A Baby Bonus Is A Cost-Effective Way to Support Parents

The Republican trifecta has pledged to deliver a pro-life, pro-family victory in this year’s major tax legislation. A baby bonus should be part of that package. It’s a cost-effective way to support parents–whether their baby is planned or not. 

A baby bonus is a family benefit payment that goes to parents right after a child is born. In a recent report for the Niskanen Center, I propose a $2,000 baby bonus program that would offer a refundable tax credit. Ideally, this payment would arrive within a few weeks after the baby is born. 

While I’d be happy to see the baby bonus modestly boost fertility rates, that is not its primary purpose. A modest payment will have modest effects. The real goal is to help parents have the child they already hope for. When parents welcome a child, they experience a shock to their incomes and their employment. A baby bonus is designed to ease that disruption and help them navigate the turbulence of the first year, post-birth.

Essentially, a baby bonus acts a little like unemployment insurance (UI). It exists to cushion the financial blow that comes with an employment shock. In the case of UI, the social insurance program helps you weather a bad event. A baby bonus helps parents adapt to a good problem. In both cases, the extra financial cushion helps workers take time to make the right choice, avoiding acting out of desperation. 

When a baby is born, parents are more vulnerable to economic shocks than they might be later in a child’s life. The parents are younger, which means they have lower earning potential than they are likely to have when the child is older. In addition, they’ve had less time to build up reserves of savings or sick days. 

A baby bonus might make it possible for either a mother or father to take unpaid FMLA leave that he or she otherwise could not afford to use. The $2,000 payment roughly matches the average out of pocket hospital bill—for many parents, it would take that worry off the table. The baby bonus might give a mother time to fully establish breastfeeding with the help of a lactation consultant, rather than her feeling rushed to return to work and stranded without help. 

The beauty of a baby bonus is that it’s a force-multiplier for parents. It’s not a slot in a child care center that doesn’t feel safe or a voucher for formula that doesn’t match a baby’s sensitive stomach. A baby bonus is a bet on parents—that when they have more freedom to choose for their child, they will choose well. Families who received more in CTC payments used a high proportion of the credit to satisfy basic needs like food and shelter. A baby bonus, reaching families at a high expense, lower income period of life, would presumably be directed primarily to new, baby-related costs.

The beauty of a baby bonus is that it’s a force-multiplier for parents.

In the report, I suggest two possible ways to structure a baby bonus. One way is to make it a universal program, ensuring that all parents qualify for the $2,000 payment. Alternatively, the bonus could come with a moderate earnings requirement in line with other family tax benefits. In that scenario, parents begin phasing in the benefit at a 20% rate from the first dollar earned, and fully qualify with earnings of $10,000 or more. 

In both cases, the program costs are low. A universal baby bonus costs approximately $7.7 billion per year, and a bonus with an earnings requirement costs $5.3 billion. In either case, the administration would be simple and streamlined: parents fill out a form in the delivery room, and the IRS processes the payment. Because the money is paid right after birth, rather than at tax time, the earnings requirement is set at a level that minimizes the chance of a claw back the next year.

A baby bonus should be a simple, predictable benefit that prospective parents can count on. It should alleviate some of the pressure they feel to delay expanding their families, making it easier to decide that they don’t have to wait until next year. It should help a mother surprised by a positive pregnancy test realize that she can welcome this baby without shortchanging her toddler. In short, a baby bonus allows parents a little more permission to say yes, in a culture of “no” or “not yet.” 

Especially in the wake of backlash over Dobbs, it makes sense for Congress to prioritize a pro-family, pro-life program that offers hope to vulnerable parents. Back in 2019, now-Vice President JD Vance laid out his goals for pro-family realignment. In doing so, he recounted a story of being on the train and seeing a Black mom having a hard time with her tired toddler. He saw other passengers performatively sighing or pointedly changing seats. It was a clarifying moment for him.

“I think we have to build a Republican Party that supports her, even if she doesn’t want to support us, at least not in the beginning,” he told the American Conservative’s gala audience. She was a good mom, doing her best, he said, “And if we are not for good mothers and the dreams of their children, then what the hell are we doing?”

I imagine that mom could have used a baby bonus to solve an urgent problem. And she’d remember the party that trusted her potential and gave her a little more freedom to flourish. 

Leah Libresco Sargeant is the author of Building the Benedict Option and runs Other Feminisms, a substack community.