In the first week of February, Mitt Romney introduced the Family Security Act, which would send every married couple earning less than $400,000, and every single-parent earning less than $200,000, $350 a month for every child they are raising under the age of 5, and $250 a month for every child between 5 and 17. The bill has set off a heated debate on the American right about the best way to honor family values in the 21st century.

Scott Winship and Samuel Hammond are two of the most influential voices in this intra-right debate. Winship, the Director of Poverty Studies at the American Enterprise Institute, argues Romney’s child allowance would help children at the expense of marriage, work, and the long-term good of the children themselves. Hammond, Director of Poverty and Welfare Policy at the Niskanen Center, argues that America’s twin challenges of declining working-class marriage and declining fertility ought to be understood as harmful byproducts of our free market system, which demand an active response from the government. It is a debate at once technical and philosophical.

On February 26 MI hosted a debate between Winship and Hammond moderated by MI president Reihan Salam. We will cover the merits of the Family Security Act, the long legacy of the 1990s welfare reform debates, and the political economy of social conservatism.

Event Transcript

Reihan Salam:

Good afternoon and welcome to our virtual event, Mitt Romney's Child Allowance and the Future of Social Conservatism. I'm Reihan Salam, president of the Manhattan Institute and I'm very excited to be joined by Scott Winship, director of poverty studies at the American Enterprise Institute, and Sam Hammond, director of poverty and welfare policy at the Niskanen Center.

Reihan Salam:

Scott and Sam are two of conservatism's leading thinkers on poverty and the welfare state and they happen to disagree about the merits of Mitt Romney's new Child Allowance Proposal. Today we're going to dig into that disagreement a bit, which I hope will shed some light on both the trade offs of the Romney plan itself and some of the larger questions facing conservatism in this moment, mainly what political economy is most likely to produce family formation, stable marriages and socially rich neighborhoods conservationists believe in? This is a lot of ground to cover, so we're going to jump right in. Scott and Sam, thank you for joining me today.

Scott Winship:

Thanks for having me.

Reihan Salam:

It occurs to me that there is a larger background set of assumptions that are informing how the two of you are approaching this debate, so before we get into specifics of the Child Allowance Proposal, let me offer grossly oversimplified caricatures of what I take to be your positions and then you will politely and carefully correct all of the horrible mangling that I'm about to do. So Scott, I take it your view of the American economy, the labor market, is basically a bit more benign. When you look at the last 20 or so years, you see an economy that has done decently well considering a change in global technological context, in which basically you see islands of poverty. You see a broad middle class that is affluent where there are challenges, problems of affluence, but broadly speaking, you see discrete problems with certain communities experiencing really entrenched poverty. Is that a fair characterization?

Scott Winship:

Yeah, I think more or less. Yeah. My view is that we ought to all want to reduce child poverty, it's too high. It's a lot lower than I think most people realize in the United States, but it's still too high and it should be one of our top social policy priorities. There are other ways to do it than something like a child allowance and we ought to care a lot more about just producing point-in-time poverty rates without a care about entrenched poverty, which includes an over reliance on government benefits, includes long term poverty, includes intergenerational poverty, concentrated poverty and also includes social poverty, just having a dearth of connections and being connected even to the father that you were born to. These are all things that are more than just money and I think something like child allowances, while it can reduce the short term poverty that we ought to all be concerned about, it also runs a very real risk of increasing entrenched poverty and contributing to some of these longer term problems.

Scott Winship:

The last thing I would say is I think we've done a lot better with our social policy in terms of reducing poverty than people realize and a big part of that over the last 25 years was welfare reform, which was a series of state and federal changes in the 1990s and something like child allowances runs the risk of reversing some of that and reversing a lot of the good that it did.

Reihan Salam:

So Scott, just to clarify on this a bit, when you think of low income populations, you don't necessarily think of people going through a spell, a short term period in which their income happens to be low, you rather see the issue as people who are stuck in these isolated islands away from the broader mainstream in which people are part of the working world, that's your chief concern.

Scott Winship:

Right, that's the group I'm concerned about. It turns out the safety net works really well and probably as everybody imagines that it should for most people. Most people hit on a hard time, maybe they experience a divorce for instance, they lose their job, they have an unanticipated pregnancy, they rely on the safety net for a short amount of time and they do go on to become independent themselves, but it's always been the case that even as there were a lot of people that moved on and off of safety net benefits in the way the program is intended, there's a core group that will receive benefits for a very long time, absent incentives not to. That is the group that I'm most worried about.

