AEI/Brookings Working Group Calls For New Emphasis on Investments in Children

An American Enterprise Institute/Brookings Institution Working Group released a new, bipartisan report Tuesday calling for a rebalancing of the national investment strategy toward children and their future well-being.

The report, “Rebalancing: Children First,” was the major topic of discussion during a joint AEI/Brookings digital event featuring White House Council of Economic Advisers Chair Cecilia Rouse and Utah Sen. Mitt Romney (R).

“The future of America rests in part on how the country prepares the next generation to live and to lead,” the report says. “Childhood is a consequential and cost-effective time to make investments that last a lifetime. Yet, many children in the United States do not have the resources or relationships they need to build a strong foundation for their future.”

AEI Director of Economic Studies and working group co-chair Michael Strain said the working group agreed across partisan lines that a national budget is not just an accounting exercise but a document that reflects the moral priorities of the nation. “This report argues that those priorities are out of whack,” he said.

Working group co-chair Diane Whitmore Schanzenbach, director of the Institute for Policy Research, Northwestern University, outlined some of the report’s top recommendations:

• Both government and the nonprofit sector should do more to build evidence on programs that care for caregivers and offer regular home- and community-based support for parents.
• Support for policies to strengthen and encourage marriage along with clear public messages about the importance of marriage.
• Support for increasing resources to low-income families with children through changes to the Child Tax Credit and the Supplemental Nutrition Assistance Program (SNAP). Making the tax credit for children available to households with no earnings and increasing SNAP benefits by 20 percent for families with children ages 5 and younger would reduce child poverty and help children to succeed later in life.
• Support for policies that help parents in the acquisition of new skills that lead to better jobs, policies such as those that expand access to apprenticeships, career and technical education, and programs that support parents who are students in the successful completion of their degrees.
• Support for increasing the generosity of the Earned Income Tax Credit.

Schanzenbach said no working group member wholeheartedly agreed with all of the report’s recommendations but there was unanimous agreement that the full set of policy changes “would improve the status quo.” She also emphasized that the group agreed that all the proposals would be budget neutral proposals and could be paid for by redirecting resources away from programs benefitting seniors, wealthier adults, corporate welfare including agriculture subsidies, and tax enforcement.

Rouse emphasized the Biden administration’s focus on the well-being of children and said the issues raised by the report were particularly urgent given the impact of the COVID-19 pandemic. “The learning loss has been so profound, and some kids have been completely disconnected from the educational systems,” Rouse said. “It behooves us to get in and try to make that up as soon as we can.”

On the subject of the ongoing congressional talks about extending the expanded Child Tax Credit, Rouse seemed to leave the door slightly ajar for potential compromise on some kind of work requirement for the credit, which has been a sticking point for West Virginia Sen. Joe Manchin, a moderate Democrat whose support is crucial.

“The CTC should be a way to help improve the lives of children. When we condition it on work, we cut out the children whose return would be the highest,” Rouse said. “Having parents work is not the goal of the CTC. That said, we don’t want to discourage work.”

Romney, who issued his own Child Tax Credit expansion proposal last year, said talks are ongoing since the Build Back Better legislation was put on hold and signaled his flexibility in being part of a bipartisan solution.

Romney’s proposal also had no work requirement and he said he’s wary of adding one for fear of discouraging parents from making the choice to care for their child at home, particularly during the early childhood years. But he said he was open to possibly adding a requirement that to receive the credit, recipients must have earned a certain amount of taxable income during the previous year, even if it’s as low as $5,000 or $10,000.

“I’m flexible and I understand the concerns on the other side of the aisle,” said Romney, adding that he’s had discussions about the CTC with Manchin and other Senate Democrats. “Let’s go back and look again at family security and children and see if we can pass something on a bipartisan basis.”

The working group participants:

• Co-chair Michael Strain, director of Economic Policy Studies at AEI.
• Co-chair Diane Whitmore Schanzenbach, nonresident senior fellow in economic studies at the Brookings Institution and director of the Institute for Policy Research at Northwestern University.
• Natasha Cabrera (University of Maryland)
• David Deming (Harvard University)
• Veronique de Rugy (George Mason University)
• Lisa A. Gennetian (Duke University)
• Ron Haskins (Brookings Institution)
• Dayna Bowen Matthew (George Washington University)
• Richard Reeves (Brookings Institution)
• Isabel Sawhill (Brookings Institution)
• Kosali Simon (Indiana University)
• Katharine Stevens (Center on Child and Family Policy)
• Ryan Streeter (AEI)
• James Sullivan (University of Notre Dame)
• Bradford Wilcox (University of Virginia and AEI).