Two weeks ago the European Council elevated demography—specifically depopulation through low birth rates—onto its strategic agenda for the next five years. For the first time the question of natality will have its own commissioner in Brussels. The change came under pressure from the member states of eastern Europe, where the birth rate question has climbed to the top of domestic policy agendas.
On these matters, Hungary leads the way. Its government, led by Prime Minister Victor Orban, has implemented a range of pro-natalist policies, amounting to a massive, unprecedented five percent of the nation’s Gross Domestic Product. One representative innovation is a program offering a $33,000 marriage loan to couples, with the debt fully forgiven on the birth of a third child.
Recently, the Hungarian model has come to America. Until a decade ago, the United States appeared to differ from the European pattern of below-replacement fertility. While the nations of the European Union in 2000 had a Total Fertility Rate near 1.5 births per woman, the American figure was close to 2.0. In part, this derived from the relatively high fertility of certain American religious groups….something distinctively American. It also reflected, I believe, the success of the “American” form of family income support, achieved through tax policy… notably the personal exemption for children and the child tax credit, the latter introduced in 1997 and increased in 2001.
However, the financial crisis of 2008/09 had a surprising effect on American family behavior. Fertility fell sharply, which could have been predicted. However, when the economy improved, fertility did not. American numbers remained low, near the still dismal European figure. The American model of family support no longer seemed to work.
This has led some American policy analysts to look for new ways to deliver income assistance to young families…. at the impressive Hungarian level. One proposal gaining some traction appeared this past autumn in the journal American Affairs. An article co-authored by political scientist Gladden Pappin and economist Maria Molla calls for a scheme called FamilyPay, which would provide a direct cash stipend to parents: $6500 annually for one dependent child, $11,500 for two, $17,000 for three, and up to $38,000 for nine or more. This would be supplemented by a voucher-like system of CarePoints that could be spent “on everything from diapers to baby food to private school tuition.” Given the proposed structure of the scheme, births within marriage would be favored and intentional single-parenthood discouraged.
The cost would be enormous…. $1.8 trillion per annum, or 8.7 percent of GDP…. a number that would leave even the Hungarians in the dust. To pay the bill, the co-authors propose an intriguing combination of budget cuts, tax increases (including heavy new federal excise taxes on gambling, pornography, video games, night clubs, tobacco, vaping, tattoos, piercings, and cosmetic surgery!), and strategic borrowing. Implausible? Certainly so at the moment. All the same, the Pappin-Molla plan is the kind of fresh thinking needed to counter both the sterile libertarianism found on the Right and the post-family socialism found on the Left, in both Europe and America.