The American Child Allowance: A (very partial) history

I was a sophomore in college in 2009 the first time I learned that a “child allowance” is a thing that exists in the world.

I was getting ready to study Dutch social policy during a summer study abroad program at the University of Amsterdam. To prepare, I was reading up on the country that would be hosting me for the summer, and came across a New York Times Magazine article by Russell Shorto, an American expat living in the Netherlands. He wrote about what it was like to discover a generous European social insurance system through American eyes:

Logging into my bank account, I noted with fleeting but pleasant confusion the arrival of two mysterious payments of 316 euros (about $410) each. The remarks line said “accommodation schoolbooks.” My confusion was not total. On looking at the payor — the Sociale Verzekeringsbank, or Social Insurance Bank — I nodded with sage if partial understanding. Our paths had crossed several times before. I have two daughters, you see. Every quarter, the SVB quietly drops $665 into my account with the one-word explanation kinderbijslag, or child benefit. As the SVB’s Web site cheerily informed me when I went there in bewilderment after the first deposit: “Babies are expensive. Nappies, clothes, the pram . . . all these things cost money. The Dutch government provides for child benefit to help you with the costs of bringing up your child.” Any parents living in the country receive quarterly payments until their children turn 18. And thanks to a recently passed law, the state now gives parents a hand in paying for school materials.

This was revelatory to me. I was just beginning to learn about public policy, but I knew enough to know that the United States didn’t have anything like a kinderbijslag. It felt remarkable that a government could establish that kind of relationship with its citizens: one where no-strings-attached money just pops into a parent’s bank account, with the cheery explanation that families deserve a hand in buying diapers, strollers, and the like. We’re here for you, the Dutch government seemed to be saying, both in life’s joys and its hardships.

It also struck me, however, that adopting such a program in the United States was an utterly farfetched pipe dream. America, land of convoluted tax credits and a total aversion to cash handouts for fear of what parents might spend them on, would never go for a child allowance. One out five children living in poverty was simply the price the country had collectively agreed to pay for red-blooded, small-government liberty.

Twelve years and a global pandemic later, the American Rescue Plan is massaging one of those tax credits into something that will send semi-monthly checks of up to $300 to most families in the country. For one year at least, the child allowance has come to America.

* * *

I spent the summer of 2009 biking along canals and wandering through Amsterdam’s cafes. The global economy had cratered, but in Amsterdam at least, people seemed to be continuing to live their best lives, crowding outdoor cafes at all hours of the day. Months into President Obama’s first term, I was full of patriotic pride. But I couldn’t shake the sense that in many ways, the people I saw in the Netherlands and across Europe that summer seemed to be living better than Americans were.

I wanted to concretize where the U.S. was going wrong, and to capture what made the European system special. The child allowance seemed exemplary to me — a vivid tip of the iceberg of what the U.S. was lacking. I made the Netherlands’ family policy the topic of the term paper I owed in exchange for my summer in Europe, writing:

At the crux of the Netherlands’ child care and family policies is its child benefit program. This program … disburses quarterly payments to every parent of children under 18 in the country. This program is a vivid illustration of sentiment not just in the Netherlands, but across the European social democracies: “We have made a fairly basic decision,” says Valgard Haugland of Norway’s Christian Democratic Party (Reid, 152–153), “We have decided that raising a child is real work. And that this work provides value for the whole society. And that the society should pay for this valuable service. Americans like to talk about family values. We have decided to do more than talk; we use our tax revenues to pay for family values.” This philosophy is the moral underpinning beneath European child care policies: that raising a child is real work with tangible social benefits, and that it is beneficial to society as a whole to pool funds together to aid the task of parenting.

Other points in favor of the Dutch child benefit I noted at the time included: the rate of payment is not attached to income level — the benefit, the Dutch government said in its literature, “will not be reduced if your income increases, or increased if your income drops”; the Dutch government initiates the process automatically by sending families a form after their first child is born; and the benefit increased in three tiers as a child gets older (interestingly the opposite of how many other countries structure their child allowances).

