Fix Family Poverty With Free Markets, For Once
It has been a strange month in the world of family policy. Since Sen. Mitt Romney (R–Utah) floated his child allowance plan, which would replace existing family assistance programs with a monthly payment of $350 for newborns to five year olds and $250 per child for kids between six to 17, the budding alliance between traditional conservatives and left-wing progressives has been startling to watch. The news that New York Times columnist Ezra Klein and our American Enterprise Institute (AEI) colleagues (including Ramesh Ponnuru, Brad Wilcox, and Yuval Levin) have found common ground on this idea is either a sign that great things are about to happen or that things are about to go completely off the rails. We think it’s the latter.
Giving parents money with no strings attached in order to reduce child poverty is an idea that has been tried before. The results are hardly ancient history. These policies became part of the federal government’s scope as a way to support the children of mostly widowed mothers, and successfully prevented severe destitution for many children. But these successes faded in the second half of the 20th century as the programs expanded and societal behaviors around marriage and childbearing began to change. Unconditional cash aid to poor families led to government dependency and non-contributing absent fathers, eventually becoming widely unpopular among policymakers on both the right and the left.
Advocates for a child allowance believe our situation calls for a return to this approach. Some proponents have tried portraying a child allowance as fiscally conservative. But it is hard to understand how the federal government sending monthly checks to almost every child in the country (except the top 5 percent), for a total cost of $229.5 billion per year, is fiscally prudent, even if that spending is replacing other welfare programs. This kind of top-down, redistributive plan seems antithetical to a free market, small government approach.
Even so, some supposed fiscal conservatives remain intrigued by using the federal government’s power of the purse to enact a child allowance in the name of reducing poverty and supporting families. But it is useful to remember that as recently as 1992 almost 5 million, mostly single-mother families were receiving unconditional cash aid from the government, yet 60 percent of children in single parent homes were living in poverty. Even liberal proponents for the poor at the time recognized that the system of unconditional cash payments was harming children by discouraging parental employment and increasing dependency.
The passage of welfare reform in 1996 (along with tax credits that were tied to work) essentially ended the policy of distributing unrestricted cash payments to poor families. Welfare reform required work in exchange for assistance and established federal time limits on benefits. The result was an 18-year decline in the poverty rate for children in single-parent families—a trend that only ended with the Great Recession. In fact, by 2017, the overall child poverty rate declined by more than 40 percent and the gap in child poverty rates by race and ethnicity narrowed substantially.
Given this history, it is incredible to see folks like Ezra Klein assert that the Romney “proposal would cut child poverty by a third, and the Biden plan by half.” If we are to be unconcerned about returning to the pre-welfare reform days, why not eliminate child poverty altogether by just giving people even more money? The answer is because unconditional cash payments from the government have unintended consequences, and those consequences include reduced employment, more nonmarital childbearing, and ultimately higher poverty rates.
But the child allowance is not really just a plan to end child poverty as we know it. The fact that some proposals want the allowance to top out for single parents making $200,000 a year and married parents making $400,000 a year suggests that this is just as much a plan to simply subsidize child-bearing and rearing. The growing natalist movement on the right—which includes but is not limited to religious conservatives—says that it’s time we do something about declining fertility rates in this country. Some conservatives are even prai
Article from Latest – Reason.com