Magazine | June 24, 2019, Issue

A GOP for Parents

(Pixabay)
Policy should recognize the economic dimension and contributions of families

While running for the Republican presidential nomination in 2016, Donald Trump said that under him, “you’re going to have a worker’s party.” It was a marked contrast to the way Republicans had sounded only four years before, when the party convention in Tampa had returned again and again to the theme that the Obama administration did not respect businessmen.

Having long presented themselves as the political ally of entrepreneurs, Republicans are now in the midst of reinvention as a party of workers. Since more Americans are employees than employers, this shift has an obvious electoral logic. And it is a welcome shift in other respects. The party’s old self-image encouraged too narrow a view of conservatism, which has more to offer the country than the liberation of businessmen to innovate, as important as that task can be.

In making this transition, however, conservatives and Republicans risk trading one materialist outlook for another. For conservative politicians to view their potential supporters as workers rather than as entrepreneurs or aspiring entrepreneurs is still to view them primarily as economic actors. People are concerned about their wages and benefits, but not only about those things. Often they cast their votes with an eye not just on their financial self-interest but on the overall health of our society.

Anxiety about the state of the social fabric seems to be on the rise, and the family is at the heart of it. The family is an institution with an economic dimension: The etymology of “economy” derives from the Greek for “household.” Many people, and probably most Republican voters, think of their jobs mainly as a way to provide for their families. But since the family is not oriented as an institution toward production, it can easily be neglected in discussions of economic policy that dwell instead on GDP, wages, and so forth. In part because of that tendency, Republican politicians have become curiously detached from the kind of rhetoric of home and hearth that ought to be a natural fit for conservatism.

But Republicans are starting to show sporadic interest, at least, in policies that address the economic dimensions of family life. The editors of the Wall Street Journal recently considered some of the economic reasons for the decade-long decline in American birth rates. They concluded that while public policy has a very limited ability to affect adults’ decisions about childbearing, “government could do some good by mitigating the higher costs of family life that it has caused — from health care to education to zoning and housing regulation.”

Those are promising areas for reforms that would benefit Americans generally, but especially parents and their minor children. Deregulation that pulls down home prices and rents would make it easier for young people to start families, especially in parts of the country that are growing economically. Health-care reform that enabled people to purchase cheap, renewable plans to protect themselves and their families from catastrophically large medical expenses would be another boon.

The federal government is deeply involved in higher education, but conservatives have left little mark on federal policy toward it. Skeptical of much of that involvement but unable to roll it back, they have resolved the difficulty by not thinking much about the topic. But a lot could be done to expand families’ options and lower their costs. Among other reforms, we could redirect a share of federal funding from colleges to vocational education, liberalize the accreditation standards for schools so that different kinds of institutions could arise, and make student-loan debt equivalent to other forms of debt in being dischargeable in bankruptcy.

At the other end of childhood, some Republican members of Congress — notably Representatives Dan Crenshaw (Texas) and Ann Wagner (Mo.) and Senators Joni Ernst (Iowa), Mike Lee (Utah), Mitt Romney (Utah), and Marco Rubio (Fla.) — have suggested that new parents should be allowed to borrow from their future Social Security payments to finance time off from work. Parents might take three months of leave and, in return, postpone their receipt of retirement benefits by roughly the same amount of time. The idea places these congressmen between the many Republicans who would prefer to make no policy changes to facilitate paid leave and the Democrats who seek to raise payroll taxes to enable it.

Both of these other camps have attacked the idea. The left-wing critique holds that it’s unconscionable to cut retirement benefits for parents, even if the cuts are freely accepted. The conservative critique is multifaceted. The most common worry is that future politicians will not honor the terms of the deal: Anyone who took paid leave will get their retirement benefits in full, and the net effect will be an increase in government spending and a transfer of tax money from households that didn’t use paid leave to households that did.

That kind of profligacy is certainly a danger. But for nearly 50 years Social Security has allowed disabled widows and widowers to take early benefits in return for reduced monthly payments, and that policy has held even though the affected population is an extremely politically sympathetic group. (The program as a whole has a growing financing gap not because politicians keep expanding it but because they have failed to revisit a benefit formula set in the 1970s.)

The conservative critics are right to note that there are trade-offs in any proposal, from the right or the left, that lets more people take leave. Companies are legally required to offer leave to new parents, and more parents will take it if they gain access to funding for it. That’s a cost to businesses. Some evidence indicates that businesses are less inclined to hire or promote women because of this cost. The gains for children and families are probably worth it.

While everyone uses the phrase “paid leave” when talking about these proposals, one version of the idea does not actually require parents to take time off. A father could draw on some of his future Social Security benefits while continuing to work. Families would be able to choose whether the extra money would finance leave or other household needs.

The impulse to let families have more resources without restrictions on how they use them lies beneath another policy initiative that has split conservatives: the expansion of the tax credit for children.

Senator Lee has argued that Social Security and Medicare act as an implicit tax on parents, and especially on parents of large families. The programs depend on adults’ willingness to make the financial sacrifices that raising children entails but does not tax them any less or give them any higher benefits for having made those sacrifices. In effect, the government has socialized part of the payoff from having children. We don’t expect children to take care of their parents in old age as much as we once did; we expect everyone’s children to bear much of the cost of taking care of the elderly. This feature of modern welfare states may explain why there is some evidence that the expansion of old-age entitlements in the developed world has contributed to a reduction in birth rates.

One way to undo this inadvertent effect of entitlements would be to offer parents tax relief of roughly $3,500 each year for each dependent child they have. (That’s a conservative estimate.) Prior to the Republican tax law of 2017, middle-class families received about $1,600 per child: a $1,000 tax credit plus a tax exemption worth about $600. The new law — thanks above all to Senators Lee and Rubio — doubled the credit and abolished the exemption, so the amount of tax relief per child rose to $2,000.

Some families make too much income to qualify for the credit. Others pay too little in income taxes to receive the full amount. The argument for parental tax relief based on the entitlements implies, however, that there should be no income limit, and that the credit should reduce payroll-tax liabilities even for people who do not pay income tax. The low earner who pays payroll taxes and raises a child is contributing more to the future of Social Security and Medicare than the low earner who pays payroll taxes but does not raise a child.

A pro-family economic agenda would expand the child credit in multiple ways. The parental tax relief in the 2017 law is set to expire in 2025; it should be made permanent. The overall amount of the credit should be increased, and that amount should be protected from erosion over time. (Ideally, the size of the credit would rise each year as wages do, since taxes for entitlement programs also rise with wages.) And more parents should be made eligible for the child credit.

That agenda would face both practical and political obstacles. The practical problem is that the government already runs large deficits, and a bigger child credit would make them even larger. Expansion of the credit should thus be coupled with — in descending order of desirability — spending cuts, reductions in tax breaks, or increases in tax rates.

The political problem ought to be easier. The editors of the Journal have been against parent-based tax relief for decades. They view it as an unjustified subsidy for an interest group and a distraction from the goal of making the tax code more conducive to economic growth. During the debate over the tax bill, Rubio and Lee proposed changing the corporate tax rate from 20 to 22 percent in order to make more low earners eligible for the child credit. The Journal slammed them for not understanding the sources of American prosperity.

Republicans should stand for a government that does less than it now does to inhibit economic growth — but also one that burdens families less. To succeed, they will have to remember that voters are not reducible to how they make their income, and that the business of America is not business.

This article appears as “A Party for Parents” in the June 24, 2019, print edition of National Review.

Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg Opinion, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.

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