A strange thing happened this week amid the chaotic logrolling that has come to define America’s broken budget process: A conservative Republican and a liberal Democrat proposed a good-faith, bipartisan tax reform.
I’m of course referring to the proposal that senators Mitt Romney (R., Utah) and Michael Bennet (D., Colo.) released on Sunday night, which offered Republicans all the corrections to the 2017 tax cuts they’d been asking for, in exchange for an expansion of the child tax credit directed at low-income and working-class families.
The budget negotiations looked promising at first, but ultimately broke down when the White House ruled out any changes to the child tax credit’s refundability. It was a confusing move, as the combination would have been pro-growth in the conventional sense of removing barriers to business investment, while also giving a boost to family incomes — just in time for an election year. Instead, the final spending agreement was the usual monstrosity of special-interest handouts designed to keep the government open while punting on serious structural reform.
But this wasn’t totally surprising, either. Increased support for working-class families has been a rhetorical priority for President Trump since Day 1, most prominently through the First Daughter’s campaign on paid family leave. Yet time and time again, an assertive pro-family agenda has been watered down — if not silently sabotaged — by the pro-business faction within the president’s own party and administration. The Wall Street Journal’s editorial board, in particular, has an infamous obsession with family benefits, opposing any spending on parents and children with the vitriol of a Randian spinster.
Enter the freshman senator from Utah, Mitt Romney. As a former governor and presidential candidate, Romney assumed office this year with a pre-existing national profile and a great deal of respect from his colleagues on both sides of the aisle. This has given him the space to take risks on points of principle, from censuring the president on occasion to pushing the envelope on paid family leave.
Conservative endorsements of the child tax credit are nothing new, having featured in every major Republican tax bill since 1986. Romney’s proposal significantly departs from Republican orthodoxy, however, by encompassing households with little or no income — what tax wonks call “full refundability.” Families would be guaranteed an annual refund of $1,500 for every child under six, and $1,000 for every child ages six to 17, rising to $2,500 and $2,000 respectively for higher earners. As Sean Speer noted elsewhere on NRO, this would make the per-child credit more like the child allowances found in Canada and Western Europe, dropping the conceit of “tax relief” in favor of open support for families and children.
Universal family benefits have been a no-go zone for Republicans since the welfare-reform debates of the 1990s. At the time, conservative reformers argued that the old welfare system, Aid for Families with Dependent Children (AFDC), promoted government dependency by disincentivizing work. They were vindicated when the work requirements passed under Clinton were followed by a jump in female labor-force participation. When single mothers combined their new market incomes with child-oriented tax credits, most came out ahead and poverty fell.
Unfortunately, this true but simple narrative is often misconstrued to mean that family benefits are anti-work and anti-marriage per se, rather than the by-product of the old welfare system’s roots in the progressive era. Indeed, AFDC grew out of Mother’s Pensions, an early-20th-century program for widows who weren’t expected to work. It thus promoted dependency by design, clawing back a dollar of benefits with every dollar earned.
Child and family allowances, in contrast, aren’t affected by earnings, and so don’t penalize work. On the contrary, when Canada’s Conservative party instituted a $2,000 child allowance in 2006, employment for unmarried mothers actually increased. Nor do they arbitrarily penalize large families or households that choose to have a stay-at-home parent. Child allowances instead entrust families to make their own choice, affirming the central role parents play in raising the next generation.
Conservatism is at its best when it applies eternal virtues rooted in human nature, like the dignity of work, to the cultural crises of the present. Nonetheless, a virtue taken to excess can become a vice. Left-wing calls for a national day-care program, for example, seek to maximize female labor-force participation and close the “gender pay gap,” thus enshrining the two-earner family model into public policy. Work-contingent child benefits are no less a case of social engineering: a merely voucherized version of modern progressivism. To defend traditional families, conservative policymakers must therefore avoid what the conservative economist Lyman Stone describes as “The Dangers of Workism” — an excessive focus on paid labor as the bedrock of social life.
Romney’s embrace of unconditional child benefits is an attempt to do just that. If welfare dependency was the cultural crisis of the 1990s, today’s crisis is the countrywide collapse in working-class family formation amid rural economic decline and soaring urban costs. Responding to this crisis will define the next generation of conservative reformers. Extending existing child benefits to those very working-class families is simply the most obvious place to start.