they were based on projects or other costs. we wanted to come as a policy based on principals. so the consensus was that should recognizing all families incur substantial costs when they are try to go raise children.

many families experience families. when we see 16% of children or whatever the latest government numbers are that mask the so a it ensures it is for all children regardless of your circumstances and regardless of, you know, life circumstances we argue it should be acceptable. while the current safety net has been very successful in reducing poverty among families are children tax benefits come once a year.

the assistance comes often monthly. it can be used for targeted expenses. and then this is where we can have a lot more discussion about whether we were coming at it at the right level. we average based on some of the literature on the effects of income and child development that around $250 a month cash benefit which would be around $300,0 thousand dollars a year. we have other considerations we talk about in the paper that we did not come to consensus on. one is that t idea that younger children could have a larger

benefit. we model some of the effects of what we call a tiered benefit for young kids. so if you have five, six, seven kids whether you should get 3,000 for each kid or if it should sort of scale down. this main model is monthly payment of $250 per child. tiered would give $300 per month for children under six and then tiered where families are larger family size or greter numbers of children would get a reduced benefit. so i will just stick to the

poverty pockets. we take the survey, which is the on yule household survey and we use the supplemental poverty level. we used the 2016 survey. when we add the income from a universal $250 child allowance we see a reduction of poverty. it's pretty substantial. again, that falls over half or to 2.1%.

when we look at extreme poverty, that's, you know, all most by definition, virtually eliminated with universal child allowance. >> a and you can see you get it when you make it smaller for larger families and a bigger effect when you give more to young kids. these are really meaningful. we would take away the child tax credit. it would be treated like an additional income source for higher income folks.

it makes it a little more aggressive. this is the same story. it's a larger effect for children under six. so this just shows total income divided by poverty threshold. the higher income you are it shows net difference in resources. you can see if we did a $250 allowance there would be no losers. at least if you only did the elimination of child reduction. you have to pay for that some how. i guess it depends on your

philosophy. but minus child exemption there would be a net gain for everybody across the population with kids. price tag. with our $250 universal credit the cost would be about $192 billion and the cost savings from the tax credit would be about half that leaving a net cost of about 96, $97 billion. we don't suggest in our paper that we should directly spend that. we don't come to consensus about what the appropriate mechanism is in order find that.

it could be a value added tax. there's lots. i will stop because i'm being told to stop and say thank you. >> you can find our paper on if senator's web site. so i want to start by jumping back in time a little bit to this, which is from december

1992. i recognize it will be small but the principal is crucial. new studies show the dhield poverty rate is five times in western europe.

one of the key differences is that other nations all have a child allowance or child credit but we do not. it would be impossible to come back. so that was over 25 years ago. i'm going to sort of skim over this information because it's been covered already. the bottom is the child poverty rate compared to other

countries. so confirming that it was as when it was written. let's make the child tax credit

refoundable. you can pick anything and i chose to go with school nutrition programs in part because i think it signals if we did this that we are serious about signaling parental responsibility in choice. on the left i think the most notable thing is how much assistance goes to the form of either cash or medical reimbursements over half. when you look at spending on children it is like a rainbow. it has been divided up into

literally almost 100 separate programs for every little tiny niche. they have adults that argue on their behalf and third parties that defend their own interests while supporting kids interests

incidental l incident incidentally. it's not orphn behalf of kids b on behalf of suppliers. that's the first reason cash matters. it's not as prone to special interest capture as these other programs are. the other reasons i will run through quickly because they were talked about earlier too. number one is effective. chicks is supposed to be impossible. you can spend more than a dollar. the reason it is true in this

case is because parents don't capture the full benefits. if parents could go to a bank and say give me a loan or buy some equity in my child's future earnings i can give you a fair market return. so maybe it's an alternative to this proposal. in the meantime without a child tax credit we are literally underinvesting in children. the second is that tried to isolate the earned income tax

credit. what it found is it is eight times more than spending on medicaid. we consider that spending to be cost effective. my paper does a deep dive on the canadian system, which i'm most familiar with. the studies there looked at -- well, first of all, they found that it was actually effective at producing maternal depression and they wanted to understand

