By Samuel Hammond and Robert Orr, Niskanen Center

The United States has the highest post-tax-and-transfer child poverty rate of any country in the developed world. While many factors can affect poverty, a cross-national perspective reveals the rather straightforward reason why: our relative lack of spending on children and families. The United States spends only 0.7 percent of GDP on family social expenditures, of which the share devoted to cash benefits, 0.1 percent of GDP, is the lowest of any country in the Organization for Economic Cooperation and Development.

The United States would need to increase cash transfers to children and families by approximately $200 billion per year to merely match the cash benefit portion of the OECD average.

At the same time, the institution of American family has never looked weaker. Family formation and marriage rates have declined substantially over the last four decades, with the largest declines concentrated in the middle- and working-classes. The U.S. fertility gap - the difference between desired and actual fertility - has crept steadily higher, at least in part due to the rising costs of core goods like housing and child care. In 2019, the U.S. birth rate fell for the fifth consecutive year to its lowest level in 35 years, and it looks destined to fall even lower given estimates that the so-called “COVID Baby Bust" will lead to somewhere between 300,000 and half a million fewer births than expected.

In this report, we argue that the U.S. should enact a universal child allowance as the appropriate and philosophically conservative policy response to these twin crises. While far from a sufficient solution to either child poverty or family instability, we believe a child allowance is at the very least a necessary one - and long overdue at that. With careful design, the enactment of a child allowance would also create the conditions necessary to consolidate a variety of less effective policies and programs, including those known to encourage dependency and penalize marriage.

Some graphics from the report

This report contains an analysis of Senator Mitt Romney’s new child allowance proposal, the Family Security Act. To read our full analysis of the proposal find our factsheet here, including estimates of poverty impact by state, race, and resource quintile. Our statement in support of the Family Security Act can be found at ExpandTheChildTaxCredit.com

This article appeared on Niskanen Center 04 February 2021 and is reproduced here under a Creative Commons Attribution 4.0 International License.