The Economist April 2nd 2022 33
United StatesChildallowanceThe social experiment
R
enuka maharjan is a dedicated wom
an. Over the past two years she has
made a regular trip on public transport
across three boroughs of New York City, re
quiring two changes and one hour in either
direction, to reach The HopeLine, a food
bank in the Bronx. Waiting in the cold out
side it one morning, she says the food and
nappies (a rare offering) are worth it: “Only
my husband is working. I have to take care
of my two babies, so this helps a lot.”
Rather than being supplements to the
safety net, food banks such as The Hope
Line have become something like stop
gaps. The world’s richest country has done
an especially poor job at looking after its
youngest. Among industrialised coun
tries, America has consistently ranked
among the worst for its childpoverty rate.
The reason for this is no real mystery: the
welfare state does not redistribute much to
the poorest families. Many of the countries
with far lower rates of child poverty, such
as Canada, Hungary and Poland, have
achieved their success by creating child allowances—regular payments to parents of
modest amounts of cash.
So there were grounds for optimism
when America began an experiment—little
noticed but grand in scope—with a child
allowance. Created by the American Res
cue Plan, the gargantuan stimulus bill that
President Joe Biden signed in March 2021,
the scheme began making monthly pay
ments in July to the families of 60m chil
dren (most of the 73m in the country).
These amounted to $300 a month for each
young child and $250 for older ones.
For Ms Maharjan, who kept making herlong trips to the Bronx, the monthly cash
was enough to go from scraping by to begin
“investing” in her children. “That helps a
lot, especially for minimumincome peo
ple like me,” she says. She looks crestfallen
as she remembers that the payments
stopped in December—after Democrats, by
failing to agree on much of the president’s
agenda, could not approve an extension.
Those six months provided a fullscale
experiment for whether Europeanstyle
safetynet programmes could work in
America. Sceptics doubted that the Inter
nal Revenue Service would be able to turn
itself into a quasiwelfare agency in a mat
ter of three months. A senior White House
official notes that Social Security and the
Affordable Care Act required years of prep
aration before beginning.
The early assessments were rosy. Schol
ars at Columbia University developed a
monthly measure of child poverty that is
much speedier than the official annual da
ta. Between June 2021 and July 2021 their
estimates registered a large drop in the
childpoverty rate—from 15.8% to 11.9%.
Put another way, the number of children in
poverty fell by 40%. That was the result of
all covidrelated relief programmes, but
the monthly payments alone drove a 25%
drop in poverty in their first month.
As uplifting as the result may have
been, the converse is as dismal. Since the
payments lapsed, the researchers calculate
that most of the gains made against childN EW YORK AND WASHINGTON, DC
Why the most successful anti-poverty programme in decades is going cold→Alsointhissection
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38 Lexington: Biden’s end-game