In stimulus bill, a policy revolution in aid for children
Tucked into $1.9T package is monthly payment tantamount to child allowance like those offered in other rich countries
WASHINGTON — A year ago, Anique Houpe, a single mother in suburban Atlanta, was working as a letter carrier, running a side business catering picnics and settling into a rent-to-own home in Stone Mountain, Ga., where she thought her boys would flourish in class and excel on the football field.
Then the pandemic closed the schools, the boys’ grades collapsed with distance learning, and she quit work to stay home in hopes of breaking their fall. Expecting unemployment aid that never came, she lost her utilities, ran short of food and was recovering from an immobilizing bout of COVID-19 when a knock brought marshals with eviction papers.
Depending on when the snapshot is dated, Houpe might appear as a striving emblem of upward mobility or a mother
on the verge of homelessness. But in either guise, she is among the people Democrats seek to help with a mold-breaking plan, on the verge of congressional passage, to provide most parents a monthly check of up to $300 per child.
Obscured by other parts of President Joe Biden’s $1.9 trillion stimulus package, which won Senate approval Saturday, the child benefit has the makings of a policy revolution. Although framed in technocratic terms as an expansion of an existing tax credit, it is essentially a guaranteed income for families with children, akin to children’s allowances that are common in other rich countries.
The plan establishes the benefit for a single year. But if it becomes permanent, as Democrats intend, it will greatly enlarge the safety net for the poor and the middle class at a time when the volatile modern economy often leaves families moving between those groups. More than 93 percent of children — 69 million — would receive benefits under the plan, at a one-year cost of more than $100 billion.
The bill, which is likely to pass the House and be signed by Biden this week, raises the maximum benefit most families will receive by up to 80 percent per child and extends it to millions of families whose earnings are too low to fully qualify under existing law. Currently, one-quarter of children get a partial benefit, and the poorest 10 percent get nothing.
While the current program distributes the money annually, as a tax reduction to families with income tax liability or a check to those too poor to owe income taxes, the new program would send both groups monthly checks to provide a more stable cash flow.
By the standards of previous aid debates, opposition has been surprisingly muted. While the bill has not won any Republican votes, critics have largely focused on other elements of the rescue package. Some conservatives have called the child benefit “welfare” and warned that it would bust budgets and weaken incentives to work or marry. But Sen. Mitt Romney, R-Utah, has proposed a child benefit that is even larger, though it would be financed through other safety net cuts.
While the proposal took center stage in response to the pandemic, supporters have spent decades developing the case for a children’s income guarantee. Their arguments gained traction as science established the long-term consequences of deprivation in children’s early years and as rising inequality undercut the idea that everyone had a fair shot at a better life.
“The moment has found us,” said Rep. Rosa DeLauro, D-Conn., who has proposed a child allowance in 10 consecutive Congresses and describes it as a children’s version of Social Security. “The crystallization of the child tax credit and what it can do to lift children and families out of poverty is extraordinary. We’ve been talking about this for years.”
Houpe’s precarious situation is the kind the subsidy seeks to address. Born to a teenage mother, Houpe, 33, grew up straining to escape hardship. Although she was young when she had a child, she came close to finishing a bachelor’s degree, found work as a pharmacy technician and took a job with the post office to lift her wage to nearly $18 an hour. Raising a son on her own, she took in a nephew whom she regards as a second child.
Houpe seemed on the rise before the pandemic, with the move to a new house. The monthly payment consumed 60 percent of her income, twice what the government deems affordable, but she trimmed the cost by renting out a room and started a side job catering picnics.
During the pandemic, she spent six months waiting for schools to reopen until the boys’ plummeting grades — Trejion is 14 and Micah 11 — persuaded her that she could not leave them alone.
“I had to make a decision,” Houpe said, “my boys or my job.”
But when her requests for unemployment were denied, the bottom fell out.
While critics fear cash aid weakens work incentives, Houpe said it might have saved her job by allowing her to hire someone part time to supervise the boys.
“I definitely would have kept my job,” she said.
The campaign for child benefits is at least a half-century old and rests on a twofold idea: Children are expensive, and society shares an interest in seeing them thrive. At least 17 wealthy countries subsidize child-rearing for much of the population, with Canada offering up to $4,800 per child each year. But until recently, a broad allowance seemed unlikely in the United States, where policy was more likely to reflect a faith that opportunity was abundant and a belief that aid sapped initiative.
It was a Democratic president, Bill Clinton, who abolished the entitlement to cash aid for poor families with children. The landmark law he signed in 1996 created time limits and work requirements and caused an exodus from the rolls. Spending on the poor continued to grow but targeted low-wage workers, with little protection for those who failed to find or keep jobs.
In a 2018 analysis of federal spending on children, economists Hilary Hoynes and Diane Whitmore Schanzenbach found that virtually all the increases since 1990 went to “families with earnings” and those “above the poverty line.”
But rising inequality and the focus on early childhood brought broader subsidies a new look. A landmark study in 2019 by the National Academies of Sciences, Engineering and Medicine showed that even short stints in poverty could cause lasting harm, leaving children with less education, lower adult earnings and worse adult health. Although welfare critics said aid caused harm, the panel found that “poverty itself causes negative child outcomes” and that income subsidies “have been shown to improve child well-being.”
Republicans may have unwittingly advanced the push for child benefits in 2017 by doubling the existing child tax credit to $2,000 and giving it to families with incomes of up to $400,000 but not extending the full benefit to those in the bottom third of incomes.
Republicans said that since the credit was meant to reduce income taxes, it naturally favored families who earned enough to have a tax liability. But by prioritizing the a±uent, the move amplified calls for a more equitable child policy.
Under Biden’s plan, a nonworking mother with three young children could receive $10,800 a year, plus food stamps and Medicaid — too little to prosper but enough, critics fear, to erode a commitment to work and marriage. Scott Winship of the conservative American Enterprise Institute wrote that the new benefit creates “a very real risk of encouraging more single parenthood and more no-worker families.”
But a child allowance differs from traditional aid in ways that appeal to some on the right. Libertarians like that it frees parents to use the money as they choose, unlike targeted aid such as food stamps. Proponents of higher birthrates say a child allowance could help arrest a decline in fertility. Social conservatives note that it benefits stay-at-home parents, who are bypassed by work-oriented programs like child care.
And supporters argue that it has fewer work disincentives than traditional aid, which quickly falls as earnings climb. Under the Democrats’ plan, full benefits extend to single parents with incomes of $112,500 and couples with $150,000.