Reihan Salam:

So the churning that you see above and below the poverty line, you don't think that we should be that alarmed by that, that's just part of the dynamic economy and that's just something that we're handing reasonably well with existing safety net programs.

Scott Winship:

Yeah, I think we should be concerned about it, but I think it can be addressed by our existing safety net programs. We can make reforms to things like the earned income tax credit during downturns, especially during once in a century pandemics. We can make bigger reforms to make sure those people don't fall through the cracks, but I think we're doing a pretty good job and actually the evidence bears me out pretty well too in terms of comparing us to other Anglo speaking countries. Our poverty rates are not really that much higher than those other countries and in some cases it's actually a little bit lower than some of our peers. I think we ought to always be striving to do better, but something like child allowances would be a major dramatic break from our tradition of anti-poverty policies that have done pretty well.

Reihan Salam:

And I know I'm cheating here because we haven't really defined child allowances just yet, but I do want to get a broad sense of the background. So Sam, here I'm sure I'm going to butcher your sense of things, but let me just take a stab at it and then you let me know what I'm getting right and what I'm getting wrong. My understanding is that you see the bigger picture a bit differently, that yes there is a poverty problem, but there's also a larger problem of churn, there's a larger problem in which people typically have children when they're younger and that's a moment when they typically have lower market incomes. There are various changes to the labor market that see to it that you see a steep gradient in which people are earning more later in life, but basically they're not able to earn enough to comfortably, securely raise families. This is true not just for the poorest of the poor, but for a broad swath of call it the lower middle class. Is that a fair characterization Sam?

Samuel Hammond:

Yeah, absolutely. If you go to a hospital, maybe not during pandemic times, but if you go to a hospital, at any point-in-time, you're going to find people who are there for longterm care, people in hospice, people with terminal illnesses, but that's not... if you think that's what hospitals are doing, you're taking the wrong average because the average person goes to the hospital for a day to get their vaccine or to set a broken bone and our poverty programs actually work quite similar. Take SNAP for example. At any point-in-time you look at the SNAP population, there are people who have been there for multiple years, but the average poverty spell, as you mentioned, is nine months, so people enter the SNAP program and they leave after nine months. And that churn, Scott mentioned not wanting to focus too much on the point-in-time, And actually, I totally agree with that, we have to look over the entire life cycle.

Samuel Hammond:

One of the irrationals for a child allowance is put a floor beneath families to say this is a source of stability because we know that family incomes vary a lot, we know that when people have their first child they're a lot younger and a lot lower earners. They're the Henrys right, the not yet rich class. One of the principle values of the child allowance is to say we have a tax credit that supports middle class families and we have a welfare bureaucracy that supports the poor. If we're really concerned about these pockets of intergenerational poverty, what used to be called the under class, then we have to find a way to bridge those two systems and get people within a common program.

Reihan Salam:

Interesting. So one way to put this is that your view is that it's, call it, it's not the 5%, it's not the 10%, you're thinking that there are problems facing a much larger universe, call it the 40%, the 50% and the idea of creating this income floor for parents is something that is relevant for this much wider swatch of the population because you see them as potentially vulnerable at some point-in-time over the life course.

Samuel Hammond:

Yeah, absolutely, especially when it comes to family formation. Household stability, family stability, that's a very vague sounding concept, but a lot of the research on child allowances points to that stability factor as key to the outcomes that are observed. Right now, you have this COVID baby bust, one of the reasons for it is just strictly the massive uncertainty that families are facing. That uncertainty, instability, income volatility is something that doesn't get picked up when you just look at point-in-time estimates.

Reihan Salam:

Here's a question for both of you. When you think about this idea of the lifecycle that people typically are earning less earlier on than they are later in life, there are some private solutions for this potentially. There are other ways that we can smooth our incomes over time. Scott, is it fair to say that you believe that those solutions work decently well, that people can smooth their consumption without... and including this broad, call it this lower middle class, middle class population, that those private solutions are basically there?

Scott Winship:

Yeah, I think that's right. I think unanticipated income drops, for instance, that the trend there tends to basically follow the trend in the unemployment rate over time. There was an increase in the 1970s, I think, in the risk of income loss, but there hasn't been very much change over time over the last 40 years, say. We have an unemployment insurance system that's intended to handle things like that. We have other social insurance systems that are intended to handle the risk of becoming disabled or too ill to work. We obviously have a much more expanded public health insurance than we did 40 years ago. I think in the totality of our safety net, it does pretty well I think for the typical person who, say, is in the middle quintile or the second quintile and I think what I'm more... And actually, I think even in the bottom quintile, folks are doing a lot better than they were 30 or 40 years ago. I think the evidence is just very clear on that.

