What’s Conservative About a $3,600 Child Allowance?
(Bloomberg Opinion) -- This year, most households with children will receive $3,600 for each child under 6 years old and $3,000 for each older child. The Joe Biden administration wants to make this child allowance permanent.
Conservatives are divided about it. At Bloomberg Opinion, Ramesh Ponnuru has written favorably about proposals to aid families with children, while Michael R. Strain has been critical. Here, the columnists hash out their differences.
Ramesh Ponnuru: Michael, your main concern is that moving from a yearly tax credit to a direct monthly payment will hook working-age, middle-class parents on government aid. You worry that they will ask for larger and larger checks, and politicians will write them. You hint that parents will become more tolerant of government bloat in general.
I am skeptical that these effects will happen. Do we have any evidence that frequency of payment makes a big difference in the political psychology of voters? Social Security payments do not seem to have made the elderly into a voting bloc that backs government aid programs across the board. Nor has their undoubted political clout and support for the program translated into frequent legislative expansions of the program.
Social Security’s spending has grown mostly because the elderly population has grown, and the automatic benefit adjustments instituted in the 1970s proved more generous than intended. The fear that parents will change their political behavior seems too speculative a basis on which to oppose a policy that would help Americans raise the larger families they say they want and slash child poverty.
Michael R. Strain: As Yogi Berra didn’t say, predictions are hard, especially about the future!
Social Security is a helpful but imperfect analogy. First, as you say, Social Security benefits automatically increase over time, and at a rate faster than the Federal Reserve’s preferred measure of inflation. More importantly, retirees (incorrectly) believe that their Social Security checks represent returns on investments that they have paid into the system during their working lives. They don’t think of benefits as government assistance.
My concern with converting the tax credit for children into a monthly child allowance is related: Households will stop thinking of the credit as part of their annual tax refund and will start thinking of it as regular financial assistance from the government. This change will make the program more popular. And the more popular it is, the more tempted politicians will be to increase its generosity.
But we don’t need to rely entirely on (informed) speculation. The tax credit for kids was signed into law by Bill Clinton. It was doubled in size four years later by George W. Bush. Parts of it were expanded by Barack Obama. Donald Trump doubled the credit. And President Joe Biden has significantly expanded it for 2021 — which Democrats hope to make permanent. During this time, Congress has also helped the credit to expand in various ways.
Given this history, the burden of proof is on those who argue that making the credit even more front and center in voters’ minds — and thus increasing its popularity — won’t lead to its continuing to be ratcheted up, not on those of us who are concerned about its future growth.
Ponnuru: I am not at all sure that child benefits will be more popular when disbursed more frequently. Other democratic countries that have adopted regular child payments have not seen them grow like weeds, even if the children themselves do.
The U.K. pays benefits weekly. The amount per child has not kept pace with inflation during the last 20 years. Australia’s child benefit, paid fortnightly, has nearly kept pace with inflation rather than grown over the same period. Child benefits in Ireland have shrunk in inflation-adjusted terms since 2005 (I’ve chosen a later date to avoid having to convert figures from the old Irish pound). Fear not, Michael!
Strain: We’ll find out soon enough, because the popularity of the benefit will very likely lead to its being extended for (at least) a few more years.
I’d be less concerned about this if the child allowance were more focused on low-income households. Do families earning $400,000 per year really need a monthly child benefit from the government?
And I’d be much less concerned if the child allowance were part of an overall strategy of rebalancing spending away from middle-class retirees — specifically, by reducing future Social Security and Medicare spending — and toward children.
But our elected leaders aren’t in the mood to make hard choices based on sensible priorities. Instead, Washington’s appetite for increasing government spending is voracious. I’m betting that will include a taste for expanding what will surely be a very popular child allowance.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Ramesh Ponnuru is a Bloomberg Opinion columnist. He is a senior editor at National Review and a visiting fellow at the American Enterprise Institute.
Michael R. Strain is a Bloomberg Opinion columnist. He is director of economic policy studies and Arthur F. Burns Scholar in Political Economy at the American Enterprise Institute. He is the author of “The American Dream Is Not Dead: (But Populism Could Kill It).”
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