A child allowance might be the next horizon of progressive policy
It’s a distant thought now, but someday liberals will again get the chance to advance a progressive agenda on the national stage. And in the grim shadow of November’s electoral defeat, the future of progressive thought is already being hatched. Academics and researchers are quietly building the case for a bold new policy to support American families in cities across the United States: a universal child allowance.
A child allowance is a regular payment from government to families to help mitigate the costs of raising kids. Nearly all countries in the developed world pay some form of cash benefits to families with children, recognizing that raising kids is hard, socially beneficial work that warrants compensation and assistance.
Nearly all countries, that is, except the United States. The closest we have to a child allowance are a pair of tax benefits: the tax exemption for dependent children, and the Child Tax Credit. Yet these benefits only help families once a year at tax time. Because they mostly go toward offsetting a household’s tax bill, these benefits also skew toward wealthy families who typically owe more in taxes. Of the $38 billion that the federal government spends on the dependent exemption each year, only 1.5 percent goes to help the poorest 20 percent of households, while 57.1 percent benefits the wealthiest 40 percent. And while the Child Tax Credit helps save millions of people from poverty, its largest subsidies still go to middle and upper-middle income families.
The United States stands virtually alone in failing to provide regular cash assistance to families, particularly poor ones. In part because our benefits are so stingy, the U.S. also has one the highest child poverty rates in the developed world, with nearly 20 percent of all children growing up poor.
A team of social scientists is laying the intellectual groundwork to change this. In an upcoming report, the group, led by child development and poverty experts Luke Shaefer of the University of Michigan and Greg Duncan of the University of California-Irvine, argue that a monthly child allowance could reduce U.S. child poverty by 40 percent. They propose using the $96 billion currently spent on child-related tax benefits, plus another $69 billion in new revenue, to make monthly payments of around $250 per minor child to all families in the country. Such a program would have substantial benefits for child health and development, along with familial stability and wellbeing, the team expects.
The social scientists aren’t just theorizing, however. In an initial small pilot study led by Duncan and his report co-author Hiro Yoshikawa of New York University’s Steinhardt School, among others, the team tested the real world impact of a child allowance. Fifteen low-income mothers of newborns at New York’s Presbyterian Hospital received $100 on a debit card every month for the first year of their children’s lives. The researchers surveyed the families at the end of the year, and found that they had invested significantly more money in childcare than comparable families who had not received a child allowance. Families reported that the money made a big difference in helping them cover expenses for their new children.
Contrary to conservative fears that the poor will abuse no-strings-attached benefits, the researchers found that very little of the money was squandered on vices. For instance, only 3 of 1,112 debit card transactions took place in liquor stores. This is typical for these kinds of studies. “There’s an extensive body of research showing that unconditional cash transfers do not result in increased spending on vices,” Yoshikawa said.
Given the encouraging findings of the pilot study, the researchers are now working toward developing an expanded child allowance experiment to study the program’s impact on more young children across more cities over a longer period of time. “The study would help give us an accurate estimate of how much income matters during the early years of life,” Yoshikawa explained. So someday soon, hundreds of families across the country could be receiving actual child allowances for the first several years of their children’s lives.
A universal child allowance may seem like a political pipedream in the United States. But it’s largely an extension of an ongoing discussion around reforming the Child Tax Credit. “The focus on child poverty and supporting families is a bipartisan issue,” Yoshikawa notes.
Indeed, national leaders across the political spectrum — from Hillary Clinton to Republican senators Mike Lee and Marco Rubio to Democratic congresswoman Rosa DeLauro — have all pitched ideas to revamp the adequacy and delivery of our child benefits. Several think tanks and foundations have also championed some form of a child allowance as an improvement upon our current tax-based benefits. And as families continue to struggle under financial strain, the momentum behind a child allowance will only grow.
In fact, this isn’t the first time that reformers have tried to streamline our child tax benefits into a single monthly child allowance. In the early 1970s, Democratic senator George McGovern proposed a $50-per-month cash benefit for every child in the nation, to be paid by eliminating the dependent tax exemption. McGovern’s proposal never became law, but it drew support on both sides of the aisle.
Forty-five years later, the logic behind wrenching our family benefits out of the tax code still stands. “Economic hardship doesn’t just occur once a year,” Yoshikawa explains. “It affects children’s development on an ongoing basis.”
For much of the next four years, progressives will be consumed with defending the republic and its safety net from plunder and wreckage by the Trump administration and its Republican allies in Congress. But they shouldn’t neglect to lay the foundations for the next horizon of progressive policymaking. To regain power, progressives need both big ideas that resonate with the public and proof that those ideas work. That project has already begun among those who dream of a child allowance for all American families.