Cash for kids: Emerging plans to fight child poverty

Last updated: 02-22-2021

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Cash for kids: Emerging plans to fight child poverty

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The United States has one of the highest rates of childhood poverty in the developed world. More than 11 million American children lived in poverty in 2019, a figure that’s expected to grow once data on the impact of the coronavirus pandemic becomes available. In the past week, two plans have emerged in Washington that take widely different approaches to achieving the same goal: combating child poverty by sending parents money every month.

Senate Democrats this week unveiled a proposal to provide parents with monthly payments totaling up to $3,600 over the course of the next year as part of the $1.9 trillion stimulus bill currently making its way through Congress. The plan would increase the size of the current child tax credit and send the money monthly rather than in an annual lump sum, so the parent of a child under 6 would receive $300 per month — parents of older children would receive slightly less. The proposal would also eliminate rules that prevent as many as 27 million of the poorest families from receiving the full value of the existing benefit. At the moment, the proposed program would expire in 2021, but Democrats reportedly intend to make it permanent once it’s in place.

Republican Sen. Mitt Romney has released his own plan to send parents of young children $350 a month and $250 for older kids. Under his proposal, the money would be distributed by the Social Security Administration, rather than the IRS. Romney’s plan would be permanent and be paid for by eliminating some tax deductions, including the child tax credit, and cutting funding to existing government welfare programs. Both plans phase out payments for families above a certain income level.

The concept of a monthly child allowance has a broad base of support. Analyses of both the Democratic and Romney plans suggest they could substantially reduce child poverty in the U.S. — as much as 50 percent, according to one study. The results of child assistance programs in European countries, Canada and Australia have proven that monthly checks can be transformative for struggling parents, set their children up for a more successful future and benefit the overall economy, supporters say.

Opinions differ widely on the best way to implement a child allowance, however. Proponents of the Democratic plan say using the tax code allows the program to be funded without slashing other services needy families rely on. Others prefer Romney’s proposal because it simplifies the complex web of tax benefits and government programs that can often allow struggling families to fall through the cracks. The Democratic plan, they argue, would make this system more complicated, add to the deficit, and could disappear after a year without more legislation to extend it.

Many conservatives oppose the idea of a child allowance in any form, largely for reasons that echo their critiques of other government welfare programs. Sending parents money, they argue, could make them dependent on the government and keep them out of the workforce — results they say would hurt the prospects of individual families and the economy as a whole.

While both plans have their backers, the Democratic proposal is much more likely to become a reality. Debate over the details of the stimulus bill has focused mostly on issues like who will receive stimulus checks and raising the minimum wage, rather than the child benefit. It appears likely that the plan will be in the final bill, which congressional leaders are hoping to pass before mid-March.

A child allowance would end the scourge of child poverty forever

“A couple of decades from now, America will be pretty much the same whether direct payments end up being $1,000 or $1,400. But this will be a transformed nation if we’re able to shrink child poverty on our watch.” — Nicholas Kristof, New York Times

Other nations have shown the merits of giving parents reliable financial help

“The fact of bipartisan support for child-benefit checks is a heartening sign that the United States may finally be moving closer to the systems of public family support that every other wealthy democracy has adopted, and which protect children’s wellbeing far better than our own.” — Maxine Eichner, The Hill

Romney’s plan would create a better welfare system with no extra cost

“The idea would boost poor and middle-class families, simplify the safety net, and reduce poverty, yet cost the same as the status quo. It deserves serious debate and consideration, both during the present stimulus negotiations and in the future.” — Robert Verbruggen, National Review

A child allowance would cause long-term harm to individual families and the economy

“Child allowance advocates assume that point-in-time poverty is all that matters, but if their preferred policy incentivizes more behavior that impedes intergenerational mobility, they will have won a battle while losing the long-term war on poverty that we have fought quite successfully over the past generation.” — Scott Winship, American Enterprise Institute

Simpler is better when it comes to helping people

“[Romney’s plan] would simplify government programs and probably make them easier to administer.” — Ramesh Ponnuru, Bloomberg

The tax system is the wrong way to administer a child benefit

“Stop creating and reforming opaque, duplicative tax credits that are hard to use and that partially or entirely exclude the poorest of the poor. Instead, get rid of this entire tax credit mess, and create the simplest and most inclusive program imaginable: a universal monthly child benefit for every kid in America.” — Matt Bruenig, Jacobin

Other antipoverty programs shouldn’t be cut to fund a child allowance

“Under Romney’s plan, many low-income families are likely to end up not much better off than they are now, since a large chunk of their new benefits would be offset by losses of old benefits. Some back-of-the-envelope estimates suggest that a lot of low-income single parents might be left substantially worse off.” — Catherine Rampell, Washington Post

The government should enact programs that encourage people to have more kids

“Philosophically, Romney’s plan makes an important point: Common-good conservatism must encourage and reward choices that support and promote the common good. That includes having children, and lots of them.” — Kaylee McGhee White, Washington Examiner

A child allowance would ultimately pay for itself

“Aid to children would achieve what proponents of the tax cut promised but failed to deliver: an improvement in America’s long-run economic prospects. If the children we help today grow up into healthier, more productive adults than they would otherwise — which they will — that will eventually mean higher G.D.P. And aid to children would also indirectly help the budget, because those children would later pay more in taxes and be less likely to call on safety net programs.” — Paul Krugman, New York Times

The welfare state should be reduced, not expanded

“[The Democrats’ plan] would be another major expansion to the welfare state at a time when the social safety net already reaches millions of U.S. households. … A fully refundable [child tax credit] comes with unacceptable trade-offs, including employment disincentives, marriage penalties, and increased reliance on government for far too many Americans.” — Angela Rachidi, Institute for Family Studies

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