It could be a model for the United States, I wrote: “[I]t is clearly a problem when 20% of American children are growing up in poverty. This is a disgrace on the nation, and it is inhumane and unjust to allow such a tragedy to perpetuate itself. There are clear, progressive steps that the United States can take to begin to remedy this, and it should use the Netherlands as a model.”

In 2009, it seemed like the Dutch had gotten family benefits just about right. But it was a real long-shot that the United States ever would. Democrats controlled the presidency and both houses of Congress, with a filibuster-proof majority in the Senate. But the party’s conscious defensive sail-trimming centrism meant that nothing like a child allowance was anywhere to be found in the domestic policy discourse. Liberals like me were hoping for the Heritage Foundation’s health care plan, maybe with a crumb of a public option tacked on. And after that, maybe paid family leave or cap-and-trade. But cash to families? Not a chance.

* * *

I picked up the child allowance idea again in 2014 while I was in law school when I first started writing about policy. My jumping-off point was a Marco Rubio proposal (ironic!) to take the Earned Income Tax Credit and convert it into a monthly wage subsidy instead of an annual lump-sum refund.

“This idea makes a lot of sense,” I wrote (and it still does!). “But there’s no reason to stop at the EITC. We could likewise convert the Child Tax Credit into a series of periodic direct cash payments to families. This would ensure that the [child] subsidy syncs with family expenses throughout the year, rather than arriving as a lump sum.”

I don’t remember there being much in the way of robust left-of-center discourse about a child allowance back then. I remember one article by Matt and Liz Bruenig making the case for an allowance — but even they acknowledged that under the political environment of the time, “a child allowance might strike many as too bold to pass.” (They were real leaders on the child allowance; I’m pretty sure Matt also had child allowance blogposts at Demos’s Policy Shop which have now been 404'ed from the Internet.) But that was about it.

Interestingly, what paved the way for some of this early child allowance was the right-of-center policy discourse at the time. This was the fleeting moment of the Great Reformicon Hope: the short-lived intellectual movement among a handful of conservative policy people that was supposedly going to reshape the Republican Party to embrace actual pro-family policy. Senator Mike Lee was talking about boosting the Child Tax Credit, Reihan Salam wanted to use the tax code to redistribute income from the childless to parents, and Ross Douthat was generally onboard with some kind of expanded CTC. (However, Douthat was decidedly not onboard with “a child benefit that’s entirely detached from work and taxpaying.” He preferred a regressive benefit “whose value actually increases as you move from the bottom income quartile to the second one.”)

The progressive twist was to go two steps further than the Reformicons — who, after all, were free-market conservatives — to: (1) yank child benefits out of the tax code by turning the Child Tax Credit into direct spending; and (2) give the full benefit to the poorest families too.

This was always going to be a bridge too far for most conservatives. “When crafting policy, conservatives are still deeply reluctant to let the poor derive more benefits from our welfare state than they pay in taxes,” I wrote in 2014. “They have long pilloried refundable tax credits as being redistributive handouts and welfare in disguise. This is why Lee makes his new CTC refundable against payroll taxes but won’t go so far as to make it fully refundable for low-income families who have exhausted their tax liability.”

This inherently limited what conservatives could do about child poverty. “If transfers that give needy Americans net subsidies are abhorrent,” I wrote, “then conservatives leave no room for government to do anything but accept the market poverty rate that our economy produces — about 24 percent in 2014.”

* * *

My recollection is that the left-of-center think tank world began to move toward child allowances toward the end of the Obama years. The pro-family outfit First Focus dropped a child allowance report in 2015. So did the Center for American Progress. The Century Foundation and the center-right Niskanen Center followed in 2016.

