News Analysis

On child benefit, the US lags behind other nations. Could that change?


One of the most striking failures of right-of-centre policymaking in America is its infinite solicitousness toward corporations but indifference to families.

According to Federal Reserve data, the median net worth of a family with a head of household under 35 was $11,000 (£9,000) in 2016. According to the USDA, the average yearly cost of having a child is more than $12,000 (£10,000).

When you combine the costs of childcare for young children with the fact that younger families have not yet reached their peak earnings potential, raising children is a daunting financial task for a large number of American families. These numbers go a long way toward explaining why young people are delaying marriage and having children.

These costs are even higher for families who choose to opt out of a public school system that is increasingly hostile to religion. Neither homeschool expenses nor tuition for religious schools are tax deductible.

For the political right, this is not just a failure of policy, it’s also a failure of politics. Cohabitors and single people tend to vote Democratic, and married families tend to vote Republican. By not supporting family formation generously, Republicans are ensuring there will be more Democrats in the future.

In Europe, nationalist governments in Poland and Hungary have increased their child benefits considerably. According to PriceWaterhouseCoopers, the two countries now rank with France and Austria in the top four most generous countries for families with children, adjusted for average national salary. Hungary’s family benefits are some of the most dramatic, including a loan of about $33,000 (£27,000), granted upon the birth of a couple’s first child, which is forgiven if the couple has three.

By contrast, America ranks at the bottom, just above Turkey, among OECD countries in family benefits spending as a proportion of GDP. A new article by Gladden Pappin and Maria Molla in American Affairs argues it’s time for the United States to increase that amount substantially.

Their proposal calls for direct stipends to families with children, much like a proposal by Matt Bruenig, president of the People’s Policy Project, called the “Family Fun Pack”, published earlier this year. The parents of a first child would receive $6,500 (£5,000) per year, another $5,000 (£4,000) for the second, with incremental benefits declining after the third child.

“This approach would affirmatively recognise that raising children is work—work that contributes to the health of the country as a whole, and which deserves respect and dignity,” Pappin and Molla write.

“Stipends for at-home childcare will reverse the late-neoliberal trend in which the most valuable occupations command the lowest or, indeed, no market price.”

This sounds remarkably generous, but it seems less so when you consider that if the US hadn’t engaged in the Afghanistan and Iraq wars and spent the $2.4 trillion on families with children, we could have written them all a $73,000 (£60,000) cheque.

Pappin and Molla suggest paying for some of the benefit via a financial-transactions tax. They also propose “increasing excise taxes on various ‘vice’ goods, such as gambling, pornography, video games, nightclubs, tobacco and vap­ing, tattoos and piercings, and cosmetic surgery, along with new taxes on economically sterile sectors such as fine art and certain other luxury goods”. For good measure, they suggest a tax on social media advertising revenue. All of this is bold and laudable.

Matt Bruenig takes a similar approach of direct payments to parents, in the form of a $300 (£250) monthly stipend for every minor child. That approach is in stark contrast to the establishment Democrat family proposal called the Working Families Tax Relief Act, which mostly maintains the Rube Goldberg-like system of tax credits currently in place. It also would eliminate the marriage penalty of the earned income tax credit (EITC) altogether.

In addition, Bruenig’s proposal adds dramatically expanded paid family leave (36 weeks), free childcare and pre-kindergarten, and a baby box (a kind of starter kit) along the lines of the one Finnish parents have received for more than 75 years.

The establishment right is less convinced. The Heritage Foundation, for instance, seems to be against expanding paid family leave, against expanding the child tax credit and highly sceptical of the EITC.

As for President Trump, his budget proposal included a provision to allow states to figure out how to pay for six weeks of paid family leave. The assumption seems to be that a mother will start leaving her child at daycare at the age of a month-and-a-half.

If the AmAffairs and Bruenig ideas seem like socialist wish lists, they also may be the sort of dramatic ideas that the right could counterpose to Democrats’ own economy-restructuring plans like the Green New Deal.

If the contrast is between boldness and mediocrity, boldness wins every time. So it may be smart politics for Republicans to serve the interests of their voters, rather than those of shareholders, war profiteers and libertarian ideologues.