The Trump Administration is reportedly considering ways to reverse declining fertility in the United States, most notably a $5,000 “baby bonus” for any mother who gives birth. The administration is right to worry about the fertility rate, which has been on a steady decline since 2007 to the point where the number of new babies born each year is no longer enough to replace dying Americans. A declining population puts stress on social insurance programs, threatens the aggregate economic strength of the United States—with potential risks to national security—and denies society the intangible benefits of more children.
While the problem is real, a baby bonus is not the answer.
The biggest issue is the cost. There were 3.6 million live births in the United States in 2024. A $5,000 baby bonus paid on behalf of each new baby would have cost $18 billion in that year alone.
By extending the expiring provisions of the Tax Cuts and Jobs Act without enacting sufficient offsets, Congress is already poised to add trillions of dollars to the federal debt. Congress and President Trump can’t touch Social Security in a reconciliation bill, don’t seem willing to find savings in Medicare, and are wavering on spending cuts to means-tested programs like Medicaid. It is fiscally irresponsible to consider layering on even more spending that will exacerbate the urgent problem of a ballooning federal debt. The result would be higher taxes and slower economic growth in the future, which would make it even harder to raise a family.
The other issue is that the federal government already does a lot to support families with children. For the sake of illustration, consider the maximum additional amount of various tax credits and transfers a new child can make a family eligible to receive over their first 18 years of life (without accounting for inflation or discounting future payments).
The current aggregate increase in the maximum federal benefit received by a married couple due to adding a first child is $66,000 from the Earned Income Tax Credit, $34,000 from the Child Tax Credit, and $50,000 from the Supplemental Nutrition Assistance Program. Medicaid coverage throughout childhood provides a total benefit of around $69,000 in the median state. No family receives the maximum additional amount on behalf of their children for each program in every year, but the point is that federal tax and transfer programs are already designed to provide generous additional resources to families when they decide to have children.
Moreover, this does not account for other federal supports that become newly available or more generous when a family adds a new child, such as the Child and Dependent Care Tax Credit, child care subsidies, rental housing assistance, the Supplemental Nutrition Program for Women, Infants and Children, school meals, and cash welfare. Nor does it account for non-federal supports like state tax credits targeted to families with children and public schooling. Even unemployment benefits are increased in 13 states for workers who have children.
Existing federal benefits for families are already front-loaded toward families with younger children, because most are means-tested and thus provide the largest benefits to families when their incomes are low, which is more likely the case when adults and their children are younger. Some benefits are explicitly targeted to young children. With the exception of refundable tax credits, which families cannot access until they file their taxes, higher benefits can be accessed quickly after a new baby is born. This includes the non-refundable Child Tax Credit which new parents can immediately take advantage of by updating their tax filing information with their employer and reducing their federal income tax withholding.
It is worth noting that the generosity of federal benefits for children has increased substantially since 2007, over the same timeframe that the fertility rate has fallen. There is little evidence that further increasing benefits through a baby bonus would turn the tide.
Though baby bonuses are problematic, the federal government can take other meaningful steps to strengthen families.
Many worthwhile efforts would not necessarily require additional federal spending. Policies that promote strong economic growth would increase real wages and do more to encourage fertility than a one-time $5,000 check from the federal government. Reducing the cost of living for American consumers would also help, which can be accomplished by cutting onerous regulations and reducing tariffs. Bringing down inflation would put downward pressure on auto and mortgage interest rates, making vehicles and housing more affordable to new families.
To the extent that Congress also seeks to increase direct financial assistance to families, a better way to spend the money than baby bonuses would be to modernize the Child and Dependent Care Tax Credit. This nonrefundable tax credit reduces the tax burden on families who pay for child care in order to work. However, the maximum eligible expense of $3,000 per child is no higher than its level in 2001, even as child care costs have grown to well over $10,000 per year. Congress should increase the cap on child care expenses that can be deducted.
Doing so would be much less expensive than baby bonuses, given that the baseline annual cost of the Child and Dependent Care Tax Credit is only $3.4 billion. It would also encourage work, which would offset some of the static fiscal cost. And it would make the tax code less unfair to working parents who are currently taxed on an expense required for them to work in the first place.
As the Trump Administration considers ways to better support families and encourage fertility, it should not lose sight of the big picture. Promoting strong economic growth and reducing the cost of living are the most important ways for the federal government to make it more affordable to start and grow a family. Cutting more benefit checks, even with the happy-sounding title of baby bonuses, would be duplicative and exacerbate the federal debt problem, ultimately risking slower growth and higher inflation already poised to disproportionately harm young parents—and especially their children.