The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
The text below is an excerpt from the complete document. Read the full brief in PDF format.
This brief is based on information from the report "Investing in Children" by C. Eugene Steuerle, Gillian Reynolds, and Adam Carasso.
Abstract
Between 2006 and 2017, the share of the budget pie that the federal government will invest in children is projected to decline by 14 to 29 percent. Forecasts of federal government spending indicate that over the same period annual domestic spending will rise by approximately $650 billion in real dollar terms, but investments in children will garner nearly none of this increase. The United States budget is increasingly oriented toward consumption-based programs and less oriented to those investments aimed at enhancing economic growth.
Introduction
Between 2006 and 2017, the share of the budget pie that the federal government will invest in children is projected to decline by 14 to 29 percent, conclude Eugene Steuerle and Gillian Reynolds of the Urban Institute and Adam Carasso of the New America Foundation in a paper for the Partnership for America's Economic Success. Forecasts of federal government spending indicate that over the same period annual domestic spending will rise by approximately $650 billion in real dollar terms, but investments in children will garner nearly none of this increase.
Societies, like families, spend money in two ways: current consumption and investments for the future. Consumption includes spending on food, clothing, and entertainment. Investments include funding of roads and airports, scientific research and development, and human capital through education and other means of developing human capabilities.
Economists agree that investments are primary drivers of future economic growth for the country, and, in our increasingly knowledge-based economy, investments in human capital are among the most important. In addition, research suggests that investments in human capital programs serving children can sometimes yield significant returns to them and society for decades to come. Yet the federal government's investment in human capital programs focused upon children, modest at best relative to many other federal priorities, are likely to shrink in the future if current policies continue.
Definitive studies have not been done to assess the effectiveness, or "return," of many government investments. Still, even investment programs with modest positive returns are likely to yield higher returns than consumption-oriented programs that often yield zero
or even negative growth effects. In that sense, the government is like a household: shifting spending toward investment is likely to enhance growth in both income and consumption in the future.
(End of excerpt. The entire brief is available in PDF format.)
This research was sponsored by the Partnership for America's Economic Success.
The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
Usage, posting and reprint of materials on the UI web site:
Most publications may be downloaded free of charge from the web site in PDF format. This information may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required.
Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact paffairs@urban.org.
If you are unable to access or print the PDF document please contact us or call the Publications Office at (202) 261-5687.
PDF