why. but also what are some times called home stability items. it's just general household items that reduce stress. and that goes to some of the psychological resources that shows that stress from a shortage of income is a big determi determinant for developments for children down the road. so we have had people come from the left of center and the right of center. say that the social engeneral nearing that the right does and left does, neither are correct. we should leave it to parents. i think that's my strongest

motivation. we had that debate in canada. we one was proposing we have a day care program. it was very controversial especially among stay at home mothers and so forth. so the party at the time introduced child benefit because they tried to split the difference and say let's just give cash. it opens up the choice to parents whether they want to compensate at home care versus external day care. it worked out extremely well. the alternative approach was tak taken. they subsidized child care. over the past 20 years i have looked at this int number one, it did not increase. it displaced by calling kids

into the formal sector. number two, there was disturbing evidence that it lead to decline more aggressiveness in children and so i think we -- a big piece of why cash matters is when you lock yourself into service delivery you can end up sort of going down the wrong path. >> okay. so this is where i kind of tick off people on the right. what you see here is before and

after of the university child care benefit in canada, which is what it used to be called. what reduces work so it goes from 60% to 70%. so if you can earn more outside outside the house you can do that. if you can go outside and make money but you're spending all of your money on at-home day care it doesn't quite make sense to do that. the neutrality of money sort of the market price signals that you wouldn't be able to thrive sort of in the abstract.

this is really quickly looking at the different participation between legally married and single mothers. i think the thing is that single mothers have a harder time after a newborn reentering the labor force partly because they are on their own. once again, cash is able to split this difference in a way that a benefit can't. this is from an important paper called the differential impact of labor supply. it found that married parents used subsidized stay at home mother on the margin where as single mothers use it to access external services. and so even though married mothers reduced their labor single mothers increased by 1.4

percentage points either way the sky is not falling in these scenarios. if you really value what sort of choice and posted it on social engineering a point drop in labor force participation. it is not something to be terrified act. i just want to finish on a note on the direction of the conservative movement. by extension of libertarian movement, even though it has sort of shrunk in size it looms as large in the consciousness of d.c. policy debates. everything is sort of talked

about. i was framd around welfare reform. you know, we have tlos battle on gay marriage or something like that but what about single families? this is a policy that can bridge the desires of progressives to care for the most needy and the desires of the conservatives to be neutral with respect to traditional families. feel free to speak out. >> a child allowance proposal in

2015 which is much closer than the columbia university one. i'll go through why i think that was the right approach. i have positive and negative feed back and then sort of general thoughts about the political moment we are in and why that idea is an idea of whose time has come. so i think it's really important. the research and the long term outcome is striking at the right age group caps proposal similarly. one difference is that we kept the base ctc as a thousand dollars fully refundable.

i think that the young child tax credit is also important because there's a big mismatch between parents peak earnings years. it's a quarter century mismatched. so at the same time you're getting time off of work you have a little less flexibility in your schedule because you are caring for young children. you're early in your career or

job. so very much in favor of the proposal. it has a lot of similarities they have put out there in the summer of 2015. on sam's i think similarly monthly payments and recognizing that, you know, a child allowance isn't going to have catastrophic participation effects. i don't know anybody that would work because they were getting 2 or $3,000 a year to raise kids. those are helpful points. i think it's helpful to spur these discussions. it seems as though you're taking

away lunch to pay for dinner or taking away lunch to pay for housing or some other basic human needs. and so a couple of other thoughts, many noted how they spend much more on their countries than we do. in the u.s. we spend about 1.2% on families. that's less than half of what others spend. and so we should be not looking to cut in these kinds of

proposals. olivia mentioned the low wage labor market, increase in productivity that has not reached these low wage workers that would be helped by this. so i think there's a lot of other ways to pay far massive expansion. it would be an enormous step forward. ours wasn't universal. it faphased out. middle class families are also really really squeezed right now. we did an estimate showing between 2000 and 2012 wages stay flat but income security went up, 70% was child related.

