Since July of this year, over 30 million families have received monthly cash payments from the Federal government under the Child Tax Credit (CTC).
Now, Congress is debating whether to extend or expand that policy. The CTC is a centerpiece of President Biden’s social policy package, and Democrats mostly support it. But the CTC is not a narrow, partisan policy, and there are good reasons for those with conservative and libertarian values to support it too.
Some may be surprised to learn that the CTC was originally a Republican innovation, championed by former Speaker Newt Gingrich and President Ronald Reagan as a way to give money directly to parents instead of bureaucrats. As Sen. Marco Rubio recently wrote in a letter to the Wall Street Journal, the CTC, in principle, is a “conservative, pro-work, pro-family policy.”
It is also pro-freedom. Unlike a lot of other government programs, the CTC provides financial support directly to families and trusts them with the freedom and the responsibility to use that money as they see fit. They can spend it on rent, on tuition for private school or on groceries. They can even save it away for a rainy day. The point is that with the CTC, it’s parents — the people who know their childrens’ needs best — who get to make the choice.
New research by a team of researchers from Washington University in St. Louis, Appalachian State University, University of North Carolina-Greensboro and the Urban Institute, in partnership with Humanity Forward, demonstrates that when you give parents this freedom, they use it responsibly.
According to the survey, parents reported using the CTC on essential expenditures and savings.
The five top uses of the credit were to save for emergencies, pay for home necessities, pay for necessities for their children, pay for food and contribute to a college fund. Low-income families in particular, who are often the recipients of wasteful welfare programs (if they can navigate them), were actually most likely to report using the credit on essentials for their children.
Conservatives sometimes worry that government handouts create dependency and discourage work. But there is little evidence to support this concern. According to the Humanity Forward research, nearly 94% of parents said that they planned to continue working or work more while receiving the credit. Only 6.4% of parents said they would use the credit to either work less or change jobs, and the vast majority of these respondents were parents of infants or toddlers.
In other words, almost nobody is going to drop out of the labor market just because they’re getting an extra few thousand dollars per child, per year from the CTC. And the relatively small number of people who do are almost always going to be married parents who are using the CTC to spend more time at home with young children while their partner works. It’s hard to see how somebody could object to that outcome, from a conservative perspective.
Some conservatives also worry about the cost of the CTC. But the CTC is actually a rock-solid investment that, over time, more than pays for itself.
America currently has one of the highest child poverty rates in the developed world — with 1 in 7 children living under the official poverty line. Providing financial assistance to families with young children has been shown to yield long-term financial benefits. Children who receive assistance get more education, commit fewer crimes, are less likely to use drugs, and have better health. Even if you forget about the fact that these are human beings we’re helping and simply focus on the dollars and cents, the CTC is a fiscally sound policy.
Conservatives and libertarians should not let partisan divides stop them from supporting good public policy, whatever its source. The CTC is pro-work, pro-family, and pro-freedom. If Congress decides to extend it, all of us have reason to celebrate, whatever our political ideology.