The only true danger for kids on the Internet is if they get tricked by child predators into meeting in real life. A "panic button" does nothing in that case, since the child does not think he/she is in danger.
Here's a better way to spend tax money to protection children on the Internet:
Pay a software company to develop a good, free "Net Nanny"-style software program and make it available for everyone to use.
The market for software like that has always been weak, since most parents don't care enough about protecting their kids from the Internet to actually want to spend money and time buying and configuring the software. Part of the reason is because the software is not known to be very good. Government spending could keep software like that universally compatible with all major OSes, browsers, etc., with a very good matching algorithm or a database on which sites are safe and which aren't. And it could be a free download from your government's website.