January 17, 2020
(This is a guest post by Shawn Fremstad.)
In his column today, Paul Krugman rightly calls for more attention in the presidential campaign on family benefits and child poverty. As he points out, in Europe public social expenditures on family benefits (including benefits like child allowances, paid family leave, and child care) “average between 2 and 3 percent of G.D.P. The corresponding number for the United States is 0.6 percent of G.D.P.”
I’d add there are at least three notable non-European examples of countries that substantially boosted their expenditures on family benefits over the last decades. In Canada, family benefits have increased from .9 percent of GDP in 2000 to 1.6 percent in 2015 (this is the latest year for Canada in the OECD’s comparative database, but their spending is likely even higher today for reasons noted below). In Japan, family benefits have increased from .6 percent of GDP in 2000 to 1.3 percent in 2015. In Korea, family benefits have increased from .1 percent of GDP in 2000 to 1.2 percent 2017.
While Krugman highlights child care and mentions paid family leave, he doesn’t mention a third important family-benefit reform that we need to make: turning the Child Tax Credit into an inclusive child allowance. In 2015, Justin Trudeau ran on reforming Canada’s then-byzantine set of tax credits for families with children into a single, simple, and progressive benefit. I was in Quebec during the run up to that election and remember seeing regular campaign ads touting his Child Benefit proposal. Notably, Trudeau pitched his plan in a way that was designed to appeal to both low- and middle-income families:
“… with [conservative Prime Minister] Harper you need to be a certain family to get his $2 billion tax break. For our plan, all you need is to be middle class, or hoping to join it. You can be a single mom, a stay-at-home dad, a family where both parents work or are divorced. It doesn’t matter. Our plan helps you.”
Trudeau won, and today the maximum credit is $6,639 (CA$) per child under age 6 and $5,602 per child age 6 through 17. Unlike in the United States, all very low-income families get the maximum credit, and child poverty has declined substantially in Canada as a result.
Finally, I have to say that Krugman gets offtrack at the end when he argues that the Sanders campaign is to blame for the lack of attention to children because he made Medicare for All “a bright shiny object chased by the news media at the expense of other policies that could greatly improve American lives….” (My colleague Dean Baker has written about past Krugman critiques of Sanders on Medicare for All). While the media certainly needs to expand its focus to include family policy issues beyond health care, it is unfair to blame Sanders for their failings.