Bargaining up to a child allowance

Jeff Spross has a piece at The Week arguing that Hillary Clinton’s childcare reform proposal, while laudable, is still inferior to a straight universal child allowance.   Spross agrees that her plan to “make sure no American family spends more than 10 percent of their budget on child care[ . . .] would be a big deal,” but identifies a pair of problems with the proposal. First, subsidies to families will be offered through kludgy tax credits, making for a tedious application process and inefficient delivery system. Second, these tax credits will be paid directly to childcare providers, effectively steering children toward center-based care and away from other options like family-provided care. (Spross presumes that the fleshed out version of Clinton’s plan will look a lot like the Center for American Progress’s proposal. I do too.)

These are both valid criticisms of the Clinton/CAP childcare plan. Doling out subsidies through the tax code adds needless complexity to our social policy, and leaves out those without the awareness or resources to access these submerged benefits. Direct payment is undoubtedly a simpler option, both for the families eligible for benefits and the government agencies administering them.

Interestingly, Spross’s second critique—that childcare subsidies push families toward commercial care—is one more typically levied by conservative critics. “[I]f you want to get the tax credit,” Spross writes, “you have to want child care in the first place. The plan involves a certain failure of imagination that assumes all families want to have both spouses in the workforce.”

The National Review struck a similar note when President Obama proposed an expanded tax credit for childcare services. “Most mothers, especially of small children, prefer to work part-time or drop out of the labor force for a time,” it asserted. “Commercial child care is the least favored option for most parents. The president’s plan encourages families to do what they do not wish to do and penalizes them for refusing.” Instead, the National Review argued for an expanded Child Tax Credit so parents could do as they wish with the money.

This isn’t a new position for conservatives. In 2005, Ross Douthat and Reihan Salam wrote in the Weekly Standard to propose a similar solution to the childcare problem. “To address the concerns of women,” they wrote, “Democrats tend to focus on child care subsidies, parental leave, and other measures that are better understood as ‘market-friendly’ than as ‘family-friendly,’ in that the goal is to make it as easy as possible for parents to maximize their time in the paid labor force.” Under their preferred approach, “the government could offer subsidies to those who provide child care in the home, and pension credits that reflect the economic value of years spent in household labor.”

Whether raised by the right or the left, these strike me as valid concerns about the structure of a childcare subsidy. In its proposal, CAP makes an unapologetic case for nudging parents toward center-based care, which it sees as an “educational necessity” for the development of young children, whereas custodial care generally “does not prepare children for school.” Still, there are undoubtedly countless parents who would prefer to raise their children from home during their formative earliest years. Too many families are coerced into the dual-earner labor market by sheer economic necessity.

Where Douthat, Salam, and the National Review propose a bigger Child Tax Credit in place of childcare subsidies, Spross prefers a universal child allowance. As a general matter, a Child Tax Credit is essentially a child allowance with kludgy hurdles to applying for and receiving it added in. And if not made refundable, a bigger CTC cuts out the neediest families—a major problem for most progressives.

But suppose liberals and conservatives bridged their differences to: (a) make the new child benefit refundable, and (b) pay it directly to families instead of care providers. Liberals get protection for low-income families, while conservatives ensure benefits for stay-at-home parents. This would be something like an advance tax credit for families with children: a flat benefit for all who qualify. Essentially, it would approximate a universal child allowance.

This would still have some kludge baked into it, since it would ostensibly be a tax credit. But as I’ve argued, the second-best solution given our system’s exhausting preference for tax expenditures is to simply provide a periodic payment option for certain tax credits. Families could thus receive child subsidies in a series of regular payments like a child allowance, rather than in a springtime lump-sum tax refund.

Conservatives may recoil at this idea as thinly disguised welfare, particularly for families who would gain from the tax system while paying little into it. But perhaps they’d be willing to play ball in order to turn a subsidy for commercial childcare into one that rewards home-based care too.

Of course, this all assumes a functioning and good faith legislative process, something that is neither assured nor even likely at this point. But even if productive compromise legislation is farfetched, it’s interesting that the solution to valid conservative critiques of liberal childcare reform winds up being a more progressive solution.

A child allowance by another name would be an ever bolder and more ambitious program than a simple childcare subsidy. If Clinton’s significant childcare proposal wound up being bargained into an allowance-plus-kludge type of policy in Congress, we’d all be better off for it.

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2 thoughts on “Bargaining up to a child allowance

  1. Pingback: Why we need a basic income for kids | J.DODGE blog

  2. Pingback: The best way to fix child poverty in the US is to give kids a universal basic income — Quartz

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