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Why Democrats Must Embrace A Universal Child Allowance

A new study shows that such a policy could cut child poverty in half.

Yana Paskova/Getty Images

Last week, at his keynote speech at South by Southwest, President Barack Obama brought up a subject that doesn’t often enter the realm of public policy: diapers.

Diapers are prohibitively expensive for the poorest families with young children, which cost them, on average, 14 percent of their annual income. However, while they are a necessity, there is no federal assistance for diapers. The White House pledged to help bridge the “diaper gap” through a partnership with private companies and nonprofits to make them more affordable for poor families. Representatives Rosa DeLauro and Keith Ellison have also introduced a bill that would create grants for states to implement programs to help get diapers to parents.

Subsidizing the costs of diapers is an important policy goal—no parent should have to choose between feeding their child and keeping them healthy and dry. However, the truth is that poor parents struggle to afford, well, most things—bus fare, toilet paper, textbooks—and needs differ from family to family. A poor family in New York City might struggle to pay for a monthly Metrocard, while a mother in Texas needs to fill the gas tank to get to work. The point is, for every diaper gap filled, there will invariably be dozens more gaps left wide open.

In 1925, Paul Douglas wrote in an essay on child welfare, “The most effective way in which society can protect children is in providing their parents with sufficient income so that they can be brought up properly.” He argued for a child allowance, which would pay mothers a monthly or weekly stipend for each child in their household, mirroring what European industries were doing for workers at the time. While Douglas was writing in a very different era (when men were the primary breadwinners and the federal minimum wage did not yet exist), the thrust of his argument still stands today: The best way to protect children is to give their parents cash.

Of course, there are some needs that cannot be covered by money alone, such as education and health care. But for material necessities, a child allowance would benefit parents enormously, protecting them from many of the gaps in our safety net. Most industrialized countries have recognized this and deliver child allowances as a standard government benefit. This is true for social democracies, such as Finland, Denmark, and Norway, as well as for countries more politically similar to the United States, like the U.K., Australia, and Canada. In fact, the U.S. stands out from its peers by not having some sort of child allowance.

The U.S. is also exceptional in its high child poverty rate. Overall, using the supplemental poverty measure (a more comprehensive measure that factors in government transfers), almost 17 percent of children live in poverty in America. In Denmark, Norway, Germany, and Switzerland, child poverty consistently falls under 10 percent. Almost one in 20 (4.5 percent) of American children live in deep poverty, or under 50 percent of the poverty line.

A new report by The Century Foundation shows the impact that a child allowance could have for these children. By giving parents a $4,000 yearly allowance for each child (approximately $333 per month), child poverty would be cut nearly in half and deep child poverty would be reduced to 1.6 percent. With a price tag of $200 billion, this is the most expensive scenario, but the report offers a variety of options, with the general trend being that the more you pay, the more poverty reduction you get.

Critics of such policies often object that the cash wouldn’t go to children—that poor parents would spend that money irresponsibly, such as on drugs and alcohol. It’s the kind of thinking that leads some states to require drug tests for welfare recipients, to limit welfare benefit ATM withdrawals to $25 a day, and to ban people from buying lobster and steaks with their food stamps. This distrust of the poor—often racially motivated—is misplaced. Evidence from England shows that poor parents who received child allowances were able to spend more on books, toys, and healthy foods. In Canada, parents overall actually spent less money on alcohol and tobacco for every extra dollar they gained from child allowances.

Currently, we rely on a system of tax benefits to transfer money to parents, such as the Child Tax Credit (CTC), which gives parents a maximum of $1,000 a year per child. However, because the credit is only partially refundable and parents must make at least $3,000 a year to receive it, those who have low or no income don’t get anything from the CTC, leaving out the poorest families. And for those who do qualify, the credit comes only once a year during tax season, making it difficult to use it for daily expenses. As Christopher Wimer, one of The Century Foundation report’s authors, said, “The U.S. reliance on tax credits means benefits are more tied to work in the U.S. This means less support going to children in the most disadvantaged families who are not engaged in the labor market [and] smaller reductions in child poverty than we would see with a universal child allowance.”

Wimer acknowledged, however, that there are ways in which we could make the CTC reach more poor families. This may already be happening. Earlier this month, Representative DeLauro introduced a bill that would create an additional tax credit for parents with children under three years old. The credit, worth up to $1,500, would be fully refundable and have no bottom income limit, meaning that it would reach the poorest children, regardless of whether or not their parents are working. It would also be distributed on a monthly basis, making it essentially a child allowance for our country’s youngest children, leaving out only wealthier families. This focus on younger children—who are more likely to be poor—may be a way forward for implementing more broad-based universal child allowance policies.

Striving for universality in a child allowance is important—universal benefits are harder to dismantle due to the fact that everyone is invested in the system, tying the needs of the poor to those of the middle class and the wealthy. (This is one of the reasons why Social Security, for example, is so politically successful.) Means-tested anti-poverty policies such as food stamps and TANF—a block grant program for needy families—are constantly in peril of being cut (TANF itself is a much stingier version of its predecessor, AFDC). As Amber A’Lee Frost of Fairness & Accuracy in Reporting wrote in defense of universal public college, “You don’t need to be a democratic socialist like Bernie Sanders to conclude from this that if you want a service to be both high-quality and secure in its permanence, it should not be merely a service for the destitute.”

A universal child allowance would also acknowledge the right of every child to grow up with a basic level of subsistence. For a country that seems all too comfortable punishing its children for the supposed sins of their parents, this is a revolutionary idea. It shouldn’t be—for an investment of around 1 percent of GDP we could cut our child poverty rates in half. According to one study, child poverty costs the U.S. an estimated $500 billion every year in lost earnings, increased crime, and poor health. “We can’t tolerate this as a nation. It is mean-spirited, cruel, immoral,” Jeff Madrick, director of the Rediscovering Government Initiative, which published The Century Foundation report, told me. “It’s time to think about a basic income for children. Evidence is that it will work effectively to cut the poverty rate.” 

Our high child poverty rate is a result of what we choose (or do not choose) to provide the most disadvantaged members of our society. Making diapers more affordable for poor parents is a drop in the bucket of the federal budget. To truly address the struggles of poor families, we can’t be afraid to turn the faucet on.