Policy Perspective

$87 Billion and Counting
by Greg Duncan and Isabel Sawhill

Winter 2004, Volume 26, Number 1

At nearly 1 percent of the size of America’s economy, President Bush’s $87 billion price tag for Iraq is an enormous amount of money. What could that kind of money do if invested here at home? As an author and an editor of the recent book One Percent for the Kids, we have some very specific ideas for investments that would greatly benefit America’s children and our country’s future.

Our book is the product of four years of work by a group of 12 policy experts who reviewed evidence on interventions and other policies designed to enhance children’s development. Our proposals total about $76 billion. We were encouraged by the fact that Tony Blair has mustered the political will to devote an equivalent amount on child-related proposals in the U.K., although our programs differ from his.

A prime concern was how to build upon the work-promoting successes of recent welfare reforms. Experiments have shown that full-time work for single mothers can boost children’s achievement, but only if family income increases as well. Accordingly, we propose a modest increase in the minimum wage and a $20 billion expansion of the Earned Income Tax Credit for full-time workers (30 or more hours per week).

At the same time, research shows that maternal employment might harm infants. Here we seek to expand parental options by increasing unpaid parental leave from three to six months and reinstigating work exemptions in welfare programs for mothers with infants under six months of age.

In view of the high rates of out-of-wedlock childbearing and declining rates of marriage, it is critical to examine carefully the evidence in these areas. Building on the successes of a handful of pregnancy-prevention programs, we recommend a $2.5 billion expenditure on high-quality after-school programs. While increasing the number of children growing up in two-parent families is a worthy goal, the evidence so far is not solid enough to warrant more concrete steps than carefully evaluating promising approaches to encourage marriage.

Brain research has focused attention on children’s early years, and intervention evidence confirms the wisdom of expenditures during these years as well. Since younger children appear to be most vulnerable to poverty, we propose a $10 billion child allowance beginning at birth and ending on a child’s fifth birthday, for both poor and middle-class families. If on-going evaluations of Head Start warrant, we would expand Head Start coverage for low-income children. We would begin to implement tested intervention programs targeting children at all economic levels who have severe mental health problems and provide universal pre-kindergarten (pre-K) access.

Despite recent progress, millions of children and pregnant women still lack health insurance. We propose to close this gap with a $10 billion expansion of Medicaid-type insurance programs. To provide opportunities to escape the problems of high-poverty, urban neighborhoods, we would expand vouchers for public-housing residents and further promote mixed-income housing development.

All told, our package of proposals adds up to between $60 and $76 billion, depending on details of financing the universal pre-K programs. The $87 billion price tag for Iraq provides one useful point of reference. Recent tax cuts provide another. When fully phased in, the 2001 tax cut provides $88 billion annually to the wealthiest 5 percent of Americans. If our country can summon the political will to rebuild Iraq or cut taxes, surely we can invest the money needed to secure the future of our children.

Isabel V. Sawhill is vice president and director of the Economic Studies program at the Brookings Institution.

Greg J. Duncan is the Edwina S. Tarry Professor of Education and Social Policy and an IPR faculty fellow.

One Percent for the Kids: New Policies, Brighter Futures for America’s Children was published in 2003 by the Brookings Institution Press.