care [do better as adults]. … That has direct economic effects on our labor force of the future.”
Despite such arguments, spending on kids has traditionally been something of an afterthought in the federal budget.
That sharp tilt in federal spending toward the elderly reflects an informal, but enduring, policy consensus, Isaacs says. “The historic way of funding retirement and health programs for seniors is federal, and schooling” and other programs for kids “is primarily state and local,” she says. “We made this historic decision years ago and didn’t realize that the net result was going to be so much more security for the seniors and insecurity and underinvestment in kids.” While the federal government spends about $6 on seniors for every dollar it spends on kids, the imbalance in public spending comes down to about $2 on seniors for each dollar on kids when state and local spending is included, Isaacs notes.
Expensive new senior benefits
But more centrist Democrats and fiscal analysts question adding such an expensive benefit to Medicare when its costs are already projected to rise substantially.
Asked if the federal government can afford such a new benefit, Ritz says, “We think the answer to that question is no. I think there should be a discussion about how we address some of the unmet senior needs, but that needs to be taken in the context of the unsustainable growth of those programs already.”
Rethinking a historic division
Many of those young people are being reared in red states across the Sun Belt that spend relatively less money on services for children, including education and health care, Frey and other analysts note. To advocates for children, that tension reinforces the case for rethinking the historic division of Washington focusing on seniors and states primarily funding educational and other services for kids.
“We’ve been trying that way of doing things for some time, and it makes for huge variations across the states,” Isaacs says. “We are discovering it results in less-than-ideal investments in children and much less than in European countries. So I think it’s exciting to see that we are moving into the 21st century and deciding we need to invest in children at the federal level.”
Similarly, Boushey argues, “It’s a national economy. We are not 50 countries; we are one nation with one economy. Making sure that we are making these investments in our people, who are free to move across states as they grow up, it’s in the national interest. It’s our national interest to make sure we have a well-cared-for and well-prepared national workforce.”
The irony is that seniors, about three-fourths of whom today are White, have a direct self-interest in investments that would help more of the increasingly non-White youth population reach the middle class. Those kids of color are the future workers whose payroll taxes will fund Social Security and Medicare for retirees, and if fewer of them achieve stable earnings, the financial pressures on those two retirement pillars will only intensify.
The competition between spending on seniors and spending on children may seem like a zero sum tradeoff, but in the end there is no financial security for the gray without more economic opportunity for the brown.