Reality: The U.S. has the economic capacity to proactively invest in all Americans by providing health care, child care, jobs, guaranteed income, and Baby Bonds. The real question is whether we choose to do so.

Ask a broad cross-section of Americans whether the government should help people meet their basic needs, and the answer is consistently yes. In recent surveys, 62% say the federal government has a responsibility to ensure all Americans have health care coverage. That’s the highest percentage in more than a decade; during the troubled rollout of the Affordable Care Act in 2013, this figure was as low as 42%.¹ Nearly three-quarters of Americans view child care costs as a “major problem,” with about half calling on the federal government to make affordability a “high priority.”²

That support is not ideological. It reflects lived experience and a shared sense of human dignity. When people are forced to confront crippling medical debt, feel trapped in a job because of health insurance, or are forced out of the workforce because child care costs more than they earn, they are not truly free. Without the security to leave a toxic workplace or the self-determination to raise a family without falling into poverty, freedom remains an empty promise. 

Yet the political conversation in Washington sounds very different.

This first installment in a multipart series tackles a core myth that has helped make economic inequality — and the scarcity of things we all need to live, thrive, and be truly free — a normalized feature of American life: the fallacy that the United States cannot afford to provide basic economic security for its people, and that public sector investments in people are ineffective at best and wasteful at worst. Few ideas have done more to foreclose the possibility of a life defined by human flourishing, civic engagement, and genuine tranquility — one in which people, through affirmative inclusion, are truly self-determining.

Why investment in people is “unrealistic” but defense spending is never too expensive

Entitlements. Runaway spending. Unsustainable. Fiscal time bomb. These are the terms that echo through Congress and Washington, D.C., policy circles whenever large, far-reaching social programs are discussed — whether longstanding ones like Medicaid and SNAP or proposals like single-payer health care. The message is always the same: Whatever their merits, these investments are simply too expensive to sustain. Many Republicans go further, portraying them as bloated, inefficient handouts that undermine self-reliance and erode the ideal of rugged individualism. Even among Democrats, who are generally more supportive of government spending, there is sometimes deep discomfort with the price tags. Universal health care, child care, or income guarantees are said to cost “trillions” and, therefore, unrealistic. And it’s true that in a nation of more than 300 million people, providing essential services at scale adds up quickly.

But these narratives ignore a crucial reality: The United States is not only the world’s largest economy — it is the largest economy in modern history. With the dollar serving as the world’s reserve currency for eight decades, and with a powerful central bank that can infuse money into the economy and influence global capital flows, the U.S. operates with financial capacity that no other country has ever had.

The problem, says Demond Drummer, director of strategy at The New School’s Institute on Race, Power and Political Economy, is not money. It’s a matter of priorities — how America defines what counts as “productive” and thus worth spending money on.

Consider the now nearly $1 trillion defense budget, which sits firmly in the category of so-called productive spending. Since World War II, it has been politically untouchable because it is tied to national security. When Congress funds wars, weapons systems, or military aid, no one seriously asks where the money will come from. We simply decide it matters, then find a way.

“When Congress funds wars, weapons systems, or military aid, no one seriously asks where the money will come from. We simply decide it matters, then find a way.”

The same logic applies to corporate bailouts and subsidies. During the 2008 financial crisis and again during the COVID-19 pandemic, hundreds of billions of dollars were deployed to stabilize banks, airlines, and major industries. These interventions were framed as essential investments in the economy and in jobs. But in the following years, many of these same corporations prioritized stock buybacks for wealthy investors over raising wages or increasing productive capacity.³

By contrast, U.S. federal spending on health care, child care, or job or income support is framed as a cost: the government handing out money with little to show for it.

For Drummer, this distinction is entirely artificial. “Smart spending on people is an opportunity generator,” says Drummer. “It ​​changes people’s lives and reduces multigenerational poverty. It also promotes broader and more equitable growth.”

During the pandemic, government response sparked a rare interlude from a corporate-first approach, offering a glimmer of what could be possible. Through the American Rescue Plan Act (ARPA) and Local Fiscal Recovery Funds, we saw a shift toward equitable public assistance. These funds fueled local innovation and bolstered policy movements such as guaranteed income, medical debt cancellation, and wraparound services for workers. Combined with federal protections like eviction moratoriums and mortgage assistance, these actions proved that the state can directly guarantee economic rights and foster self-determination when the political will exists.