70% will durn to the means tested program at some point during their working years. there is an alignment of interest i think makes the time right for these kinds of proposals. thank you. >> i am not speaking for joint economic committee of congress. i am glad to be here. so we have pretty low child

allowance for the kids of parents who can't or won't work. it's in the form of a bunch of programs. not a single program. that's an over simplify case. i think it's a useful way to sort of think about this. i think if folks would rather spend their money on something other than food give them cash rather than food stamps and they probably know better how to spend it.

the columbia proposal would make both of these more general louse. we worry about people that were going to delay and we worry some of them won't. so i think that's a real concern that i have with the proposal that changes sort of the balance of what people are deciding on the margin.

plus the columbia proposal i would not die on these numbers but it seems to me it is pretty likely maybe folks are fine with that. to my mind if you will propose something that is unprag unpragmatically big i would want to spend it in a different way. you should not take it to mean i

don't think we have a poverty problem. it is at an all time low. i have written on this. chris's numbers showed some economis economists. it is at the research service. child poverty being under half the poverty line probably at an all time low if you include noncash ben fits. if you include things like housing benefits and you count them when you determine who is under the poverty line. i think they would show that. it is frankly so rare it can't be reliably detected. i think the comments about poverty and being caused by

welfare reform is unfortunately really misleading. in the cps which was the numbers you saw up there, my report also used the cps. that increase if you believe it is true started in the mid-1970s. it's not welfare reform. if you believe it it increased means of knowledge married college graduates, increased among children of married couples. if i had more time i would say you should not believe these numbers. if you do believe the numbers it's not welfare reform. okay. we reduced poverty more than we tend to think. i think the reason we have not done that is because we tended to think cash is made to do that. we spent a thousand dollars. it has been stalled for decades.

i think we need to look at different ways to spend that money. >> thank you. >> so it's interesting to be at the end of this panel. let me try to say what is the problem we are trying to solve? it is a little easier to think if this is the right solution. i think there are two pretty distinct problems. one is that parents made big investments in kids. kids are a public good. we'll get something out of that. if t child allowance would kind of improve those investments. a very different and distinct issue is you have a common obl galgs to meet the needs of hoar

to under the circumstances all on their own. those are kind of two different reasons. i think you should move. i come up is this a 2k3w50 lu-- good solution? in some ways it is yes. some ways it is no. it recognizes the common and collective investment. it recognizes parent ts are taking on a big task. one of my favorites is that we think of children as pets. don't bother me with your pet. children will be our next generation and maybe we need to have collective responsibility. i think it's a good opportunity. it also is a good opportunity because it provides those benefits in a way that doesn't

have inefficiencies. so two employepros. two things i think are less goochltd one of those is that it's not targeted. because it's not targeted it doesn't give the again fits who need it moets. i think it makes it more to the effect it will have which is meeting our obligation to provide a basic floor. it doesn't target those who need it moets perhaps -- and this goes to one of the issues sam brought up. i think we need to reflect on all of the resources. let's at least think about time and money. if you take a family that has $40,000 of income and they have

that income because one parent is working and one parent is at home that family is better off than another family who has only one parent resident and that family has $40,000 of income. there's not enough parent to take care of that kid. it is also better off nar both earning $20,000 and both in the labor market. we need to take into account things that support other expenses that families vp that recognize that stay at home parents are a resource. they are valuable. that means families that have them are richer than if we only counted their income. >> that's another piece to take into account! having a child allowance seemed like a great idea to me if it is

either extra money or if it's replacing something that is not as well targeted to meeting these needs. if we are going to replace a child tax credit i think they are admirable opportunities. i think if we are going to replace snap or school lunch i would like to see the same chart chris put on there. i think it's a real problem if you take care of one of redistri bu butting. the last thing is that resources isn't unrelated to the form of

those benefits. so part of why we have political support is because it's tied to work. part of why we have support for food stamps, food stamps might not be as -- snap might not be the fungibles ch we want to avoid magical thinking. the support will be the same. i think it's another piece of the puzzle. >> thank you so much to all of you for your discussion and your presentation. let me start with a few questions. so one of the questions i have about the child allowance is we are essentially saying we are replacing the child tax credit or changing the chielld tax cret and transferring people who may

or may not be working. everybody, whether or not you're working, so we are taxing people and going to be getting the funding some how. if you're transferring that money to a lot of people who are not woshlging. -- working. if you're childless adult we will give you $500 and that's the incentive to work. and we are telling a person not working we'll give you $2,000 because you have a child. you mentioned that is it enough

