Cost-Effective Investments in Children

Julia B. Isaacs
Julia B. Isaacs Former Brookings Expert, Senior Fellow - Urban Institute

January 1, 2007

How can we balance the budget in the next five years? In a series of papers on budget choices, Brookings analysts examine options for reducing domestic discretionary spending, pruning the defense budget, raising revenues, and investing additional resources in children. An overall deficit reduction plan uses the ideas developed in this series to balance the budget in the next five years. All five papers in this series, and more information about the Budgeting for National Priorities project, can be found at


Based on a review of benefit-cost evidence, this paper identifies four areas of investment that merit expanded federal funding even in a time of fiscal austerity. America’s future economic well-being will benefit from targeted investments to ensure that children have the skills to become tomorrow’s adult workers, caregivers, taxpayers, and citizens. Target areas for a package of proposals totaling about $25 billion annually and $133 billion over a five-year period are the following:

  • High-quality early childhood education programs for three- and four-year-old children ($94 billion over five years);
  • Nurse home-visiting programs to promote sound prenatal care and the healthy development of infants and toddlers ($14 billion over five years);
  • School reform with an emphasis on programs in high-poverty elementary schools that improve the acquisition of basic skills for all students ($17 billion over five years); and
  • Programs that reduce the incidence of teenage pregnancy ($8 billion over five years).


American children are facing an uncertain economic future. Rising spending for health and retirement benefits for an aging population, combined with falling tax revenues after several rounds of tax cuts, have led to a fiscal crisis. If the current generation fails to take on the responsibility for balancing the budget, future generations will pay the cost—plus interest—of paying off the debt and addressing unfunded financial commitments. Balancing the budget will require a combination of reductions in entitlement spending, reforms in defense and other discretionary spending, and increases in revenues. While the major focus of a responsible, future-oriented budget plan should be deficit reduction, a good budget strategy also needs to make targeted investments in programs that will improve America’s future economic well-being. Chief among these is effective investments in children to ensure they have the skills to become tomorrow’s adult workers, caregivers, taxpayers, and citizens.