Having promised them some time ago, before a week of travel left me behind on blog posts, I hope to have responses up next week to some of the recent macro-level liberal takes on “reform conservatism” — from E.J. Dionne, William Galston, and my colleague Tom Edsall, among others.
For now, though, let me direct you elsewhere for more general thoughts on our quasi-movement, and dip a toe into the waters with some comments on one of the specific reformist ideas closest to my heart: A family-friendly tax reform along the lines suggested by Ramesh Ponnuru and Robert Stein, and proposed in legislative form by Utah Senator Mike Lee. A case for that reform (penned by Stein) fills one of the chapters in “Room to Grow,” the recent book of essays that tries to distill reformist thinking on a number of issues, and it inspired a sharply worded attack from Matt Bruenig over at Salon, who dismissed the Lee plan as a “horror show” — an idea that’s “grotesque, vicious and cruel,” he wrote, because it “leaves poor families totally out in the cold.”
Patrick Brennan then defended the proposal for National Review, and Bruenig followed up with a more restrained version of his original critique: In a nutshell, he argues that it doesn’t make sense to have a child tax credit that (because it’s only refundable against payroll taxes) delivers somewhat larger benefits to middle class and rich families than to very poor ones, and that instead pro-family policymakers should favor a flat “child allowance” that gives every family or parent the same per-child benefit regardless of their income.
It’s an interesting argument, so here are few thoughts in response:
1) I don’t see, and don’t think its architects see, the child tax credit exclusively in terms of its poverty-fighting potential. In policy terms, it’s also about reducing anti-family distortions across the income spectrum; in political/strategic terms (which any policy agenda has to take into account), it’s more about addressing the major concerns of middle and working class voters (the cost of living squeeze, the work-life juggle, the pressures on family stability those create) than it is about crafting Compassionate Conservatism 2.0. The Lee proposal, or a variant, would clearly help some poor families: As Brennan points out, the “totally out in the cold” line is misleading, because the expanded tax credit would in fact do more for the poorest parents than the current tax code, even if it wouldn’t do as much for them as for families with larger payroll tax liability. (I think Bruenig’s bigger distributional beef is actually with the existing personal exemption, which the Lee plan just leaves unchanged, rather than with a new child credit.) And not every policy has to benefit every income bracket proportionally to be worth pursuing …
2) … especially since making a policy change that benefits middle class families more than the very poor does not in any way preclude making other policy changes targeted explicitly or exclusively at the lowest-income Americans. And, sure enough, many reform conservatives tend to favor making such changes as well: For instance, the idea of either expanding the earned income tax credit to cover more workers, or replacing the EITC with a wage subsidy that does the same thing, tends to feature prominently in “reformocon” proposals, and either step would raise incomes for some of the people in the poorest quintile who aren’t helped by the child tax credit’s payroll tax rebate. These ideas would, in the ideal reformocon world, be part of a larger anti-poverty overhaul that could take several different forms (Scott Winship’s chapter in “Room to Grow” goes over some possibilities), and some of the potential contours, I’m sure, would not be to Bruenig’s liking. But if he wants to criticize the overall approach to the working poor, the child tax credit proposal shouldn’t be analyzed in a vacuum, as if more poverty-specific ideas don’t also exist.
3) It’s also the case that the Lee plan, as scored, leaves significant revenue shortfalls, which would need to be filled in to some extent for the policy to become viable. And most of the plausible ways of making up the shortfall — phasing out the credit at a certain income threshold, leaving the existing 25 percent tax rate in place, making sharper cuts to the mortgage interest tax deduction, leaving the top rate at 39 percent instead of dropping it to 35 — would change the distributional consequences of the bill, and reduce its potential benefits for wealthier taxpayers. (Or, to put it more bluntly, they would reduce its potential benefits for childless well-off taxpayers, whose share of the tax burden would need to rise for the reform to work.) So part of Bruenig’s distributional critique might be addressed along the path to turning a first draft into a legislative reality — if such a path is ever followed, of course.
4) As for whether a flat child allowance might be preferable, I am open to the possibility, and might become more open in the future depending on economic trends … but for now, I’m still extremely wary of making a commitment to parents that isn’t tied in some way to work and wage-earning. Linking a child tax credit to the payroll tax makes sense given that that’s where the “parental tax penalty” (which I think Bruenig slightly misunderstands, but I’ll bracket that somewhat theoretical debate) explicitly takes its bite. But the payroll tax link also promises to mitigate the potential work disincentives that would be associated with a straightforward subsidy, and to skirt some of the out-of-wedlock birth incentive problems that were associated with the pre-welfare reform design of AFDC. As with the broader debate over worklessness and a guaranteed income, I would rather not take steps that risk further clientalizing the very poor, and I think a child benefit that’s entirely detached from work and taxpaying might risk having exactly that effect — whereas a child benefit whose value actually increases as you move from the bottom income quartile to the second one might have a much more beneficial impact.
I’m also sure Bruenig mostly thinks this is privileged, paternalistic rubbish. This is a place where the right-left line is pretty bright, and probably getting brighter. And it’s a place where reform conservatism is, well, conservative, in ways that liberals and left-wingers are unlikely to favor or endorse.