Government spending that works: The hidden return on investing in people

Well-designed investments in people have consistently delivered high economic returns. Studies show that transitioning to a system where everyone has a right to health care — whether through a single-payer Medicare for All system or some other model — would save tens of thousands of lives and reduce total U.S. health spending by 13%.⁴ Baby Bonds — a concept pioneered by the founding director of The New School’s Institute of Race, Power and Political Economy, Dr. Darrick Hamilton, that establishes publicly funded trust accounts for children — would give millions a foundation for education, homeownership, or entrepreneurship. Affordable child care would allow millions of parents who are currently out of the labor force to return to work. 

The expanded Child Tax Credit, briefly enacted during the pandemic, cut child poverty nearly in half.⁵ Reducing childhood poverty is proven to improve long-term educational outcomes and earning potential — ultimately lessening the future strain on public health and social safety nets.⁶

Further, these credits are a prime example of the macroeconomic multiplier effect. When the government directly invests in people, that money is immediately reinvested in the economy as families spend money on food and basic necessities, supporting local businesses and jobs. This stands in stark contrast to standard economic thinking, which prioritizes investing in firms through subsidies and tax breaks. Those have proven to be largely unproductive, Drummer says, as firms often use the capital for stock buybacks rather than passing earnings on as wage increases. 

“Smart spending on people isn’t charity,” Drummer says. “It’s an investment that gives people the ability to work, care for their families, and plan for the future. And that strengthens the entire economy.”

“Smart spending on people isn’t charity, it’s an investment that gives people the ability to work, care for their families, and plan for the future. And that strengthens the entire economy.”

When investing in people was the American consensus

For much of the 20th century, the idea of spending on economic security as a public good was mainstream. Between 1935 and 1980, the U.S. built the modern American safety net. Franklin Roosevelt’s New Deal created Social Security, federal mortgage insurance, labor protections, and massive public employment programs. These investments laid an essential infrastructure for the modern economy, delivering both dignified jobs and valuable public goods. In the 1960s, Lyndon Johnson’s Great Society added Medicare, Medicaid, and early childhood education.

These social protection programs were sweeping, ambitious, and yes, expensive. They were designed to ensure that prosperity was broadly shared through pensions, health care, jobs, and education. And they helped support America’s economic growth. At the time, President Johnson described his goal as creating “abundance and liberty for all.”⁷ Today, he might be maligned as a socialist. 

“At the time, President Johnson described his goal as creating ‘abundance and liberty for all.’ Today, he might be maligned as a socialist.”

Although these programs were popular, they had determined opponents. In her book Invisible Hands, historian Kim Phillips-Fein traces how a small network of wealthy businessmen organized after the New Deal to roll back the government’s role in the economy and turn public sentiment against investing in people. They funded think tanks, attacked labor unions, and promoted free-market ideology for decades.

Their ideas remained on the outskirts of American politics in the 1970s, when they merged with racial backlash to the civil rights movement. The “welfare queen” trope,⁸ popularized by Ronald Reagan, falsely portrayed social programs as wasteful giveaways to so-called undeserving Americans (often Black) who were gaming the system.

It was an extraordinarily effective strategy. Political support for bold social programs collapsed, even though large portions of the public continued to benefit from them. From 1980 to 2021, no new major universal social programs were created.

How we can afford to be ambitious with our public spending

Today, debates about social policy are dominated by fears about the $38 trillion national debt. But economists such as Stephanie Kelton, a professor of economics and public policy at Stony Brook University, and James Galbraith, a government and business affairs professor at the University of Texas at Austin, argue that the U.S. still has enormous fiscal capacity.

One obvious lever is corporate taxation. Between 1930 and 1980, corporations paid a statutory tax rate of roughly 50% (or in the mid-30s to low-40s after credits and deductions). Today, the statutory rate is 21%. Returning corporate taxes to historical norms (a 50% statutory rate) would generate $1.26 trillion more per year.⁹ 

But Kelton argues that taxes are only part of the picture. The U.S. government is not like a household or a business. Because the Federal Reserve can always create money, the government cannot run out of dollars. As Alan Greenspan once testified: “There’s nothing to prevent the federal government from creating as much money as it wants and paying it to somebody.”¹⁰

Inflation isn’t the constraint we think it is 

Mainstream economists point to inflation as the real limit on U.S. spending. But Kelton and Galbraith argue that inflation results from supply constraints, not money alone — too few workers, too few goods, broken supply chains.

