The Department of Agriculture estimates that in 1960 it cost middle-income families $259,711 (in 2025 dollars) to raise a child. In 2015, it cost $414,000 (again, in 2025 dollars), an increase of over 50 percent\u2014substantially more than median household income increased over this time period.<\/p>\n
As a result, women are having fewer children. During the 1950s and early 1960s, the U.S. fertility rate (the average number of children a woman had in her lifetime) exceeded three. As the postwar baby boom ended, it fell to around two in the 1970s. It now stands at 1.6, significantly below the 2.1 replacement rate.<\/p>\n
In 1937, economist John Maynard Keynes explained why demographic decline creates economic difficulties. His lecture \u201cSome Consequences of a Declining Population\u201d warned of falling investment due to lower future consumption, resulting in slow productivity and income growth. The end of the postwar baby boom led to slower growth and stagnating incomes, providing support for Keynes\u2019s thesis.<\/p>\n
The key question is why it became more expensive to raise children. A large part of the answer is bad economic policy. Starting in the 1980s, Republicans enacted a series of huge tax cuts for the rich and large corporations while cutting spending that benefits everyone else.<\/p>\n
One victim of the Republican playbook has been childcare. In my home state of New Jersey, childcare cost $18,000 per child in 2025, or 17 percent of median state income. And New Jersey is not among the most expensive states for childcare.<\/p>\n
Other developed nations provide considerable support for childcare centers, or give tax breaks to households to offset their childcare costs. In these countries, families with two children spend under 10 percent of their income on childcare. U.S. childcare costs are the highest among developed nations\u201420 percent of income for families with two adults and two children, and 30 percent for families with one adult and two children. Despite promising to reduce childcare prices in 2024, President Trump signed an executive order in early 2026 freezing $10 billion in childcare and family assistance funds for five states (California, Colorado, Illinois, Minnesota, and New York). Judge Arun Subramanian of the Southern District of New York temporarily blocked this effort. At some point, the Supreme Court will rule on this.<\/p>\n
Like childcare, college costs in the United States have risen faster than nearly everything else over the past few decades; they are also significantly greater than in other developed nations. Germany doesn\u2019t charge tuition for higher education. France, Italy, Norway, and most other European nations provide substantial financial support to colleges and limit what schools can charge students.<\/p>\n
College is currently so expensive in the United States due to meager government support. This was not always so. Following World War II, thanks to the GI Bill and substantial financial assistance to schools, college education in the U.S. was inexpensive. Pay from a summer job could nearly cover annual tuition. Starting in the 1980s, federal and state governments reduced aid to colleges and gave the wealthy large tax cuts. College costs soared.<\/p>\n
To counter this, Congress added Section 529 to the tax code in 1996. It gives a tax break to households that save for their children\u2019s education. The Economic Growth and Tax Relief Reconciliation Act of 2001 then made earnings in 529 accounts tax-free. These 529 plans, however, don\u2019t help average families. They primarily benefit the wealthy because most U.S. households can\u2019t save very much money. The average 529 plan balance can cover only 10 percent of college costs, a much smaller percentage than a summer job used to cover.<\/p>\n
Consequently, students are forced to borrow money for college and fewer students attend college, despite the average $1.2 million gain in lifetime earnings from a four-year college degree. The nation loses over $200,000 in future tax revenue when a person doesn\u2019t go to college because of the high cost. Taxpayers also lose because the government spends (over a person\u2019s lifetime) $82,000 more on income support programs, crime prevention, and incarceration for those without a college degree.<\/p>\n
Another loss social cost is that graduates amass enormous college debt. This helps explain delayed marriage and declining U.S. fertility. To reduce the college debt burden, an income-driven repayment program began in the 1990s, with required payments determined by current income, and loan forgiveness granted for any remaining balance after someone makes monthly payments for 20 to 25 years. Trump\u2019s 2025 Big Beautiful Bill made income-driven plans less generous and also capped the amount of federal loans each student could receive. Many college students will now have to borrow from private lenders at higher interest rates, and these private loans will be ineligible for income-driven repayment.<\/p>\n
Another recent Republican tax change also made children more expensive. In 1917, <\/b>soon after U.S. income taxation began,<\/b> families received a tax exemption for each child. As a result, families with children received more money in each paycheck, helping them raise their children. Trump\u2019s 2017 tax cut eliminated all tax exemptions ($4,150 at the time, which would have been $5,533 in 2026 dollars). Today, a middle-class family with two children has over $11,000 additional taxable income and pays $2,200 to $2,750 more in taxes (depending on their tax bracket) because tax exemptions for children were eliminated.<\/p>\n
Tax exemptions do have shortcomings. You can only get back what you owe in taxes. Taxpayers who owe nothing gain nothing; those owing $400 in taxes (before exemptions) can receive only $400. Furthermore, low-income families in the lowest tax bracket receive 10 percent of the value of exemptions while those in the top bracket receive bigger tax refunds\u2014more than one-third the value of their exemptions.<\/p>\n
Almost every nation discovered the simple solution to these problems. They provide child allowances or monthly checks to families with children. My own research found that child allowances substantially increase the size of the middle class in other developed nations, and a $2,000\u2013$3,000 annual child allowance in the U.S. would do likewise.<\/p>\n
The U.S. temporarily adopted a similar solution\u2014the refundable child tax credit (RCTC). Like child allowances, its genius is that low- and middle-income families receive the same amount of money from the government for each dependent child. Pushed by Democrats, the RCTC became part of the 2021 American Rescue Plan Act. Most U.S. families received a payment of $3,600 for children under 6 and $3,000 for children 6\u201317 years old.<\/p>\n
The RCTC died in 2022 when Republicans and Joe Manchin, the Democratic senator from West Virginia, refused to extend it. They claimed the U.S. budget deficit required government spending cuts and opposed giving money to people who owed no taxes.<\/p>\n
According to the U.S. Census Bureau, the 2021 RCTC removed 3.8 million children from poverty and reduced child poverty to a record low of 5.2 percent. Studies consistently show that growing up poor, even for one year, reduces the lifetime earnings of children and raises government costs for crime prevention and public assistance. Unlike tax cuts for the rich, a permanent RCTC would pay for itself over time.\u00a0\u00a0<\/span><\/p>\n Keynes recognized back in 1937 that avoiding stagnation and population decline required policies that increased equality and consumer spending. Child allowances and the RCTC do this. So does government support for childcare and college. Funding these programs will require more revenue from those who have received massive tax breaks for decades. Billionaires today pay lower tax rates than the rich paid 50 years ago<\/a> and middle-income Americans pay today.<\/p>\n Decades of Republican malfeasance on taxation and spending can be reversed. A wealth tax on billionaires, a progressive inheritance tax or estate tax, and taxing non-wage income at the same rate as wage income are simple fixes. Finally, we should remember that, unlike tax cuts for the rich, aiding families with children has substantive long-term benefits for most families and the entire economy.<\/p>\n\n Steven Pressman is part-time professor of economics at the New School for Social Research, professor emeritus of economics and finance at Monmouth University, and author of\u00a0<\/em>Fifty Major Economists\u00a0(Routledge, 2013).<\/em><\/p>\n\n Source<\/a><\/p>\r\n
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