Child Care Is Expensive. Would a Baby Bonus Help?
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Here's your Money Briefing for Wednesday, August 28th. I'm J.R. Whelan for The Wall Street Journal. The Urban Institute estimates that having a baby can mean a roughly 10% drop in income from the month the baby is born compared with before the pregnancy. As part of a presidential campaign platform, Vice President Kamala Harris is proposing a baby bonus.
So Harris's proposal builds on the success of the pandemic's expanded child tax credit. During the pandemic, it was $3,600. But Harris is now picking up on that and proposing a more generous $6,000 as a one-time bonus to help families with big expenses during their baby's first year.
We'll go over the details with Wall Street Journal reporter Dalvin Brown after the break.
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Democratic presidential candidate Kamala Harris is proposing a $6,000 baby credit to ease the financial burden facing new parents. Wall Street Journal reporter Dalvin Brown joins me. Dalvin, what does it currently cost to have a baby in the U.S. ?
Having a baby in the U.S. usually comes with a pretty big financial hit.
How much does having a baby cut household income and why does it matter?
And it causes a 10.4% drop in income on average from the time the baby is born compared with during the pregnancy. And that's according to the Urban Institute, which tracks these types of expenses.
And those expenses don't stop there, right?
Correct. The costs keep coming, especially with daycare. In big cities, infant care can cost $1,400 a month or more. And over the past few decades, the cost of daycare and preschool has risen nearly twice as fast as inflation.
How have the current child tax credits benefited families?
The expanded child tax credit during the pandemic was a huge help to families. It lifted 2.9 million kids out of poverty by providing $3,600 payments or credits to families per child. And then families used this money during the pandemic to buy things like groceries, rent, and utilities. And for many, it was a crucial lifeline during that time.
How did VP Harris arrive at the $6,000 number for her proposal? And how would it expand those tax credits?
So Harris's proposal builds on the success of the pandemics, expanded child tax credit. During the pandemic, it was $3,600. But Harris is now picking up on that and proposing a more generous $6,000 as a one-time bonus to help families with big expenses during their baby's first year. She also plans on bringing back that expanded child tax credit so families could get more to support their kids in those early years.
Who would be eligible for the $6,000 payment?
Eligibility would likely follow the current child tax credit rules. So most families would qualify. And some of the experts that I spoke to said that they're expecting families that are earning $150,000 a year or less to qualify for this program, though the Harris campaign hasn't put out all the details and eligibility requirements just yet.
But is that $6,000 figure enough? You spoke to several people who recently had children. What did they tell you?
One of the parents I spoke to, Shabrael McCollum, said that $6,000 would help a lot, but it might not cover everything. After her third child was born, she had to make some tough decisions like canceling cable, skipping family trips. They also cut back on their auto insurance. So when they got in a wreck, they couldn't afford to buy a new vehicle.
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