I have not written anything of significance about the YG Network’s Room to Grow agenda, but Ross Douthat writes a piece here about an aspect of it, the child tax credit expansion, which I have criticized in the past, along with Scott Lincicome. It also provides a glimpse of an interesting underlying question about the motivations of reform on the right.
The politics of dramatically expanding the child tax credit entitlement (and yes, it is an entitlement) just don’t make all that much sense to me. Consider the landscape of America today, where more people are staying single longer and having fewer kids of their own volition, as they pretty much always do all over the world as cultures become more highly educated. These are not recent developments:
I understand that the people behind this agenda think this is a bad thing, and I largely agree (from a more libertarian perspective, intact families are the greatest hedge we have against the expansion of government, as it rushes in to do the things that intact families do). But why is it conservative or even an example of limited government to use tax policy to essentially reject that steady decision-making over the course of decades? Is it because there are too many young people voting for Republicans? Isn’t there something better that could be offered to single people 18-34 – a disturbing portion of whom are still living with their parents – without suggesting that they’re pursuing the wrong American dream if they’re unmarried or don’t have children?
How about instead cutting taxes for working Americans broadly by getting rid of the payroll tax entirely? You could even create big tax advantaged savings accounts attractive for families and for single people who don’t have retirement accounts through work – like Canada did, but perhaps with a large HSA component. If you assume that people still want to get married and have children, but are simply too burdened financially to do it… shouldn’t the obvious limited government policy solution here be about removing government-imposed burdens, not expanding an entitlement that subsidizes one portion of society and alienating those outside of it?
What is good for society may be good for the soul, but government policy ought to set that aside and instead focus on the idea that what is good for your wallet is good for society. This is something that Wall Street recognizes, where smart people are increasingly concerned about the consumer expenditure side of stagnant wages and slow family formation:
The answer to this challenge is that we ought to reform the tax code just as we would seek to reform regulations and redistributive subsidies: to lower burdens on everyone so that they can make choices for themselves absent the market-warping force of government, not to merely reform to help people who live a certain way. Eliminate the ability to offer the carrot and the stick and just see what people do.
If you do this, people have the flexibility to pursue their own path – and many of these people who want families and homes but just can’t afford to go down that path (from their risk averse perspective) will start them and purchase them. Using the alternative approach amounts to slapping Band-aids over existing problems, and future administrations can always warp policies to help people who live the way they prefer (such as buying houses and college educations even if they can’t afford them or don’t need them). And back and forth and back and forth … and that’s how we got here in the first place.
This argument reminds me of a George Will quote cited in a little disagreement concerning Will’s evolution away from his book Statecraft As Soulcraft. Pete Wehner at the time wrote in defense of laws which more aggressively “shape the dispositions and habits of the polity”, which is just a nice way of saying it forced them to do or not do things that Wehner believes improved the country. By comparison, Will today is making the case for a different view, one which Jonah Goldberg found to be a positive development:
Between the old Will and the newer, the latter seems like the better approach to reform in general, but particularly in the arena of taxation. And in the tug of war between those who favor an approach which “shapes the dispositions and habits of the polity” and one which does not impose its opinions about what happiness or excellence the citizens should choose to pursue, I suspect the limited side is winning the argument.