Galbraith notes that this is exactly what happened after the pandemic. Labor shortages, clogged ports, and opportunistic corporate price-setting drove inflation, not runaway stimulus.¹¹ “There was no collapse of the U.S. dollar on international markets, nor any general, undifferentiated increase of all prices,” he writes at the Institute for New Economic Thinking. “None of this supports the notion of an inflationary spending spree fed by a reckless ‘stimulus’ policy.”¹² 

Instead, investing in programs for health care, child care, and education increases real economic capacity, the very thing that keeps inflation in check. It also helps families absorb any price increases that result from supply chain constraints. 

The choice about what counts as productive: Government spending that works for all

Ultimately, Drummer says, a rich society’s failure to uphold inclusive economic rights as the foundation for true economic agency is not a financial problem. It is a political and moral one.

“Are we funding unnecessary or unjust wars, tax breaks for huge corporations, and stock buybacks that enrich wealthy investors rather than passing earnings on as wage increases?” he asks. “Or are we funding broad-based economic growth and people’s ability to live, work, raise families, and contribute?”

America has the resources to do either. What it lacks is not money, but a willingness to treat the happiness and prosperity of as many people as possible as an investment rather than a cost. 

1. Jeffrey M. Jones, “More in U.S. See Health Coverage as Government Responsibility,” Gallup, December 9, 2024, accessed January 23, 2026, https://news.gallup.com/poll/654101/health-coverage-government-responsibility.aspx. ↩︎
2. Adriana Gomez Licon and Linley Sanders, “Majority of U.S. Adults Say Child Care Costs Are ‘Major Problem,’ Half Want Government to Help, AP-NORC Poll Finds,” PBS NewsHour, July 10, 2025, https://www.pbs.org/newshour/politics/majority-of-u-s-adults-say-child-care-costs-are-major-problem-half-want-government-to-help-ap-norc-poll-finds. ↩︎
3.  Buybacks hit a new all-time high immediately following the pandemic lows of 2020: S&P Dow Jones Indices, “S&P 500 Q4 2021 Buybacks Set Quarterly and Annual Record,” press release, March 15, 2022, https://press.spglobal.com/2022-03-15-S-P-500-Buybacks-Set-Quarterly-and-Annual-Record. ↩︎
4. Alison P. Galvani, Alyssa S. Parpia, Eric M. Foster, Burton H. Singer, and Meagan C. Fitzpatrick, “Improving the Prognosis of Health Care in the USA,” The Lancet 395, no. 10223 (February 15, 2020): 524–533, https://doi.org/10.1016/S0140-6736(19)33019-3. ↩︎
5. Dana Korsen, “Federal Tax Credits in 2021 Lifted More than 2 Million Children Out of Poverty, Says New Report,” National Academies of Sciences, Engineering, and Medicine, September 25, 2025, https://www.nationalacademies.org/news/federal-tax-credits-in-2021-lifted-more-than-2-million-children-out-of-poverty-says-new-report ↩︎
6. National Academies of Sciences, Engineering, and Medicine. (2019). “A Roadmap to Reducing Child Poverty.” The National Academies Press. https://doi.org/10.17226/25246. ↩︎
7. Lyndon B. Johnson, “Great Society Speech,” May 22, 1964, Teaching American History Project, accessed January 23, 2026, https://teachingamericanhistory.org/document/great-society-speech-2/. ↩︎
8.  Levin, Josh. “The Welfare Queen.” Slate, December 19, 2013. https://www.slate.com/articles/news_and_politics/history/2013/12/linda_taylor_welfare_queen_ronald_reagan_made_her_a_notorious_american_villain.html. ↩︎
9. This number is based on the approximately $530 billion that was paid in taxes by corporations in 2024 at the current 21% statutory rate. Bumping that rate up to 50% rate would yield approx $1.26 trillion in corporate tax revenue, assuming the tax base and compliance stayed roughly the same. ↩︎
10. Committee on the Budget, House of Representatives, Mar 24, 2014, YouTube, https://www.youtube.com/watch?v=DNCZHAQnfGU ↩︎
11. James K. Galbraith, “The Quasi-Inflation of 2021-2022: A Case of Bad Analysis and Worse Response,” Institute for New Economic Thinking (blog), February 2, 2023, https://www.ineteconomics.org/perspectives/blog/the-quasi-inflation-of-2021-2022-a-case-of-bad-analysis-and-worse-response. ↩︎
12. Ibid. ↩︎