Low-Income Children, Their Families and the Great Recession: What's Next in Policy?

Low-Income Children, Their Families and the Great Recession: What Next in Policy? Lawrence Aber New York University Ajay Chaudry The Urban Institute Paper Prepared for The Georgetown University and Urban Institute Conference on Reducing Poverty and Economic Distress after ARRA January 15, 2010 April, 2010 Copyright © March 2010. The Urban Institute. Permission is granted for reproduction of this file, with attribution to the Urban Institute. The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance problems facing the nation. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. Special thanks to Anna Danziger who provided very helpful research assistance for this paper. We wish to thank Olivia Golden, Ruth Friedman and Wade Horn for their thoughtful responses to our paper at the January 15, 2010, conference. In addition, we thank Sheldon Danziger, Julia Isaacs, and Isabel Sawhill for their careful reviews and critiques of our paper after the January 15 conference. Contents Introduction 1 Premises 1 Provisions to Support Children in the ARRA and the President’s First Budget(s) 4 Key ARRA Provisions to Support Children (Including Low-Income Children) 4 Which ARRA Provisions Supporting Children to Continue or Expand 9 New Initiatives Included in the FY 2010 Budget and Other Opportunities or Policy Levers to Support the Needs of Low-Income Children 9 Policy Opportunities to Protect and Promote the Well-Being of Children in Low-Income Families 10 Initiatives Targeting Early Childhood and Postsecondary Development 10 Developing Place-Conscious Initiatives 15 Initiatives Directly Targeted on Family Finances 15 Creative Experiments Today for Maximum Effectiveness Tomorrow 17 Rapid Reengineering and Scaling of Low-Cost, High-Impact Early Interventions 18 The Science and Practice of Incentive-Based Strategies 18 Rethinking the Role, Function, and Design of Schools: Whole School Reform Meets Social-Emotional Learning 19 Conclusions 20 Priority # 1. Buffer Low-Income Families with Children from the Worst of the Recession and Continuing Recovery (but do so with an eye toward the future) 20 Priority # 2. In the Longer Term, Target New Investments to Promote Developmental Equity 21 References 23 1Introduction Children can’t vote. And households with children are a declining proportion of all American households. These two facts help explain the political weakness of children and those who advocate on their behalf, and the disproportionately small share of federal spending devoted to children (Isaacs et al. 2009). Nonetheless, and to state the obvious, children are 100 percent of our nation’s future. Today’s children are tomorrow’s parents, citizens, and workers. Robust private (family) and public (government) investments in children’s health, education and development are central to achieving our nation’s long-term interests. What should happen, then, when a severe recession compromises the ability of both families and government to invest in children? In particular, what should happen when this severe economic downturn follows a period of declining investment in children and a broader unraveling of the safety net for low-income families? The current administration has demonstrated through its actions that it strongly believes that the federal government should act quickly and countercyclically to at least maintain, and ideally to improve, the quantity and quality of investments in children and youth, especially those in the most economically distressed families and communities. In February 2009, President Obama signed the Children’s Health Insurance Reauthorization Act, providing coverage to an additional 4 million children. He also signed the American Recovery and Reinvestment Act (ARRA), which provided billions of dollars of federal investment in K–12 education and the expansion of the children’s tax credit. These and other investments were passed in the first heady rush of a new administration taking office and as parts of an economic stimulus package designed to counter the “Great Recession.” Unfortunately, early in 2010 things are getting even tougher. Because the economy has not yet begun to generate new jobs for low-income parents nor increased revenues for state and local governments, investments in low-income children and youth will decline unless the federal government acts. But increasing federal investments in low-income children and their families will require: deploying scant resources away from other objectives; raising taxes during a recession; and/or continuing high levels of deficit spending. We begin this paper simultaneously acknowledging the urgent need for, and the great political difficulty of, investing more and better in low-income children, youth, and their parents.1 Premises Several features of the nature and distributio