Having children, while perhaps one of the most meaningful experiences in life, is an expensive pursuit. It is estimated that the typical middle-income married couple will spend approximately $200,000 per child over 18 years. Does this explain why Americans are having fewer kids than ever before? Experts have called the last ten years a lost decade in fertility. But Republicans and Democrats want to alleviate the financial burden, whether it is diapers or Max and Ruby books, by handing out cash to parents, following in the footsteps of Canada and Denmark. Is a guaranteed income for children set to become the next major public policy issue ahead of the midterm elections? Grab the baby bottle.
A Bipartisan Courtship for Parent Voters
In March, the U.S. government approved the $1.9 trillion American Rescue Plan Act that essentially planted the seeds for money trees. The legislation included up to $300 per month per child through an enhanced child tax credit for 93% of families with children under six. It is refundable, and parents do not have to work to be eligible. This could be laying the groundwork for a universal basic income or a certain floor of money for parents.
But while this might seem like a Democratic scheme, Republicans ostensibly want to get in on the action, too.
Earlier this year, Senator Mitt Romney (R-UT) proposed the Family Security Act, a program that gives families up to $4,200 per year for every child up to the age of six and $3,000 each year per child between six and 17. The two-time presidential candidate believes this new entitlement spending would be affordable since it would eliminate Temporary Assistance for Needy Families (TANFs), State and Local Tax Deduction (SALT), and current federal tax credits for working families and children.
Romney thinks now is the appropriate time for such action, citing the financial strain brought on by the coronavirus pandemic and record low marriage and birth rates.
“On top of that, we have not comprehensively reformed our family support system in nearly three decades, and our changing economy has left millions of families behind,” the senator said. “Now is the time to renew our commitment to families to help them meet the challenges they face as they take on [the] most important work any of us will ever do — raising our society’s children.”
Senator Josh Hawley (R-MO) recently submitted legislation called the Parent Tax Credit that is essentially an annual tax cut of up to $12,000. It would function by sending monthly checks of between $500 and $1,000 to all households regardless of income. He said in a statement:
“Starting a family and raising children should not be a privilege only reserved for the wealthy. Millions of working people want to start a family and would like to care for their children at home, but current policies do not respect these preferences. American families should be supported, no matter how they choose to care for their kids.”
It turns out that everyone is mirroring Andrew Yang, the Democratic former presidential candidate and now New York City mayoral hopeful. Whether this is the beginning of a UBI or the start of a guaranteed income for children, the United States would be following in the footsteps of other advanced countries worldwide.
It Takes a Village?
For decades, the Canadian government has given families a tax-free monthly payment called the Canada Child Benefit (CCB). The maximum annual benefit is up to $6,765 per child under the age of six and up to $5,708 per child from ages six to 17. But the federal government has a broad array of other child-related payments, including child disability benefit (CDB) and the Canada Pension Plan (CPP) children’s benefits. This is in addition to the myriad of entitlement measures among the ten provinces and three territories.
In Denmark, child benefits are more structured and are paid out quarterly. In 2020, here is how the Danish government extended child and youth benefits:
- 0-2: $746
- 3-6: $590
- 7-14: $464
- 15-17: $154 (per month)
The Hungarian government is trying to stimulate the fertility racket by offering married couples a $33,000 loan. The catch? The interest-free money does not need to be repaid if the couples have three children. Hungary is suffering from an intense labor shortage, and it does not want to rely on mass immigration to solve the problem. Therefore, Budapest is turning to couples caving in to their thriving biological urges for an economic panacea.
“The Hungarian people gave the Government a strong mandate to further expand the family protection system: 1,382,000 people filled out and returned a questionnaire,” the Hungarian government’s International Communications Office told Euronews in July 2019. “People would like Hungary to remain a Hungarian country, and be family-friendly.”
Since 1948, Finland has kept a universal child benefit scheme intact, designed to keep families in the Scandinavian country. Parents receive between $120 and $220 per month for each kid. Ireland, too, extends parents $170 a month for each child. Luxembourg offers as much as $385 up to 18 years of age, although a family may be eligible for these funds if adult children are enrolled in college or university.
Free Money for Having Children
A 2017 report from NerdWallet noted that an average U.S. household earning $200,000 a year could spend roughly $52,000 in the first 12 months of a newborn’s life. This does not count the roughly $3,400 out-of-pocket pregnancy and delivery costs. Even once the kids become adults, the price of college or university is immense. Put simply, having kids is expensive, leaving many young people wondering if it is worth the cost and stress. A little bit of a cost-benefit analysis might be needed for couples thinking about having children. That said, should the government be subsidizing fertility? Not only is it another piece of entitlement spending Washington cannot afford but also unfair to child-free couples. With mid-term election season more than a year away, Republicans and Democrats are jockeying for a position for the much-desired vote of tired and cash-strapped parents.
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