The Kids Need Cash A simple way to reduce child poverty is to give families cash: From US NEWSBLOG NOV 5


Last week, UNICEF released a report detailing the state of child poverty in 41 of the world’s richest countries. The United States, all on its own, put 1.7 million children into poverty since the 2008 recession. As it turns out, we are second only to Mexico in terms of creating poor children.

So what can our country do better, when it comes to our children?

We could piggyback on the recent popularity of an old social security policy idea that’s been dusted off and circulated around the Internet blogosphere — the Universal Basic Income. The concept is simple: Every person in America would get a yearly stipend, say, $10,000, which would either bolster or replace other forms of social insurance. Services are streamlined into one simple payout, and there are no messy administrative barriers. If you’re alive, you make the cut. Such a policy would guarantee that all households, whether they had children or not, would get an income boost.

Given the extreme skepticism in the United States toward the social safety net, a universal basic income’s recent surge in popularity is encouraging.

[SEE: Political Cartoons on the Economy]

But I think the wrong issue is being put on the table.
For starters, even supporters of guaranteed income acknowledge that it is politically infeasible in the United States — and probably anywhere else, for that matter. The only precedent we have among our developed counterparts is in Switzerland, a much smaller, wealthier, and more homogeneous state. Even there, the policy isn’t actually in place yet — advocates have simply gathered enough support to hold a referendum sometime in the future.

So, as much as policy wonks would like to hope otherwise, in its current state, and with the state of our gridlocked government, the Utopian idea of a basic income remains more a political theory than a policy in reality (albeit a compelling one). It’s just not going to happen.

But there is a related policy idea that social democracies have used for years that I think deserves as much, if not more, of our attention: cash for children.

Child benefits and conditional cash transfers, which give money to children (or, rather, the households in which they reside), are examples of existing basic income-like policies that have proven to work. But unlike guaranteed income, which has no current working models, child benefits have been put in practice in nearly every European country. Because of this, we have years worth of data that shows child benefits help to reduce child poverty. They are also Latin America’s poverty-cutting policy tool of choice, and their benefits have been rigorously measured and tested.

[READ: Housing Matters]

In fact, among economically advanced countries evaluated by an earlier UNICEF report on child poverty, the United States is the only one that does not have a child cash benefit policy. It also happens to have the second highest child poverty rate among the same cohort.

The theory behind providing child benefits lies in the fact that, while children are necessary for a healthy economy, they are an extremely expensive undertaking for their parents. The total cost of raising a child is $241,080, as estimated by the U.S. Department of Agriculture. Lessening this burden, so that children would not be raised in poverty, would be in the national interest, for many reasons.

In most child benefit systems, cash is given monthly, usually to mothers, and is adjusted depending on the number of children they have. Benefits can be means-tested (conditional on income level) or universal, big or small, but evidence shows the more cash transferred, the more you cut child poverty. An annual transfer of $3,000 per child would reduce child poverty by 40 percent in the United States, as estimated by Steven Pressman.

[READ: Choosing Schools at Any Income]

Perhaps most importantly, there is a much better chance of implementing child benefits in the United States than universal income. The latter would require a massive overhaul of how our country views and treats poverty, and require our government to spearhead a relatively uncharted redistributive policy. On the other hand, the universal child benefit is not a far cry from tax credits we already have in place, such as the earned income tax credit and the child tax credit, which give money back to working parents.

The main difference is parents must have an income to receive the benefits, and while the EITC is refundable (if the benefit exceeds a low-wage worker’s income tax liability, the balance will be paid back), the child tax credot is only partially and regressively so. For example, families receive a refund from the credit equal to 15 percent of their earnings above $3,000 — a family earning $4,000 would only receive $150, while a family earning $10,000 would receive $1,050. This counter-intuitive benefit means the less parents make, the less money they get back. A universal child benefit could help close this gap and give cash to parents who need it the most.

The child benefit also differs from traditional welfare in the United States, or the Temporary Assistance for Needy Families, due to the fact that it is not tied to work requirements, nor are funds spent on anything other than cash to parents (less than 30 percent of TANF dollars are spent on cash assistance).

With one out of five children in the United States living under the poverty line, universal child benefits deserve our attention more than guaranteed income. While the tagline for child benefits may not be as sexy, it’s a long-awaited policy for children who have waited too long.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s