Scott Winship:

We need to do better, but the thing that hasn't improved over time is that kids who start in the bottom are just as likely to remain there in adulthood as they ever were. To me, this is some problem that we haven't fixed. The number of kids who grow up without both their parents is a problem that has increased a lot over the decades and is starting to get a little bit better, but that's a problem that looks much more entrenched and difficult to solve than even child poverty does, so I would just focus my efforts elsewhere.

Reihan Salam:

One quick question before we get into the nitty gritty of the Child Allowance Proposal. One thing I've been struck by is that I don't really hear the two of you disagreeing on grounds of spending money or willingness to spend as such. Scott, is it fair to say that you're quite happy to spend additional sums to address the entrenched poverty problem, your main concern is that these resources be focused on what you see as the kernel of the problem or are you concerned about the scale of the spending as well?

Scott Winship:

I'm concerned about the scale of the spending as well. We already spend a huge amount of money at the federal level on just a slew... I think it's something like 80 different anti-poverty programs, many of which aren't that effective. I do also worry more than maybe Sam does about the overall amount that we're spending, but it is the case that I would spend more money towards the goal of increasing upward mobility for poor kids, but I just think there's going to be very different policies than giving families at the bottom more cash.

Reihan Salam:

Sam, a related question for you before we dive in, if we were operating under meaningful fiscal constraints, if you had a different political climate right now, different macro economic picture, would you say that increasing investments in childhood, basically shifting in the direction of something like a child allowance, you would be willing to sacrifice some expenditures on, for example, older adults. Is that something you'd be willing to do or do you think that this only makes sense in a having no trade offs context in fiscal terms?

Samuel Hammond:

Well Reihan, the proposal we're speaking about, the Romney Child Allowance, is deficit neutral because it isn't just purely additive and I think my perspective is not-

Reihan Salam:

Well, that's because it's neutral in a context of much larger fiscal deficits right? Those are pay forwards that could theoretically be used to close existing deficits. Just to get your sense of the broad issue, whether or not you would be willing to displace other welfare state expenditures.

Samuel Hammond:

Yeah, absolutely. In fact, if anything, I think child allowance is the opportunity to do some cleaning up of the system. Scott mentioned we have many programs that are very ad hoc and don't really clearly do much, other than reward certain pecuniary interests. As we discuss the future of not just the social conservatism, but also fiscal conservatism, the benign revenue the US government has brought in has been about 17% of GDP for 40 years. Tax rates have gone up and down. It doesn't really seem to change. Government has only grown larger, but the thing that we don't like about government, at least I don't like, is the interaction of special interest groups, public interest narrow distributional coalitions that take control of an issue.

Samuel Hammond:

One of the examples I talk about in our recent report is the WIC program. We can talk about the importance of infant formula and stuff like that for newborns, but it's this insane structure where states give out exclusive contracts to manufacturers of infant formula. It's very crony. On the other hand, when you propose cutting it, people start yelling, "Think of the children," and that bootlegger baptist dynamic leads to a lot of accuration of programs over time. I think a big piece of fiscal conservatism isn't just reducing spending, but taking a step back and looking at the system as a comprehensive whole and saying, "How can we do better?"

Samuel Hammond:

My colleague Steve Teles has this famous essay, Kludgeocracy in America, and when you look at the Romney proposal, a bit pice of it is to clean up this kludge because what a lot of families struggle with is just the sheer complexity and legibilty of the current system. We don't measure that complexity tax in anything. We don't put a dollar value on it, but complexity is a real burden for lower income families. Scott mentioned the EITC, EITC has a participationary of 78%. There's a quarter of families that are eligible for it, but never receive it because they, A, don't understand how to get or, B, it's too complex because there's 40 pages of rules. That's not a great status quo. There's a lot of different parts human social safety net that are clearly suboptimal and just looking at total dollar spending, it doesn't really tell you the full story.

Samuel Hammond:

What I will say though, because you mentioned trading off with older generations, I don't want to spark a generational warfare. That would be the last thing on my mind. One of the reasons why I like the Romney plan is because I'm a fan of social security writ large and I think there's a big difference between a program that provides retirement security in a very efficient way and a massive daycare industrial policy that will go towards employing people trained in the latest fad education policy.