for people to stop working? we have people saying yeah, it's a huge incentive to work. you know, if you don't -- why would we matter. that's no, sir insent ifr. we have a big flay for for siend. if it's not fully refundable it will be a lot harder to administer if you don't know what earnings will be towards the ebd of the year and trying to divide it by 12 and if everybody is getting the same amount of child tax credit up to and whatever income level you phase it out at i think the average payday loenl are this

and a iffer yodic and it looks much harmd. >> if you're saying this is the reservation weight. i'm giving you $2,000. >> people make choices on the margin. the marginal stays the system. if $2,000 is really the amount yuf i think people that don't -- so when this debate comes up i kind of ask people what are your implied -- are they like so huge

that a small increase in the floor will could you say you the fact is differential. you can't generalize. some will use it to compensate at home care and oers in the labor force. i think it's a really important point. you can't -- it's one -- >> it is you know, i don't think by incentivizing children to not work. it is for children regardless of their childrens behavior.

it will encourage and enable people to work and supplement when wages are low. it would be a different component. >> this is how all of the debate in the shadow of welfare reform tlch there were large work incentives. we have to stop comparing every thing to welfare reform. it's become a steal metaphor. >>. >> we also have lrned income tax credit. it is enough to convince

salespeople. >> i think the evidence if you do have to be open to the reverse argument on that as well. sea do you and the whoem the of that will never r never be and i those follow lks some of them you may think shouldn't afford a childment child. >> people make choices on the margin. it's the next dollar. it does increase your next

dollar. if you got $2,000 maybe it would reduce it. i think some of us thought maybe that's not the best idea. but yet, that's the kind of debate too. i didn't hear any of the saw shores and it's designed to an and i think there are checkive again fits to that you know, to agree with him, not having the

and whether it is another way to imwork incentive ts m. >> i was glad shi brought up the school sthoi i need you to -- the school milk program or whatever -- thank you. it's very special. [ laughter ] >> it should be judged on whether we think it is a ration we hp can i are -- they do have

anti-poverty effects. we want to make sure kids don't go hungry. if cash does a better job of that, fine. but it's -- but these things that each have their own legacy and own dollar for dollar. >> right. and just a quick question on the administrative issues that are likely to arise. we have going to. they are it is something that

could also be a design problem with a child allowance. >> i mean i think it would be in a lot less? ? you have or not. there is the administrative burden. we were less worried about whether it would come out of treasury, you know, but i think we would imagine the ssa would administer it if we had our ideal world. that may not be their ideal world. yes. exactly, yeah. >> reflect the fact that it's flat. a lot of missed payments and proper payments is because you exist on an -- >> trapezoid. >> yeah, a we're polygon. so that's a problem that doesn't apply here because it's a flat benefit. who claims it may end up being the bigger problem.

you see these flights actually in canada and other places where parents will -- going through custody battles will wrestle with who gets to claim the credit. that will be true of any kind of benefit. >> yeah. okay, great. we'll open it up for questions now. >> i have a couple comments on universality. first it's important to recognize the system we have, so one argument for universality is we should be investing in all of our children. that's actually implemented in the income tax system, it's a flip side that children are a burden, so in terms of the ability to pay we have either exemptions or deductions or tax credits. the way the system works, the current system is that the -- we

have a very near universal child allowance. people at the bottom get nothing, that's one exception. and the people at the top get more. that's a little bizarre. that is a little bizarre. second, i want to go back to olivia's point. half the population of children are poor or near poor when you use the new definition of poverty, the supplemental measure of poverty. and it goes even higher if you're talking about insecurity. it's probably 2/3 to 3/4. universality has a great advantage, most of the children are poor, near poor or insecure. if you try to make it income tested, you would have disincentives to work and marriage in the middle of the

income distribution. and they're more serious incentives as sam pointed out because that affects the return to work as opposed to just an income effect. so i understand the worry about income -- about negative effects on work, marriage, child bearing, but we have empirical evidence which suggests those effects are small. >> anybody want to comment? >> i mean, i think what i would say there is that one of the functions of work requirements is to address those sort of work disincentives that are there on the slope of folks who might otherwise choose to work less and go on public benefits. their work requirements now, it's not an easy life to do that. i think that's one of the reasons i would defend work requirements. you know, about empirical

evidence, i think it's true that conservative fears about unintended consequences are almost inherently not empirical. if they were -- if we all knew there were going to be a negative effects and we did it anyway they would be intended bad consequences, right? so, you know, i think that's absolutely the case. i think what we tend to run into on these debates is that on the left, you get a barrage of correlations which are not usually safely taken as causal relationships. and it's a problem for, i think, any number of debates, policy debates in town. >> can i respond to scott's point real quick? i don't see how taking away basic living standards like healthcare and, you know, disability support is going to get anybody back to work any faster. >> he's not talking about taking that away.

