President Donald Trump has teased the idea of a new government benefit: a one-time $5,000 bonus to every parent upon the birth of a child.

This “baby bonus” would mirror policies in many European countries and be separate from the annual child tax credit.

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With the U.S. birth rate at a record low and continuing to fall, the Trump administration is considering pro-natal policies. Evidence suggests that the most effective way for a national government to boost birth rates is not through targeted measures such as universal daycare or mandated maternity leave, but by providing substantial cash payments to parents for each child they have.

However, the idea of cash-for-kids is facing criticism from multiple directions. Fiscal conservatives argue that the country cannot afford it, while small-government advocates oppose any government involvement in family policy. Some environmentalists welcome a declining population, and certain feminists object to policies that promote family and parenthood. Additionally, the childcare industry prefers that parental benefits be directed toward childcare services rather than direct payments to families.

In their latest tax bill, House Republicans did not include a baby bonus. Instead, they proposed increasing the child tax credit, expanding some childcare subsidies, and introducing a new, complex savings program for children.

This leaves key questions to be answered: How much would these proposals actually help parents? Could they increase the birthrate? And who will lobby against them?

The background and the policies

Nearly every year since 2007, Americans have had fewer and fewer babies. The birthrate in the United States has fallen from about 2.1 babies per woman in 2007 to 1.6 in 2023. The working-age population will soon start shrinking, and schools all over America are consolidating and downsizing to adjust to this demographic decline.

Facing this baby bust, Vice President JD Vance told the crowd at the March for Life, “I want more babies in the United States of America.”

There’s little agreement as to what the federal government’s role should be in this project, but with Vance, a pro-family Catholic who has actually mentioned the U.S.’s low birthrate on the Senate floor, in the White House, ideas are getting tossed around.

The New York Times’s new family-matters reporter, Caroline Kitchener, reviewed some of those ideas, including Fulbright scholarships only for “applicants who are married or have children,” retooling federal family planning programs to include education on fertility and menstrual cycles, and a $5,000 baby bonus at birth.

The proposed baby bonus would be separate from the annual child tax credit, which is worth $2,000 per year per child under the age of 17 for most parents.

Leah Libresco Sargeant, senior analyst at the Niskanen Center, argued that a $2,000 baby bonus would provide a lot of pro-family bang for the buck. Cash shortly after birth is more tangibly valuable than a tax credit that might not pay out until next year’s tax season.

Childbirth brings with it many one-time costs: hospital and doctor bills, a new crib and baby clothes, moving into a bigger apartment, or taking time off work. Also, new parents, being younger, tend to have lower incomes than older parents, so it makes sense to shift some family support closer to birth.

Also, a large check soon after birth, separate from tax returns, is more tangible for parents and thus can be more of an incentive. Demographer Lyman Stone argued that cash for new mothers also reduces the number of abortions.

For these reasons, some versions of the child tax credit have made it larger for young children than school-aged children. The Biden-era child tax credit was $3,600 for children ages 0-5 and $3,000 for older children.

A proposal, championed by Rep. Blake Moore (R-UT) and Sen. Jim Banks (R-IN), would raise the child tax credit (currently $2,000) to $4,200 for younger children and $3,000 for older ones.

Sen. Michael Bennet (D-CO) proposed three levels: $6,360 for newborns, $4,320 for children ages 1-5, and $3,600 for older children.

An alternative proposal would allow parents to choose whether to move some of their child tax credit earlier in exchange for less child tax credit overall, or to spread it out evenly.

The current House tax bill, extending and expanding on the 2017 Tax Cuts and Jobs Act, does not include a baby bonus. Instead, it would increase the annual child tax credit from $2,000 to $2,500 (making up for 7 years of inflation), and create a complicated new type of tax-preferred account called a MAGA Account, which would allow parents or grandparents to sock away money for a child to access when they turn 18 years old.

Critics of the baby bonus

A baby bonus has its critics.

A large portion of the American Left is absolutely appalled by natalism and is especially opposed to straight cash transfers to parents. The Century Foundation, a liberal think tank funded by the Rockefeller Foundation, attacked baby bonuses as “coercive incentives to give birth.”

Many government or charitable programs give people cash when they take on extraordinary new costs, and this is probably the only case where a liberal group would call that no-strings-attached payment “coercive.” Subsidies for buying electric cars, Obamacare subsidies, and wage subsidies are not typically called coercive.

With a no-strings-attached cash benefit — either a child allowance or a baby bonus — a mother could choose to use the money to take time off work. This upsets feminists, and it also upsets the childcare lobby — the unions who want to create a more robust pipeline of money coming into a heavily regulated and subsidized childcare industry.

Many conservatives object to a baby bonus, too, on budgetary grounds, or because it feels like social engineering.

The most common objection from all sides is that it just won’t do much for the birth rate. The U.S.’s culture is broadly anti-family and anti-natal in all sorts of ways. It’s too individualistic, materialistic, workist, isolated, and secular.

These cultural conditions likely explain most of the baby bust (and the epidemic of childhood anxiety). But that doesn’t mean a $5,000 baby bonus is a bad idea. It might be worth considering whether straight cash right after birth is a better way to support families than current policies, including annual tax credits and an array of childcare subsidies.

Would a baby bonus help?

Before asking whether a baby bonus would help more American adults achieve the family size they desire, we have to ask whether affordability really is a significant deterrent to family formation these days.

The evidence points in both directions.

First, the baby bust began around the same time as the financial crisis in 2008, and has coincided with a decadeslong increase in the cost of childcare.

Second, the opportunity cost of raising children has increased, as women have rapidly gained career and educational opportunities since the 1980s.

Third, cost and affordability are among the most often cited reasons for 20- and 30-year-olds not starting a family yet.

But there’s also plenty of evidence that cost and affordability aren’t real drivers of this cultural shift.

First, consider that the birth rate was much higher in 2008 — in the midst of the Great Recession — than it is today or was in 2019, when the economy was stellar. Second, the baby bust is concentrated among millennials and Generation Z, who are not poorer than Generation X or baby boomers were. Third, geographical variations in costs do not seem to predict geographical variations in birth rate.

Aside from examining causes, what do we know about the effectiveness of baby bonuses, which have been tried around the world?

AMERICA NEEDS MORE STAY-AT-HOME PARENTS

The most comprehensive study of various pro-natal policies found that a one-time baby bonus would be the most effective way to boost the birth rate, far more effective than subsidizing child care. Still, that study suggested that support — a child allowance or child tax credit — would be slightly more effective.

Again, no baby bonus was included in the current tax bill, and the idea has its critics. As the U.S. wrestles with deficits, both budgetary and baby-wise, a baby bonus could bubble to the top of its policy debates.