Alleviating Child Poverty in the Long Run

January 24, 2007

Chairman Rangel, Ranking Member McCrery, and Members of the Committee:

My name is Ron Haskins. I am a Senior Fellow at the Brookings Institution and a Senior Consultant at the Annie E. Casey Foundation. I also spent 14 of the interesting years of my professional life working for this Committee and I am very grateful to have this opportunity to testify during today’s hearing on poverty and the economy.

The report by my friend Harry Holzer and his colleagues that you are releasing today is a challenging and exceptionally interesting product of sophisticated social science methods.1 I suspect that economists and other experts would challenge some of the assumptions underlying the report and might come up with slightly different results than those reported by Holzer. But I think the conclusion that if we eliminated childhood poverty we would save on the order of $500 billion a year because of increased labor, reduced crime, and reduced need for health care is reasonable. Regardless of the exact level of savings, nearly every expert would grant that eliminating poverty would produce economic benefits and that the benefits would be substantial. In short, I applaud this report, especially because it gives us yet another reason to do everything possible to reduce poverty.

I would, however, like to emphasize a cost that is not part of the calculations made by Holzer and his colleagues. Even if we reduce childhood poverty and prevent some of the costs childhood poverty imposes on the economy, whatever actions we take to end poverty would themselves have substantial costs. Thus, even if $500 billion is an accurate estimate of the costs of childhood poverty, we would need to spend money to reduce childhood poverty in order to reduce its long-term costs. In 2005 we spent well over $600 billion on programs for poor and low-income individuals and families2 and yet the child poverty rate was 17.6 percent.3 It’s anyone’s guess how much more we would have to spend to greatly reduce the current child poverty rate.