Children, Poverty, and Family Allowances.
by James C. Vadakin.
Basic Books. 224 pp. $6.95.
Professor Vadakin's temperate and well-documented case for cash allowances to children as an anti-poverty measure appears just at the outset of four, eight, or more years of stagnation (at best) or retrogression (at worst) in national economic and social policy. President Nixon's previous career, congressional voting record, and recent campaign, have left no doubt that in his administration poverty will be combatted, cities helped, and black communities improved, if at all, only in ways which will require the very minimum of federal expenditure, preferably in the shape of tax benefits for large corporations. Given this prospect, about the best the anti-Nixonites can do is collect their wits and engage in some hard thinking about the objectives and measures which they will pursue when the political weather clears.
Children, Poverty, and Family Allowances is accordingly a convenient occasion for considering some of the issues involved in one important agenda item, income maintenance. In 1968 no fewer than 62 nations, including all 27 Western European countries, Canada, Russia, North Vietnam, Israel, and Iran, paid children's allowances. Conditions of eligibility and benefit levels naturally differ very widely from country to country, but some features recur frequently. Payments are made to parents (sometimes to the mother exclusively) on behalf of their children. The Canadian program, among others, makes it a condition of payment that children of school age be attending classes. Almost all programs make payments to rich families as well as poor, but many countries tie benefits to steady employment of the parents. Financing practices also vary, although there is a tendency in Western Europe to rely upon payroll taxes as a major revenue source. Characteristically, payroll taxes levied for welfare purposes redistribute the income of moderately paid and low-income families. They do little or nothing to shift income from the really well-to-do toward the less well-to-do.
What, then, in American circumstances, are the merits of family or children's allowances (the terms are practically interchangeable)? To begin with, a large percentage of our poor are children. Aid to dependent children, the largest of our present efforts to relieve the poverty of the young, misses most poor children. Thus, even if the aid program were desirable on other grounds, it fails in its stated objective. A serious program of children's allowances, on the other hand, although it would do nothing for childless couples, elderly men and women living on inadequate social security, and the middle-aged, would be capable of diminishing one important component of poverty, and surely something is better than nothing.
As Daniel P. Moynihan's introduction to this volume emphasizes, children's allowances also possess another major virtue. By making grants to all children, the proposal would diminish the antagonisms between the poor and the just-barely-not poor which Great Society programs have apparently accentuated. The blue-collar vote for Wallace, for instance, seems to have been cast partly out of resentment at the attention and “funds” lavished on the poor and the corresponding neglect of the respectable working class. It is fair to say that children's allowances are the least controversial and the most conservative of proposals to redistribute income, for the sound reasons that so little redistribution is actually involved and so little change is required in present habits of thought. Rich as well as poor will benefit, in the spirit of Anatole France's license to rich and poor alike to obey the laws and not to sleep under bridges.
Professor Vadakin proposes to finance children's allowances out of income taxes, although it should be noted that the program could just as easily be administered within the Social Security System, which would lead to a reliance on payroll taxes instead. But even if payments were made out of general revenue, our tax system in practice is not nearly progressive enough to promise much shifting of funds from the affluent to the penniless. A fortiori, a system tied to social security simply will shuffle about the incomes of the poor and the moderately well-off. Since Americans love children, at least children still too young to demonstrate; since a system of children's allowances would not affect existing inequities of income and wealth; and since, finally, the initial benefit levels are likely to be quite low, I should guess that this proposal would be the least unlikely to win conservative support.
All this, of course, brings us to the question of whether such a program should be supported, and here an old division of opinion between liberals and moderate radicals is bound to obtrude. The liberal, pragmatic camp might well conclude that if children's allowances are really the very best measure that can conceivably be salvaged during the next few years, then the thing to do is gulp, regroup, and push as hard and as single-mindedly as possible for what is feasible. For my part, I like the opposing view better. The unhappy moral of Lyndon Johnson's consensual strategy for social change is this: When objectives are blurred, divisions of interest disguised, and programs softened in focus, such reforms as do in fact result are likely to be half-hearted, poorly understood even by those who are imagined to be their beneficiaries, and consequently readily susceptible to sabotage and even reversal at the first intimation that matters are going badly. The propagandistic rise and the sudden collapse of the War on Poverty amount to a prime exhibit of this process and its attendant dangers.
The lesson for the Left is clear: Stress should be placed upon measures that are genuinely capable of shifting the distribution of income and wealth in the United States in the direction of diminished inequality. Of such measures family allowances are just about the least likely to accomplish that aim. A properly designed negative income tax, on the other hand, could indeed serve as an instrument of redistribution. The words “properly designed” of course exclude the conception of conservatives like Milton Friedman who have in mind quite different objectives. Dr. Friedman, in an effort to minimize costs and preserve work incentives, has proposed cutting off benefits once an income is attained which is half that of the poverty level. Moreover, a negative income tax on his model would replace all welfare benefits.
There is no particular mystery about the workings of a radical, negative income tax. One version of such a tax, worked out by Professor James Tobin of Yale, would confer either cash grants or tax benefits upon all families of five whose incomes fall below $8,000. This figure is high enough so that a great many working-class families would receive some benefit (although less than that paid to the really poor). Hence the proposal would have some of the unifying effects imputed to children's allowances. In effect, the scheme shifts income from that portion of the population which can already pay additional taxes to those who are in the bottom half of income distribution. Tobin's sketch is one of many possible plans. But the mechanics of all of them are simple. It takes little more than basic arithmetic to design a system which greatly benefits any given segment of the population and finances the improvement by removing funds from the relatively affluent.
There is a last word to be said. I do not anticipate that any scheme as direct in its objectives and as contrary to the temper of the times as a redistributive negative income tax has any immediate hope of success. It is, however, a program for the sort of social-science research into whose design enter radical possibilities, and hence an investment in the kind of social action one may hope to see in the future.