Reihan Salam:

So just to be clear, you would not want to reduce old age social program expenditures at all. You would potentially consolidate some transfer programs directed at families with children for this, but if we were operating under a more stringent fiscal constraints, if we were talking about meaningful fiscal consolidation, you would not be looking at Medicare and social security.

Samuel Hammond:

Medicare is a different story. Medicare is very complex. I mean, we can discuss it and if anything I'd be looking at increasing social security. The U.S. has a retirement system that is very entrenched with Wall Street and with finance. I'm not a big fan of people not knowing that they're paying huge fees to invest in their 401(k)s. But that aside, I just got inducted recently, I had the honor to be inducted to the National Academy of Social Insurance, and I've been to some of their meetings. I get the sense that median person in the academy is already on Medicare. It's problematic to me that our social insurance system is becoming geriatric in a very real sense and people in middle, people in their mid life and younger, don't have any really day-to-day interaction with the concept of social insurance. We think of it as just an old person thing when social insurance is a much broader concept. We saw this with the pandemic and the important role that unemployment insurance has played.

Reihan Salam:

So when you're looking at other market democracies that offer unconditional benefits of this kind, one common denominator is that virtually all of them have pretty significant consumption taxes that are born by middle income households. And I wonder just, Sam, is it fair to say that you see that as another leg of the stool? Because that is a big question when you look at the idiosyncrasies of the U.S. safety net, a big part of it is the fact that we don't have a meaningful federal consumption tax. So just in the context of thinking about this as a smoothing and what have you, I wonder if you see that as another piece of it given that you don't envision reductions in old age insurance programs?

Samuel Hammond:

I'm not opposed to a value added tax at all. I think actually it's a big loss that the Tax Cuts and Jobs Acts didn't have the pay forward that was proposed at the time, the border adjustment tax. It was a kind of value added tax. It's hard to predict the future, but my goal is not to make America Denmark, my goal is to... I'm taking the institutions that we have as a given and we can be more like Canada, we can be more like Australia where they have universal job benefits without going all the way down the road to serfdom, but that will... In the longer run, the US does have a deficit problem and we have an awful lot of potential revenue that could be raised. We also have a lot of things that could be cut and taking that bigger picture view is, I feel above my pay grade because some of these things won't be reckoned with in 10 or 20 years.

Reihan Salam:

This is very helpful. Scott, I wonder if you could walk us through the two main proposals, the Romney Child Allowance Proposal and the proposal that seems to be much more likely to happen, which is the proposal that's coming out of the Ways and Means Committee that bears a strong family resemblance to the American Family Act.

Scott Winship:

Sure, absolutely. If I could just say a couple things to you regarding--

Reihan Salam:

Of course.

Scott Winship:

I think taxes as a share of GDP in the United States has been relatively flat for a very long time, spending as a share of GDP has not and it's on a trajectory to only get worse. We're basically at levels that we haven't seen except for at the end of World War II, which we were willing to endure to save democracy. I think we have a much bigger deficit problem than Sam is letting on and I think we also have to acknowledge, if once we institute child allowances, that's only going to expand over time. And in fact, when childless people start saying, "How come we're not getting our basic income as well?", it becomes a UBI and that becomes very expensive too. I think it runs a real risk in the longterm.

Scott Winship:

As far as the two proposals, essentially President Biden on the campaign trail advocated taking the child tax credit and the additional child tax credit, which is the refundable part that you get, over and above the income taxes that you owe and reforming it to basically be a nearly universal child allowance for all but the top 5% of households. You would get a benefit of I think it's $200 or $300 for every kid under, I believe it's under seven, and $250 for older kids per month. It would be delivered on a monthly basis, which is something that would be new. There would be caps on it, but essentially that's what you're looking at over time. It would become fully refundable, so it wouldn't be conditioned on having worked a minimum amount of time, so a child allowance for basically the bottom 95% of households.

Scott Winship:

Senator Romney came out with a proposal earlier this month that was even more generous than that in that, A, it's proposed to be a permanent proposal unlike the Biden plan, which is in theory just for a year, although Democrats are certainly eyeing later in the year expanding it to be permanent, assuming that it passes this winter, but Senator Romney would make it permanent. It's paid for, as Sam said, it would be more generous in that the youngest kids would get $350 rather than $300 a month and he also includes a bunch of other reforms to the safety net. He would get rid of TANF, which is the remnant of the old cash welfare program, aid to families with dependent children. He would make some reforms to the earned income tax credit that would simplify it in various ways. He would get rid of the child and dependent care tax credit and the head of household filing status as well, which mainly goes to single parents.

