Kenya N. Rahmaan
Trickle-down economics has been the basis of arguments concerning the benefits of this model for the poor and working-class society. Investopedia defines trickle-down economics as an economic theory that advocates letting businesses flourish since their profits ultimately trickle down to lower-income individuals and the rest of the economy. The child support system is a perfect example of the trickle-down theory and fails low-income children and families. The government, in this instance, is a business that is flourishing and has been collecting huge profits since the reform of the child support system under former President Clinton in the early 1990s.
One alleged objective of the child support system is to recover money to recoup welfare payments awarded to low-income families through the Temporary Assistance for Needy Families (TANF) benefits program. The price of this grant is enormous for the recipient of the award. According to the National Conference of State Legislatures or NCSL, under federal law, states can retain collected child support to reimburse themselves and the federal government for any welfare payments to a family. Based on the trickle-down theory, the billions of dollars that the government collects through child support enforcement is paid to low-income families in minimal amounts.
Since many states fail to pay any child support money to the families receiving TANF benefits, the payment only trickles down in the way of the low grant amount. Time limits and strict qualification criteria often significantly decrease the number of payments families receive, leaving the family with a zero-dollar monthly income. Although helpful in assisting families in satisfying some basic needs, the grant amounts are often meager in many states nationwide.
States like Mississippi and Tennessee provide less than $200 for a family of three in monthly TANF benefits. Alabama, Louisiana, and South Carolina fall short of a $250 monthly cash benefit for their neediest families. Yet, struggling families are forced to forfeit their rights to their child support payments to receive temporary help while the government collects. This money is magically supposed to drip down to the families and somehow better their situations. https://youtube.com/live/rMOmIj9LjX0?feature=share
If the parents paid the money directly to the owners, there would be no need for parents to involve the government. Even though some states pay a small amount or pass through some money to the families, the government is the true beneficiary. Any child support collected on behalf of the family is shared between the state and the federal governments (NCSL). The trickle-down theory is an utter failure when the family cannot rely on TANF benefits or child support payments because the government is hoarding the money.
Currently, 27 states do not pass through or allow money to trickle down to TANF recipients. Some other states have policies in place, but not all let the child support money trickle down to its rightful owners. Minnesota, for instance, is supposed to pay some money to families receiving state benefits. Michelle Vinson and Vicki Turetsky wrote in a Center for Law and Social Policy or CLASP (2009) report that Minnesota should pass through all support to court-ordered amounts but does not disregard any for purposes of calculating benefits. Unfortunately, the state failed to pass through any money collected from 2009-2013 to families receiving welfare benefits.
According to the Office of Child Support Enforcement (OCSE) (2014), in 2013, Minnesota reported its share of child support collections at $12,514,455, and the federal share almost equaled that amount at $12,514,462. The major problem, yet again, is that out of the reported $584,830,863 distributed child support collections, zero dollars trickled down to the most vulnerable American families. The people favoring the trickle-down theory argue that if the ‘too big to fail’ entities continue to turn a profit, some of the money will eventually reach the pockets of the lower class. But as clearly stated in the 2013 OCSE preliminary child support report, none of the over half a billion dollars collected seemed trickle-down to the families that depend on child support for survival.
Michigan is slightly different in its pass-through policies or trickling down collection money to low-income families. According to the Vinson and Turestsky (2009), up to $50 is passed through, and the amount is disregarded for purposes of eligibility and benefits. Michigan has paid some of the $1,296,510,912 collected in 2013 to some TANF families. Unfortunately, for the families, the trickle-down money decreased from $5,987,766 in 2009 to a mere $341 in 2013 (OCSE, 2014).
The reason for this drastic plummet in trickle-down money is a restriction to the Client Participation Payment (CPP). The Michigan Department of Human Services (2015) announced that as of October 1, 2011, due to changes in the department’s Fiscal Year 2012 budget, the state of Michigan will no longer pass-through $50 CPP to the family. The state and federal governments continue to reap the financial benefits of the child support system despite the alleged budget deficits. In fact, in 2013, the state reported $21,333,881 as its share in collections (ACF, 2014).
The federal government exceeded the state’s multi-million dollar payday courtesy of the less fortunate children and families. According to the OCSE (2014), the federal government collected and retained $42,140,924 of its share of child support collections. The problem with the trickle-down theory is that the millions retained by the government did nothing to help decrease the 24% of children currently living in poverty in Michigan or any other state across the country. Washington State must have shared the budget cut idea with Michigan as it had already failed to pay any significant money to its residents receiving TANF benefits.
The $47,076,931 that trickled down to the families between 2009 and 2011 decreased to a measly $3,484 in 2012 and 2013 (OCSE, 1014). Due to a new law, effective May 1, 2011, Washington State suspended pass-through payments. Over three years and several budgets later, Washington officials have failed to reinstate the original pass-through law. Before the uncompassionate change to the law, the state increased the pass-through and disregard to $100 for one child and $200 for two children (Vinson & Turetsky, 2009).
The state and federal governments collected $29,137,879 and $29,317,887 in child support money, respectively. Again, none of the funds reached low-income families, which exemplifies why trickle-down economics fails when utilized by the child support system. In this case, the state and federal governments, the wealthiest corporations, pocket the money while leaving the poorest citizens impoverished. For decades, the higher powers have argued that the money paid to wealthy corporations and individuals would mysteriously appear in the purses and wallets of the middle and lower classes. The trickle-down theory did not work when former President Reagan first introduced it, and it does not work now.
There is a grave misconception that ignores the fact that taxes pay for public assistance benefits. The child support system demands that grant money, already paid for, be reimbursed by noncustodial parents. After the government receives its ‘repayment’ money, the remainder is paid to families who own it anyway. More than half of the states retain 100% of child support payments, meaning zero dollars trickle down to the people who need it the most. The states that pay some money limit the amount to a maximum of $200 a month.
Retaining almost every dollar of child support payments while continuing to collect billions of dollars on the backs of US children should be a crime. Worse, states that did pay a small amount of money to the families have ended the policies blaming budget constraints for justifying these prolonged interruptions in payments. As long as the less fortunate are expected to wait patiently for money to trickle down from the government, poverty levels will likely continue to rise. We, the people, must force the government to reform the child support system because the trickle-down theory has been and continues to be a dismal failure to the children of America.
References:
Michigan Department of Human Services. (20 5). Background briefing. Michigan House of Representatives. https://www.house.mi.gov/hfa/Archives/PDF/Briefings/HHS_HS_BudgetBriefing_fy15-16.pdf
National Conference of State Legislatures. (2014, March 9). Child support 101.2: Collecting and distributing support. Legislative News, Studies and Analysis | National Conference of State Legislatures. https://www.ncsl.org/research/human-services/enforcement-collecting-and-distributing-support.aspx#:~:text=Under%20federal%20law%2C%20states%20are,of%20the%20child%20support%20order
Office of Child Support Enforcement nt. (2016, May 3). FY 2014 annual report to Congress. Office of Child Support Enforcement | CF. https://www.acf.hhs.gov/css/resource/fy2014-annual-report-to-congress
Office of Child Support Enforcement. (2016, January 7). FY 2013 annual report to Congress. Office of Child Support Enforcement | CF. https://www.acf.hhs.gov/css/resource/fy2013-annual-report-to-congress
Trickle-down theory. (2003, November 5). Investopedia. https://www.investopedia.com/terms/t/trickledowntheory.asp
Vinson, M., & Turetsky, V. (2009, June 12). State child supports pass-through policies. CLASP | Policy Solutions That Work For Low-Income People. https://www.clasp.org/sites/default/files/public/docs/PassThroughFinal061209.pdf
