Now that the physical infrastructure bill has passed, Democrats are working to wedge their social priorities into a shrinking budget target, reduced from $ 3.5 trillion to about $ 1.75 trillion. But rather than actual cuts, it seems their goal is to simply reduce the number of years some programs are approved for, to make them appear less expensive, without actually reducing their cost in the long run.
This is not an unprecedented budget trick. Previous President TrumpDonald Trump Meat industry groups pledge to meet Paris Agreement emissions targets by 2030 Judge dismisses part of DC AG’s lawsuit against Trump’s inaugural committee Representative Gosar publishes anime video showing him hitting Biden, Ocasio-Cortez MOREThe 2017 tax cuts are another recent example.
The idea is that once enacted, public support will grow and Democrats (or Republicans, if they get control next year) will extend the programs. But given Sen. Joe manchinJoe Manchin Former Clinton Strategist: Virginia Results Show Democrats ‘Have Left Too Much Left On Key Issues For Educated Suburban Voters’ There Is A Clear Economic Solution To Climate Change: Losers Must Bribe Winners Buttigieg Says that the administration will continue to fight for family leave MORE (DW.Va.) and others, that feels like a “river boat gamble,” as the late Senator Howard Baker called the Reagan tax cuts. A wiser policy would be to make programs affordable by targeting families who really need help. In other words, as Manchin and others have pointed out: the means test would make the social infrastructure bill more affordable.
The Child Tax Credit (CTC) is a good example. As part of last March’s COVID legislation, the pre-existing CTC nearly doubled, going from around $ 118 billion to around $ 223 billion in its first year. The expansion was only for a yearHowever, because its true 10-year cost in new spending, about $ 1.4 trillion, was not a political principle.
The expanded CTC has been widely hailed as a new way to fight poverty. The estimate that it will reduce child poverty by more than 40 percent is often repeated. But much of the CTC has nothing to do with helping poor or even low-income families; upon 96 percent of households with children qualify. The full credit of $ 3,600 for children under 6 years old and $ 3,000 for children 6 to 17 years old, goes to families with incomes up to $ 75,000 (for single parents), $ 112,500 (for single parents who declare to be heads of family) and $ 150,000 (for married families). couples filing jointly), before gradually reducing to $ 2,000 for people with incomes up to $ 200,000 and married couples with incomes up to $ 400,000 (eliminating $ 240,000 and $ 440,000, respectively) entirely. These payments are tax free and there is no limit to the number of children that can be claimed.
Therefore, a two-parent family with three children and $ 150,000 in earnings receives about $ 10,000 tax-free. More than 12 million host families (30 percent of the total) have incomes between approximately $ 63,000 and $ 440,000. Senator Elizabeth warrenElizabeth WarrenFed Gov. Quarles to Resign, Opening Seat for Biden Election Democrats Struggle to Advance After Election Setbacks White House Calls on Senate Democrats to Meet with Powell This Month: Report MORE (D-Mass.) You have called this “means test,” but it is a legal extension of the term. This is a cynical attempt to buy the support of the middle class. In a creative twist, at least by 2021, about half of this money will be paid directly into taxpayers’ bank accounts, not buried in their annual tax returns, making the payments a monthly reminder of generosity. of the Democrats.
In keeping with its “universalist” approach, the expanded CTC is now “fully refundable,” meaning payments also go to those with no income and therefore no tax liability. That’s roughly 5 million non-working parents, at a cost of roughly $ 22 billion a year. Only in Washington payments to those who do not work and do not owe taxes would be called “refundable” payments.
For these non-working families, CTC is really a form of wellness. Effectively undo Bill clintonWilliam (Bill) Jefferson Clinton Republicans take back campaign charm, and it’s Bush, not Trump After a brutal election day, Democrats wisely return to the center Non-Elected Staff Electing Himself ‘President’ MOREstill popular 1996 welfare reform – which helped drive unprecedented increases in the labor force participation of low-skilled single mothers. Without job requirements, some parents will certainly stop working; estimates range from 150,000 to 1.5 million. Reliable data will not be available for some time.
Democrats in the swing districts should be concerned, especially after the recent election. Americans have a long-standing preference for helping only the “deserving poor” and for rewarding work. Republicans have raised the specter of the days before welfare reform, claiming that the credit subsidizes “idleness” among the poor and will be a return to what Clinton called welfare: “a way of life.”
Proponents of the CTC claim that attitudes have changed, citing polls that they say indicate strong public support for the “child tax credit.” Most of these surveys, however, do not make it clear that CTC is an unconditional cash grant, like welfare. When its wellness-like quality is mentioned, support drops dramatically. In a YouGov / American Compass Survey August 2021, only 28 percent of registered voters indicated that they supported making the expanded CTC permanent for non-working families.
By testing resources, Democrats should steer clear of the costly and counterproductive goal of universal child credit, which many see as a precursor to a universal basic income. Even better would be to use your funds to carry out long-sought reforms to the Earned Income Tax Credit (EITC), to eliminate the high marginal tax rates on income growth and marriage implicit in it and in other safety net programs.
For years, the fixation of work and marriage disincentives in the EITC and other safety net programs was hampered by the inability of advocates to find ways to pay for them. Now there is money on the table. Eliminating them might not be as radical as “a tax cut for all,” but it might just be the political bridge necessary to achieve real improvement in the lives of struggling families, one that progressives and moderates could support.
Douglas M. Call is a professor at the University of Maryland and deputy director of the Wellness Reform Academy.