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Why the US is eyeing a $300 monthly child benefit

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The US is considering introducing a monthly child benefit for the first time, a seismic shift for the country that has some of the highest rates of child poverty in the developed world.

Democrats are hoping to include the measure – which could pay up to $300 (£217.50) per month per child – as part of a larger coronavirus spending package.

President Joe Biden’s spokeswoman this week repeated that the current plans are focused on “emergency funding” rather than a more permanent shift.

But anti-poverty advocates, who have pushed for a monthly benefit for years, hope inserting such a programme temporarily will lay the groundwork for more lasting change.

“It is an emergency and not a temporary one,” says Michelle Dallafior, senior vice president for budget and tax at First Focus on Children, a children’s advocacy group in Washington.

“Child poverty in this country has been persistently high and once we get a programme into place and iron out those wrinkles, then we’re going to keep pushing to make sure that it is permanent.”

What’s wrong with the current system?

Most developed countries, including the UK, have for decades offered some form of monthly child allowance to offset the costs of having children.

image copyrightEPA

image captionOne in six families with children have reported lack of suficient food during the pandemic

But the US, where fears that social welfare programmes discourage work have a long political history, relies on an annual tax credit to offset those expenses.

Introduced in 1997, it’s currently worth up to $2,000 per child, But how much money a family gets depends on how much a family makes – and therefore owes in tax – a design that critics say leaves out those who need it most.

Research has found that roughly a third of children – who are disproportionately poor, black or Hispanic – do not receive the full benefit. About 10% are completely ineligible – the vast majority because their families earn less than $2,500 a year.

“There’s just a lot of kids that don’t get the credit,” says Katherine Michelmore, a professor of public administration and international affairs at Syracuse University’s Maxwell School, who has studied the issue.

What could the changes do?

Under the Democratic plan, the tax credit would increase to allow families to receive up to $3,600 (£2,610.40) per child under the age of six, and up to $3,000 for children under the age of 18.

The benefits, intended to be accessed monthly, would be available to those with no and low incomes and phase out for single-parent families earning more than $75,000 or $150,000 for a couple.

Supporters on the left say expanding the benefit and making it available monthly could cut the child poverty rate – which was roughly 15% before the pandemic – by more than 40%, lifting four million children out of poverty.

image copyrightThe Boston Globe via Getty Images

They point to countries like Canada, where the introduction of a child benefit prompted poverty to drop by 20% in the first years of the programme.

US conservatives that have put forward their own proposals for a monthly child allowance, such as Senator Mitt Romney, see the idea as a family-friendly policy – and defence against America’s falling birth rate, which has hit a record low.

“If we don’t do more to help families … we’re just not going to have that many of them and I think, at least for social conservatives, that’s a cause for concern,” says Brad Wilcox, senior fellow at the Institute for Family Studies, pointing to rapid increases in child-related expenses like education.

Why is this happening now?

Lawmakers have periodically expanded the child tax credit, most recently in 2017, when the amount doubled from $1,000 per child to $2,000 per child as part of the Trump administration’s tax cuts. The figure is due to revert back in 2025.

But until the pandemic – which has seen one in six households with children reporting lack of sufficient food – there wasn’t the political appetite for bigger change, Ms Dallafior says. That’s even though children are the most likely population in the US to live in poverty.

“Unfortunately the pandemic and the economic fallout have exposed and exacerbated some of the inequities we see and it has helped to build momentum,” she says. “It’s just a groundswell of support because people are struggling.”

How does this compare globally?

Megan Curran, a research at Columbia University’s Center on Poverty and Social Policy, says making the monthly benefit would bring the US in line with global norms.

image copyrightReuters

image captionPresident Joe Biden wants to cut the child poverty rate – which was about 15% in 2019 – in half

The UK, for example, offers monthly payments of as much as £84.20 for the first child, and £55.80 for those after, with benefits starting to phase out at incomes of £50,000.

In Canada, the allowance can be as high as C$563.75 (£321; $443) monthly for children under the age of six and up to C$475.66 (£271.27; $374.19) for children under 18, but start shrinking at incomes of C$30,000.

Other countries provide payments regardless of income, such as Ireland, where the monthly stipend is E140 (£122.80; $169.30) per child.

But Ms Curran cautions that the US, which routinely ranks near the bottom when it comes to family support policies, would still lag in other ways, such as parental leave and childcare.

“The child allowance is not a silver bullet,” she says. “It does a lot of the heavy lifting … It can help meet the cost of children’s needs and make sure that it smoothes some of these costs from month-to-month, but there are many other pieces of the puzzle that the US needs to address.”

Will this pass?

There are many details to be hashed out before monthly payments become a reality.

Among Democrats, who have slim majorities in Congress, there are concerns that continuing to structure the benefits as a tax credit may limit how many people opt for monthly payments, hurting its effectiveness. In other cases, taxpayers have been wary about accepting tax credits in advance for fear getting hit with a surprise tax bill.

image copyrightGetty Images

image captionSenator Mitt Romney has proposed his own child care plan

There are also concerns about how to pay for expanding the credit, already estimated at nearly $120bn a year.

Sen Romney, who proposed scrapping the tax credit for a more straightforward, and larger, allowance, would pay for his proposal in part by eliminating other benefits, which critics say could hurt lower income families.

Meanwhile many Republicans, even those in favour of expanding the credit, remain resistant to a full overhaul.

“We do not support turning the Child Tax Credit into what has been called a ‘child allowance,’ paid out as a universal basic income to all parents. That is not tax relief for working parents; it is welfare assistance,” Republican Senators Mike Lee and Marco Rubio said recently.

Still, Ms Dallafior says she thinks the fact that Republicans like Sen Romney – who as a 2012 presidential candidate attacked then President Barack Obama for creating a “culture of dependency” by giving states flexibility regarding work requirements for some welfare programmes – are looking at this suggests the political winds are shifting.

“I can’t say we agree on every detail but it’s there,” she says. “You can almost feel it.”

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