Scott Winship:

It's been projected his would reduce poverty by about a third. I believe my colleagues at AEI think it's a little bit less than that, probably 26% or so, the Biden plan would reduce it by a little bit more than that, according to my colleagues.

Reihan Salam:

Understood. Is it fair to say that your objections are to both proposals or is there one that you find more objectionable than the other Scott?

Scott Winship:

No, I dislike both of them. I think that the basic concept of a child allowance because it is not conditioned on work, I worry and a lot of other anti-poverty conservatives worry that it moves back to the system that welfare reform changed in the 1990s, which is to say by providing income. So imagine a single parent with two kids, they're then looking at say five to $6,000 a year on top of any SNAP benefits they're getting, on top of any Medicaid they're getting, on top of any unreported work or income that they have. You can cobble those income sources together and some people will choose not to work and instead to receive this package of benefits for very long amounts of time and their children will grow up in homes where there isn't a working role model.

Scott Winship:

Because so much of this group is going to be lower income, it's going to be disproportionately single parent families. That also creates a concern that this policy would actually encourage more single parent families, which the research shows is pretty bad for child outcomes. The perspective that I and others on the right have taken with this is it's too much of a risk. We can talk about the evidence in the studies if there's not a clear, I think, answer that comes out of any of these pretty big bodies of literature, but it's enough of a risk, I believe, that we should avoid taking any steps back to the bad old days and there are other ways that we can reduce child poverty that don't run those risks.

Reihan Salam:

Scott, one quick follow up, it is the case, however, that if you're looking at the Ways and Means Proposal, it does not entail many of the same consolidations of other social programs, including meaningful changes to the earned income tax credit. Some folks, including at the Center on Budget and Policy Priorities, other advocates on the left, suggest that the Ways and Means approach might be more conducive to work on the part of low income households. Do you buy that? If we could walk us through the logic of that, I'd appreciate it.

Scott Winship:

Yeah, I think there actually could be some truth to that. There are some weird dynamics in the Romney plan in terms of the reforms. The earned income tax credit where, for instance, if you're a single parent that has two or more kids, there's some really big work penalties actually versus the status quo. So if you were working now and you wanted to keep working, so not even the concern that I'm talking about that people will choose that they would prefer not to work, if they prefer to work, it's actually more costly for them to do that and more so for the Romney proposal than for the Democratic proposal.

Scott Winship:

There are actually work incentives for both in that the current child tax credit has a phase in. If you move from no work or very little work to some work, you actually get a bonus for that as you move towards a more generous child tax credit over time. Because the child allowance doesn't have that phase in, it's actually less rewarding to move from no work or very little work to some work, but there is this additional problem with the Romney plan in the way that he would reform the earned income tax credit.

Reihan Salam:

Sam, is it fair to say that you see the Romney plan as preferable to the Ways and Means plan?

Samuel Hammond:

Yeah, absolutely. On the administrative side, it's much better to do this through social security. They have experience doing monthly benefits. The IRS is inherently annualized, so if you have a change of living status, marital status, any mid year adjustment, the IRS is going to struggle to do that. And obviously the Romney plan is bigger. And also because of these consolidations, I think are actually not trade-off so much as a feature. I really do think that cleaning up the system is an important piece of this program to the point about the phase-in, if there has been this revisionist look at your income tax credit and the child tax credit and their effects on incentivizing work, I do believe that the ITC helped pull people into labor force in the late '90s.

Samuel Hammond:

That's probably because you had a lot of single moms who were being informed that their welfare was not going to be time limited. And the caseworker told them all about the CITC. And these days, 72% of people don't claim it, or I'm sorry, 28% people don't claim it, who are eligible on top of that, there's another estimate 9% that goes towards tax prep agencies. It's not really that great. Not that effective of programming and more over the thing that incentivizes people from the ITC is not the phase-in, it's the fact that it increases your reservation wage. So if you're willing to work for $13 an hour, but the real wage is $10 an hour, the ITC in theory will make it more attractive for you to come into the labor market. The phase-in doesn't... A lot of labor market decisions are relatively binary.

Samuel Hammond:

You either take the minimum wage job or you don't. The fact that there's less of a face-in going from $5,000 to $10,000. I don't think it's actually going to register in our evaluations of these changes. It's already hard enough to find any impact of the ITC of work as it is. But we do know ways of pulling people into the worker. So if that is the priority, direct subsidized employment, that we piloted that through a emergency fondant and the in the Obama years, and it helped employ a quarter million people. That's how you really lift the reason for persistent unemployment is not really a supply side issue. It is a labor demand issue. Before this conversation, we were talking about what my sister does, my sister works with people with intellectual disabilities and they do regular stuff. They do like arts and crafts, and they sell that to customers.