not talking about abolishing medicaid. >> if you're saying you have to work to get medicaid. >> that's not what he said. >> i don't see how it's going to get anybody to work any faster. if you're interested getting to work faster you invest in job creation, which raises wage and makes more jobs available. that seems to be one of the most important solutions that will address the issue and you still have the child benefit there. if progressives and conservatives agree for those who are able, a good job is the best pathway out of poverty, investments in job creation and raising wages should be a big part of that conversation and the child allowance shouldn't -- it doesn't provide distortions there. so i think that's sort of an important point to underscore. >> i think we agree economic growth and job creation is super important and at the same time, we can believe that -- you won't believe this. but a lot of us can believe that what welfare reform did was

convince a lot of people to work who otherwise would not have and they were better off. >> i think the investments in childcare had a lot to do with that. >> totally agree. >> i wanted to bridge this. i fully agree with scott that welfare reform was necessary and had a huge impact on bringing people from the fadc into the work force. but just to address the point about universality, we don't have a child allowance for young kids, even if you add up the cash value of existing programs. what we have is like scott said a two tiered system where we're happy to transfer cash to parents in the form of either direct credits or deductions in their taxes. which is just cash in hand. versus for the truly poor, having this bursystem. i don't want to give up the opportunity, because if we did move forward and expand the child tax credit to make it fully refundable, we're doing

something that is unambiguously pro poor. we shouldn't pass up that opportunity to simplify the existing system. we have 100 programs representing $300 billion that go to kids and are fragmented and captured by industry interests. the problem we face is whenever someone comes out and says, well, you know, this lunch program it's great. you know, tyson and these midland and these big companies are lobbying for them because they get to be the special producers maybe we should fix that. you get the boot leggers and baptists scenario where you have child advocates that come out of the woodwork who say you're taking away lunch for kids. but if you're doing something that is unambiguously benefitting those families at the same time -- unambiguously, no comparison the cash value of the school lunches will not overwhelm giving parents another

thousand dollars. that's an opportunity to assuage a lot of the fears that this is not austerity in disguise. >> we have time for one more question. >> can i just make a comment about -- just in terms of this welfare -- the discussion about the impact of welfare reform. i think i'd like to go back, i think it was sam's point. we now have a system that really does make it easier for people who can find work consistently to do better. and so it clearly made life better for many people. but it left a number of people behind. and we can have debates about exactly how many and how far. but there are lots of people who are not able to work full time who are not able to work full year. cannot find that employment. we don't have a floor for them. we have completely abandoned them. that insecurity and instability of income is particularly pernicious for young children.

so this -- these proposals would address a problem. you can think welfare reform was positive or negative, but i think there's no question that it left children vulnerable in a way that's just really inappropriate in this country. >> one question there. >> it seems like you could make an argument kind of piggy backing what you said providing a basic child's allowance is actually a work incentive in terms of reducing barriers to employment that are based in transportation and other things like that. would you akr grgree with that? >> yes, if you look at the supplemental poverty rate it not only shows what transfers lift people out of poverty, it shows things that push them into poverty. childcare and work related expenses are one of the factors that push people into poverty. giving people -- there's not a

work clothing assistance program. there's not an national transportation voucher programs. there's some things you need cash for. the idea of having a child allowance could actually, again, facilitate getting and sustaining work because whether it's maintaining an automobile and paying for your car payments, whether it is making sure we have work appropriate clothing. some people have to buy their uniforms. or whether it's making sure you can plug a child care hole and you get scheduled with a day's notice which is unfair and unpredictable scheduling. cash matters for keeping a job, too. >> okay, great, thank you so much. please join me in thanking our panelists. [ applause ] lewe're live from testimony