The Biden administration and House Democrats are working on legislation that would send monthly checks to people with children:
In one draft of the proposal, the IRS would deposit checks worth $300 every month per child younger than 6 and $250 every month per child age 6 to 17. This would give parents $3,000 per year for each child between the ages of 6 to 17, and $3,600 per child under age 6. . . .
Eligibility for the benefit, similar to the stimulus checks, would be based on family income for the prior tax year and be phased out at a certain income amount . . .
Paul Krugman thinks it’s a very good idea: “it could, among other things, cut child poverty in half”:
America stands out among wealthy countries for its failure to provide much help to families with children. U.S. expenditures on family benefits as a share of G.D.P. are less than a third the rich-nation average. Largely as a consequence, we have a much higher rate of child poverty than our peers.
Our stinginess does a lot of harm. Economists have shown that previous extensions of aid to families with children, like the gradual rollout of food stamps in the 1960s and 1970s and the expansion of Medicaid in the 1980s, didn’t just improve children’s lives in the short run; children who received the aid grew into healthier, more productive adults than those who didn’t receive the aid. By not doing even more for children, we are stunting their future, and that of the nation as a whole.
And 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. These fiscal benefits might even be big enough that helping children pays for itself, and in any case they mean that the true cost of aiding children, even in narrowly fiscal terms, would be less than it might appear.
All in all, then, increased aid to families with children is a really good idea. It would immediately improve millions of Americans’ lives, it would make us stronger in the future, and it would have only modest budget costs.
By “modest”, Krugman means it would cost around half of the 2017 Republican tax cut, which mainly benefited the rich. Of course, there will be Republican opposition:
We’ll surely hear some version of the standard conservative argument that any policy reducing misery reduces the incentive to be self-sufficient — you know, unemployment insurance encourages people to stay unemployed, food stamps encourage them to be lazy, and so on. Making this argument about a broad-based program to help children will be hard, but they’ll find a way.
He discusses a broader issue in his NY Times newsletter:
What should we do about Americans with low income — and their children? Should we make a new push to reduce or eliminate poverty, and if so, what should it involve?
. . . As with everything else in modern America, the two parties have starkly different positions on this issue. . . . I don’t believe that the Republican position on this, or for that matter on any major policy issue I can think of, reflects a good-faith attempt to figure out what works best. But the expressed views of the parties do show a big divide about how the world works.
The Republican view is basically that anti-poverty programs aren’t the solution, they’re the problem. How so? When you have “means-tested” programs — programs that are only available to people with sufficiently low incomes, or that phase out as income rises — you are in effect imposing high marginal tax rates on the relatively poor. That is if, say, a single mother manages to increase her earnings from $15,000 to $20,000 a year, she will find much of that extra $5,000 taken away in the form of reduced benefits.
This high de facto taxation, conservatives say, discourages efforts to break out of poverty. And they also say that it fosters a culture of dependency. So they argue that to help the poor we should, well, offer them less help.
Progressives don’t deny that incentives can matter. To use one of my favorite examples, countries that offer generous benefits to people who retire early, like France, end up with many people, you guessed it, retiring early.
But economists on the center left generally argue that the disincentives created by anti-poverty programs are exaggerated, and that the main thing actually trapping people in poverty is a lack of resources: It’s hard to get an education, start a business, even move to a place where jobs are available, when you have no money in the bank and are living hand-to-mouth.
Also, being poor imposes a lot of cognitive stress: It’s hard to focus on self-improvement when you’re constantly worrying about where the next rent check will come from or how to pay medical bills.
If you see resources as the main problem for the poor, the answer to poverty is to provide more resources; this doesn’t just improve the lives of the poor in the short run, it also increases their chances of breaking free of the poverty cycle.
This is the kind of debate that should be settled with evidence. And for what it’s worth, there is growing evidence that the resources view of poverty is much closer to the truth than the incentives view. . . . This is especially true for programs that help families with children, which seem to improve the lives of those children long after they’ve matured past receiving aid.