This week on Facing the Future, we heard from The “Economist Mom”, Dr. Diane Lim, about one of the last congressional reports published under the leadership of former Democratic Speaker of the House Nancy Pelosi. It looked at economic disparities in the U.S. and what investments the federal government can make to address them while strengthening economic growth. The report – called “Bridging the Divide” – was the work of the “House Select Committee on Economic Disparity and Fairness in Growth.” There is also an accompanying 30-minute film version. Dr. Lim served as the majority staff policy director for the select committee, and she is a past chief economist of The Concord Coalition.
Tori Gorman, policy director of The Concord Coalition, joined me for the conversation.
Then later in the program, Concord chief economist Steve Robinson joined Tori and I to take a closer look at the score given to the recent bipartisan debt limit and spending deal by the Congressional Budget Office. That deal narrowly averted a catastrophic federal default as the cash-on-hand balance at the U.S. Treasury Department dipped down to a scant $22 billion.
When looking at long-term economic growth – one of the chief concerns of The Concord Coalition – the House select committee’s report illustrates how with some key federal investments, we could significantly boost job creation and lift standards of living across American society. There is actually fairly broad bipartisan consensus on the problem, but that consensus breaks down on how to pay for it . or whether the federal government should spend the money to begin with. Dr. Lim says the report concludes that economic disparities and the lack of good opportunities for all Americans are challenges that impact every single person in this country.
“We were looking at disparity in how we see it, which is inequality in outcomes because of disparity in economic opportunity,” said Lim. “The core mission was to look at the root causes of economic disparity, but also to learn about what kinds of existing policies and programs serve as barriers to equal economic opportunity. And to recommend some changes to federal, state, and local policy as well as private practices that could promote greater fairness in growth. What economists call inclusive growth. We sought to do research on academic sources and learn from experts, but also to learn from real people’s experiences, and what can we do to reduce those disparities. Speaker Pelosi also told us she wanted us to come up with ideas that could pass in a bipartisan manner, and not just come from Democrats.”
Lim says part of the problem is how we do economic measurements to begin with, because there is a major hole in the data.
“We are only observing in economic data activity that actually happened. So unfortunately we observe the most successful parts of our economy in the data – the people who already have jobs and earning high income,” said Lim. “When you look at GDP [Growth Domestic Product] data, when you think about it, we are over-representing the richest, most successful people in the economy. They get a much bigger weight in GDP. People who aren’t working get zero weight in GDP. So relying on an aggregate measure like GDP to figure out the health of the economy is not really looking at the parts of the economy that are in most need of support to live up to their potential. The entire economic profession has this challenge. We are used to using data to support our theories and drive our policy recommendations. And yet, there is inadequate data on people’s struggles on the ground level, person by person – In terms of ‘Why are they not going to work? Do they have a job opportunity? Do they have a way to get to work? Do they have someone to care for their children while they go to work? We don’t ask people ‘why didn’t you do this?’ We don’t ask people ‘why aren’t you working?’”
So what policy changes would have the most potential to get bipartisan support and help move the needle on economic growth while reducing disparities? Lim says among the most important policy changes the various bipartisan members of the select committee proposed was more federal support for kids and early childhood education.
“It was very obvious to everyone that the federal government tends to subsidize older people things more than younger people things,” said Lim. “When you’re talking about economic potential, maybe we should start with younger people, since they’re the ones who will eventually go to work and be productive members of our economy. So investing in people – especially young people – was something we wanted to pursue and recommend. We had very strong support for universal pre-K, and paid family leave, and a great recognition of how messed up the economic market for childcare is. The childcare market is a great example of an economic market failure. The costs are too high for families to afford, and yet the pay for childcare workers is too low for them to be able to support their own families. So the fact that there is this mismatch between very high costs and very low wages in the childcare industry is screaming for a role for government to provide a bridge to connect the two. The cure from a government perspective is a subsidy that brings up wages and brings down costs to consumers.”
According to Lim, another area of bipartisan agreement was more investment in physical infrastructure such as stronger public transportation and wider access to high-speed internet that connects people to economic opportunity. But Lim said that’s where the bipartisan agreement stopped, because the two sides could not come to agreement on how to pay for these investments.
“It was easy to come up with ideas that were broad and general, until it came to costs,” said Lim. “Anything that would be a tax increase or a spending cut, there would be someone for every pay-for that would oppose it. That was the challenge in our work. It was easy to make all the members see ‘yeah this is wrong, we should do something about it.’ It’s easy to agree on the big nature of the problem, it’s easy to agree on general, vague solutions. But then when you get down to specifics like who would benefit exactly, or who would pay the costs, then it gets thorny. Then the members of Congress tend to think that once they have to talk about winners and losers, that’s when it gets tricky. They don’t want to talk about losers.”
Hear more on Facing the Future. I host the program each week on WKXL in Concord N.H., and it is also available via podcast. Join us as we discuss issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.