Then came Representative Rosa DeLauro’s proposal in 2016 for a Young Child Tax Credit. This would have created a new $1,500 tax credit for children under 3 years old, which was fully refundable for low-income families (good!) but did not have a monthly payment option (not ideal). Hillary Clinton would come to embrace a version of the YCTC in the final weeks of the 2016 general election.

It wasn’t a child allowance — but we were getting closer.

Stepping back, after DeLauro’s bill, the next major marker in the fight for a child allowance was Bernie Sanders’s first presidential campaign. Throughout the 2016 primaries and caucuses, Sanders regularly railed against the moral outrage that one in five children in America live in poverty.

Yet curiously, he never affirmatively embraced a child allowance over the course of that campaign. When it came to children and families, the 2016 candidates were more focused on childcare issues. Clinton had a proposal to subsidize childcare — one that I thought you could maybe/kind of/sort of squint and imagine how it might transform into a child allowance through congressional negotiations.

But Sanders’s campaign more broadly lifted the lid and shifted the horizon on progressive policy thinking. He proved that ambitious redistributive policy was not political poison after all, and expanded the scope of what types of policies could accompany electoral success.

One of the first Sanders-inspired shifts in the policy discourse was the reemergence of the universal basic income. A long-simmering idea, the concept of providing all Americans a guaranteed minimum income became all the rage within progressive circles. And as unconditional cash benefits gained traction, a child allowance came to appear as an incremental step toward a full UBI, I suggested (as did others, such as Mike Konczal). For those who want a full UBI for everyone, I wrote, “the best place to start is to provide a basic income for kids.”

In late 2016, a group of child development and poverty experts led by Luke Shaefer and Greg Duncan proposed a $250 monthly child allowance to reduce U.S. child poverty by 40 percent. And by November 2017, Senators Michael Bennet and Sherrod Brown introduced the American Family Act, which would have turned the Child Tax Credit into an actual monthly child allowance.

Suddenly, a child allowance was seeming like a real medium-term possibility in the United States. It was of course not going to happen in 2017 with Republicans holding a monopoly on federal power. But with Democrats eager to take back Congress in the midterms and challenge Trump in 2020, it seemed like they should run on a child allowance. In all likelihood, primary dynamics would push at least some presidential contenders to campaign on the idea. In contrast to the Trump administration’s tax cuts for the rich, I wrote at the time, a child allowance would allow “progressives [to] make the opposite promise: providing a clear new benefit to help families cope with modern financial pressures[.]”

Disappointingly, a child allowance played a muted-to-nearly-nonexistent role in both the 2018 and 2020 campaigns (even with Bennet running for president!). Nevertheless, in early 2019, People’s Policy Project put out its Family Fun Pack — a policy package that included a child allowance proposal — which helped meet the insatiable demand for Democrats looking to distinguish themselves and challenge Sanders in the Big Structural Change lane of the presidential primary field. And just under the radar, the American Family Act quietly but steadily racked up co-sponsors, eventually gaining most of the Democratic Senate caucus, including presidential contenders like Kamala Harris and Cory Booker.

* * *

Then came the pandemic. COVID-19 brought on a public health and economic crisis in tandem, closing schools and throwing parents out of work.

With little fanfare, the HEROES Act passed by House Democrats in May 2020 included a temporary version of the American Family Act within it, creating a child allowance under pandemic conditions. The particular hardship thrust upon families by the pandemic and ensuing school closures created an opportunity to normalize a child allowance in the U.S., creating political space to send families pandemic assistance checks. “Those costs imposed on families in the name of public health ought to be compensated,” I wrote, “in the form monthly checks from the government.”

Including the child allowance in the HEROES Act turned out to be a big deal. Largely a symbolic bill at the time (because Trump held the White House and Republicans held the Senate), HEROES wound up being the default baseline for the COVID relief package Congress would pass if and when Democrats won back power in 2020.

