This op-ed was originally published by Spotlight on Poverty on May 31, 2017:
The argument for a child allowance is straightforward: giving families cash is one of the most effective means for reducing poverty and promoting child well-being, as evidenced by the experience of over 20 countries around the world that have instituted some form of periodic, per-child cash payment to needy families.
With few or no conditions on how the money can be used, parents end up making surprising – and surprisingly effective – choices. In addition to leading to increased spending on direct inputs, like education or pediatric health care, research has found per-child cash benefits increase spending on so-called “household stability items.” Covering these less obvious expenses, including routine bills and household goods, helps to dramatically reduce parental stress and create an overall healthier household.
That should come as no surprise to a libertarian. Libertarians and classical liberals from J.S. Mill to F.A. Hayek designed their philosophies around the immense variety of human wants and needs, and there is no reason to believe that human diversity is any less in the case of children. The libertarian motto should be to “leave paternalism to the parents,” not just because paternalism by the government is wrong, but because parents are in the best position to harness their local knowledge and direct scarce resources to their highest valued use.
The conservative appeal of a child allowance is even more obvious, with conservative governments historically being the ones to introduce child allowances in the countries that have them. That includes the United States, whose Child Tax Credit (CTC) was championed by Newt Gingrich based on the rejection of the idea that, as he put it, “the bureaucrats deserve the money more than the parents.” It was later expanded under George W. Bush, and more recently, Republican Senators Mike Lee and Marco Rubio have advanced proposals to expand it even further—although all have been shy of full refundability.
In the shadow of the Tea Party movement’s anti-government fundamentalism, more family minded conservatives are slowly rediscovering the CTC. Reihan Salam has argued a fully refundable CTC should be part of a policy package for the Republican party to re-engage traditional families. And Patrick Brown has suggested a more generous CTC would be an effective, but less contentious, strategy for reducing abortion rates.
Canada has what may be the world’s most generous child allowance in the world, at $6,400 per year for children under the age of six, and $5,400 per year for children under the age of 18. While its recent expansion occurred under a Liberal government, the benefit itself was established by the Conservative Party in order to undercut calls for a national daycare program.
A national daycare program, the argument went, would impose a particular way of life on single-earner families and families who rely on relatives for child care. Cash, on the other hand, provided a neutral medium for supporting families from a variety of backgrounds, and in turn created a powerful political wedge to break the opposition parties’ monopoly over child welfare issues.
Strengthening the Child Tax Credit has an appeal to fiscal conservatives as well. For $59 billion per year in new spending, the United States could make the CTC fully refundable, and double it to $2,000 for children under six. While this is not an insignificant sum of money, as I argued in my report Toward a Universal Child Benefit it could be paid for several times over by consolidating existing, less effective federal programs for children.
Indeed, the federal government already spends $318 billion per year on children—no small amount. And yet its effectiveness is diluted across more than 100 fragmentary programs. While most of adult public assistance comes in the form of cash or medical reimbursements, spending on children is largely in the form of in-kind benefits like school lunches, diaper vouchers, tax reimbursements, and a whole lot of administrative overhead. The result is not simply a convoluted, bureaucratic mess, but also an easy target for rent-seeking, whether from industry interests or politicians trying to leave a legacy.
It is easy to understand why progressives in congress like Rosa DeLauro have come around to the idea of a child allowance. Providing a basic income guarantee for households with young children would put a major dent in deep poverty, and strengthen the economic security of millions of families. It is less obvious why a conservative or libertarian should want to jump aboard the child allowance bandwagon, but the evidence suggests there is much for conservatives to like. And if history is a guide, they may even be the ones who ultimately make it happen.
Samuel Hammond is the Poverty and Welfare Policy Analyst for the Niskanen Center and author of Toward a Universal Child Benefit.