The child credit in the stimulus package is just a temporary measure but it is like UBI for kids. Given the good it can do, can we make it permanent?
By: Michael Gerson
For decades, empowerment and reform-oriented conservatives have argued that tax burdens should be shifted away from families with children. It was a central part of what claiming to be “pro-family” meant. During the George W. Bush administration, the child tax credit was doubled from $500 to $1,000 per child. The 2017 tax bill doubled the maximum benefit of the child tax credit from $1,000 to $2,000 per child, and gave, on average, an additional $300 per child to families earning between $25,000 and $40,000 a year — thanks largely to the effort of Sens. Marco Rubio (R-Fla.) and Mike Lee (R-Utah).
Now the Biden stimulus bill has gone a large step further — creating a credit of $3,600 for children 5 and under, and a $3,000 credit for those aged 6 to 17. And because the credit would be refundable, it would even go to lower-income families who don’t pay taxes, in the form of a periodic payment from the government.
This measure should be supported on its merits. But it has accomplished something else that is profoundly hopeful. Rather than being lost in Twitter’s netherworld of inanity and insanity, Republicans are conducting a real-world policy debate.
Disagreement about family tax policy has a long history. At least since I was a policy staffer in the Senate during the 1990s, supply-side conservatives of the Wall Street Journal variety have argued that only cuts in marginal tax rates really matter, since those increase productivity. Child credits, in their view, just give money away without improving the functioning of the economy. Compassionate conservatives responded that improving the functioning of families was also a valid public goal.
The other source of conservative opposition to the credit comes from champions of the work requirements contained in the welfare reform of the 1990s. They fear that the refundable child credit, which has no such strings, will encourage dependence and sloth, provide incentives for out-of-wedlock births and generally undermine the positive paternalism that nudges the poor toward responsible behavior.
Answering these concerns involves a more complex economic and social discussion (as you can see from a recent event highlighting the conflicting views among scholars at the premier conservative think tank, the American Enterprise Institute).
As a general matter, the defense of bossy social welfare bureaucracies sounds strange from the mouths of conservatives. But the main argument in favor of child allowances is that the family — the primary mediating institution — is under serious economic stress. Though a refundable credit may have some influence on workforce participation among the poor, the effect is likely to be small, while the overall help to struggling families will be large. And in some cases, enabling a parent to stay home with a young child is not an unwelcome outcome.
There are other good, conservative reasons to favor refundable child credits. They are likely to encourage greater fertility, in a country whose entitlement system depends on a supply of young workers that can come only from births and immigration. These credits also partially redress the imbalance of a tax system that takes huge amounts of cash from younger Americans to subsidize entitlement programs for seniors.
A government that encourages the well-being of families with children is investing in the future, not only honoring the promises of the past.
And there is a related argument that conservatives should not share with their progressive friends, lest liberals everywhere begin to have serious second thoughts about their support for the measure. A $3,600 benefit, paid in a check to a parent at regular intervals, would defray most of the cost of sending a child to a Catholic elementary school (which now averages about $4,800 a year). For many parents, a child allowance will be the functional equivalent of a school voucher — money they can use at any private or religious school. This is the fulfillment by liberals of a conservative policy dream.
The child credit in the stimulus package is just a temporary measure. Pro-family Republicans should work with Democrats to make it permanent. Sen. Mitt Romney (R-Utah) has put together an alternative that bumps up the benefit to $4,200 a year for children under 6, eliminates Temporary Assistance to Needy Families and partially pays for his benefit by ending the state and local tax deduction. Democrats will certainly reject some of this approach (particularly the last part, which would effectively increase taxes on childless couples in blue states to pay for large families in red states). But Romney’s proposal is a good-faith starting point for negotiations.
Yes, stimulus legislation passed on a partisan vote. But this — the Democratic embrace of an idea with bipartisan roots, matched by a serious Republican alternative — is what a working democracy looks like.