So from there, it was all a matter of electoral outcomes: Biden won the presidency, Democrats held on to the House and then eked out a Senate tie after the Georgia runoffs. Meanwhile, the enormous popularity of stimmies proved that unsurprisingly, sending people checks is a political winner. That was borne out when Jon Ossoff and Raphael Warnock closed out the Georgia Senate runoff by running — and winning — on a new round of $2,000 COVID relief checks.

With all veto points overcome, Democrats could then pass major components of HEROES, including the temporary child allowance. Biden proposed his American Rescue Plan, which included a Child Tax Credit increase. That fortunately evolved in Congress to be paid out semi-monthly. That program breezed through Congress as part of the reconciliation package (and fortunately — correctly — did not get Byrded out by the Senate parliamentarian). And now a child allowance will become a reality in the United States.

* * *

In the New York Times, Paul Krugman sounds some amazed perplexity at how the child allowance actually came to pass. “To be honest,” he writes, “I’m not sure what provoked this change.” After all, President Joe Biden signed an American child allowance into law yesterday, when a decade ago such a program was a European social democratic pipe dream. (And in fact, it remained such a pipe dream as recently as 2014 that in a book literally called Social Democratic America, professor Lane Kenworthy merely hoped for an increased Child Tax Credit for the United States.)

I’ve written this as sort of a personal first-draft history of my understanding of how the American child allowance came to be. It’s told through my own perspective as an observer and policy writer during this period, but in no way is meant to center or overstate my incredibly minor role . Many many others have been highlighting and advocating for a child allowance during these years (including the three panelists featured who joined a recent panel and podcast I convened).

And in fact, the beginning of this story began decades earlier in the 1970s, when Richard Nixon and George McGovern were each toying with child allowance-type programs.

But I think the factors I’ve outlined here are a big reason for what moved the child allowance from off-the-wall to on-the-wall over the last few years: A handful of conservative elites tried to build out a pro-family tax-cut agenda. A handful of progressives used that weak-sauce agenda as an opportunity to elevate the much better child allowance instead. Center-left think tanks gave the child allowance the wonk treatment and wrote it up in white papers and reports. Bills were introduced in Congress, which gained traction after the Sanders-led social democratic movement exploded political assumptions about bold progressive policies, including those that just send people cash. Unforeseen public health and economic crises then returned liberals to power with a mandate for exactly those types of policies to provide relief to families, and they reached for what was on the shelf: a child allowance.

* * *

The story is far from over. The Biden child allowance isn’t perfect or permanent. There are ways it can be upgraded. But it’s a really important achievement. It has been pitched primarily for its anti-poverty impact, which is indeed tremendous. But I think the child allowance means even more than that for our civic and political life. It’s about that pleasant, hassle-free feeling that Russell Shorto experienced in the Netherlands when government-provided help just shows up. By proving that the government can do more for Americans than just tinker with tax credits, the child allowance could forge a deeper, more meaningful, and more positive relationship between us and our government. Existing tax credits for working families do provide real help to many families. But due to their fundamentally conservative roots, tax credits by design come close to having all the civic meaning of trying a promo code at checkout. A child allowance will do more and mean more.

And that I hope will help restore some measure of American social trust — both in government, and in each other. No doubt, Fox News and its ilk will scour the land for proof-points of parents cheating the system or misspending their child allowance. But the fact that a child allowance could pass into law at all makes me hopeful that at least for now, we’ve turned a corner in our thinking on what government can do and who it ought to do it for.

Freshman representative Ritchie Torres has been a leader in Congress on the push for a child allowance, and he recently spoke about what it means for the United States. “The expanded Child Tax Credit is the greatest progressive achievement since the Affordable Care Act,” he said in an interview this week. “[It] will do for children what Social Security and Medicare did for the elderly: it will end extreme poverty for the most vulnerable Americans.”

“The American Rescue Plan demonstrates that the Democratic Party has transformed itself,” Torres added. “We are no longer the party of welfare reform, we are the party of families and children. We have returned home, we have returned to our roots at the party of FDR. And that’s exactly where we should be.”