Economy & Business

Write Them Checks

(Mohamed Abd El Ghany/Reuters)
Instead of fiddling with the tax code to help the poor, just give them money.

Our Robert VerBruggen anticipates that some critics on the right will describe the new tax-credit (and I suppose we should go ahead and put quotation marks around “credit”) proposal from Mitt Romney and Michael Bennet thus: “This isn’t tax relief; it’s just welfare.” VerBruggen is correct, and so are the critics: This isn’t tax relief, it’s just welfare.

Not that there’s necessarily anything wrong with that.

The bill from Senator Romney (R., Utah, lately) and Senator Bennet (D., Colo.) would make the federal tax credit for children “fully refundable,” meaning that people who do not pay enough tax to qualify for the full credit can get a “refund” on taxes they never paid — up to $1,500 a year for children up to age six, and then $1,000 a year per child thereafter. Giving people a tax “refund” on taxes they have not paid is up there with requiring insurers to “insure” against pre-existing conditions (which by definition cannot be insured against, having already come to pass) in the great Washington rogues’ gallery of nonsensical horsepucky deployed for the purpose of allowing members of Congress to avoid political responsibility for spending money.

A “refundable” (there is no refund) “tax” (the tax liability is incidental and may amount to $0.00) “credit” (it is not a credit) creates a kind of pseudo-entitlement in the tax code. Congress likes those, because Congress does not have to appropriate money to spend through the tax code. It is basically dishonest and cowardly, but there is a better way:

Send them checks.

Seriously. The hoop-jumping that Washington will engage in to avoid the simple, straightforward process of appropriating money for this or that benefit and then sending checks to the beneficiaries is astounding. There are poor people, and some of those poor people have children. If we want to give them money, then we should just — radical idea! — give them money.

Send them checks.

But giving people money requires that Congress do its job: passing budgets, appropriating funds, facing democratic accountability, etc. But spending money on poor people is not politically popular. Back in the good old days of budget sequestration, the only people bitching and moaning about the squeeze on federal spending were four defense contractors in Northern Virginia, and — take note — they prevailed. Everybody loves spending money on defense contractors, especially Republicans, who traditionally claim to believe in three things: lower taxes, higher military spending, and balanced budgets. They seem to have stopped pretending to care about balanced budgets, although Romney and Bennet, to their credit, include an offsetting tax increase (on capital gains from inherited assets) in their fully refundable not actually a refund imaginary credit for imaginary taxes. Of course, we could just . . .

. . . send them checks.

We expend a great deal of effort giving people money without seeming to give people money. Pretty much all of the burdens that already are laid on U.S. employers or that certain do-gooders (Ivanka Trump and her family-leave schemes) are ways of giving people benefits without the government having to put those benefits on the books. Subsidized loans for students, small businesses, house buyers, greenie-weenie energy schemes, etc., are the same thing. (Actually, those are worse, in a way, because those outlays masquerade on the public books as assets.) Why do we do that? So that we don’t have to own up to it when we . . .

. . . send them checks.

Washington doesn’t like to send poor people checks because there isn’t much juice in it. But the American people, too, are skeptical about just sending money to poor people. For one thing, they think that poor people don’t handle money well, which isn’t unreasonable: If, while living in one of the richest and most dynamic societies in human history, you end up so destitute that you require public assistance of some kind and cannot quite, say, meet the needs of your own children without such assistance, then there’s reason to think you aren’t real good with money.

That’s why we like vouchers for education, but also for other benefits: Food stamps, for example, are a voucher program for food. Vouchers tend to work better for many applications because sending poor people vouchers is almost the same thing as sending them checks: Vouchers are money that you can spend only on approved things, and they help us to avoid the pitfalls of central planning because they act more or less like money in the marketplace. But we also have moralistic reasons for that preference: If we’re going to help you out in life, then we’re going to condescend to you, too, and boss you around a little! It makes us feel better about the whole sordid business. And you don’t really get to do that if you just . . .

. . . send them checks.

Later this month, I’ll watch the Richard Burton film Becket for the whatevereth time. (The feast day of St. Thomas à Becket is December 29.) There’s a lovely scene in which the bishop of London chastises the newly ordained Thomas for giving his cloak to a beggar in a fashion that strikes the elder churchman as showy.

“It will keep him warm,” Thomas says.

“He’ll only sell it for drink,” the bishop sniffs.

“Well, then, that will keep him warm!” Thomas retorts.

We are a very, very rich country, and Americans are very generous people. (Basically.) If we want to give poor people a couple grand each year to help out with the costs of raising their children, then we can do that. It isn’t cheap, but it isn’t nearly as pricey as, say, subsidizing the lifestyles of relatively well-off people, which is what Medicare and Social Security, two of our most expensive programs, often end up doing.

And we could avoid a lot of rigamarole and political shenanigans and self-deception if we would just write them checks.

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