Samuel Hammond:

That's only possible because their wages are subsidized because otherwise there's not that much demand for that labor. And it is just simply the case that the market is always two sided. There's a supply side and a demand side. And if you really, really, really want to get people into the workforce, we have the tools to do that. And it's not the income tax credit.

Reihan Salam:

Scott, correct me if I'm wrong, but I think that this also surfaces in other disagreement regarding whether it's the demand side or the supply side of that low wage labor market that we should be most concerned about. If if I'm recalling correctly you really do believe that there is an issue on the supply side of the low end. Is that a fair characterization?

Scott Winship:

Yeah, absolutely. I think these were the arguments that were made in the 1990s when people who, by the way included me that were worried about welfare reform and thought it was going to be a terrible idea. These were the arguments that were made, like how can we send so many new people out into the workforce? The jobs are not there. We know that, right? The jobs aren't there. It's going to be a disaster Senator Moynihan talked about kids sleeping on greats. And we were just wrong. I say we, because I bought into all of these arguments which were by the way made on the basis of the policy modeling that the Urban Institute did back then, and that the Urban Institute has done now for child allowances, which are the best modeling that can be done at this point. But that just have an incredible amount of uncertainty.

Scott Winship:

So what we discovered in fact was that there were jobs for all of these folks, employment rates among single mothers in the 1990s, just soared to rates never seen before. And partly that was because of the 1990s were such a great decade, but the really important thing is that the rates never went back. Employment rates never went back down to where they were before welfare reform, they increased and they stayed up and even more importantly, hardship went down and never went back up to the rates that existed before welfare reform. So I think we could talk a lot about the evidence that should matter for these debates. But certainly what I think ought to matter a lot is the very real experience we had when we had this debate in the 1990s. And the critics of conservative reforms, which again, included me at the time were just wrong.

Scott Winship:

So I do think that more of our employment problem towards the bottom is on the supply side than on the demand side. And I worry the child allowances would exacerbate that.

Reihan Salam:

Sam, my understanding is that you don't see labor force participation as your lodestar necessarily that you believe that there are circumstances under which a decline in labor force participation on the part of parents, isn't necessarily a bad thing. Particularly if you see this as something unfolding over the life course. Can you tell us a bit more about that?

Samuel Hammond:

Yeah, sure. Just a quick comment on the demand versus supply side issue, I sometimes get the feeling that U.S. policy debates, if it wasn't a pilot program in Wisconsin in the 90s, it didn't happen. We don't have to be so parochial and the research we draw on there. There are many countries that have larger welfare states in the U.S. also have significantly higher employment and labor force participation. And we know how they do that. They do that by having a tight labor market by having supports that get people into work by sometimes directly subsidizing labor. And I agree that the old AFTC program really did create a poverty trap, which the welfare reform broke. But I also don't take away any credit to Alan Greenspan for the great job he did at the U.S. Federal Reserve chair.

Samuel Hammond:

To the point of the labor force maximizations, there is this odd bedfellow coalition is beginning to form between chamber of commerce types and that youth, they used to be on the center right. But now we're moving towards the center line because they see Democrats as their ally on installing a massive childcare edifice to make it maximally easy for women with kids to work. And I think that has some trade-offs. And I think we have a careful about what we're really maximizing because it's not welfare, right? The first thing you're taught when you're in economics is GDP is not welfare. GDP is the dollar value we put on production, but if we take somebody who's making, who has the potential to earn $10 an hour in the workforce and push them out of their care duties as a stay-at-home parent and push them into a job where they were in there earn $10 an hour, and then use that $10 an hour to go hire a babysitter.

Samuel Hammond:

We've just increased GDP by $20 an hour. But what have we done for welfare? It's not really that clear that we done anything. In fact, it might even be negative because work is for a lot of people cost. And this is particularly relevant in the context of stable two-parent families. I know Scott is primarily focused on on the single mom population, but even in that case when Canada expanded their child benefit in 2006, we saw a significant increase in never married women entering the labor force, precisely they were getting that unconditional stability that they needed to afford the basics of having a babysitter to go hand out resumes. And I think we can do a lot better than looking back at just the experiments in the '90s, that deal with a very different population, a very different set of circumstances, and draw a loose family resemblances between AFTC in this based on the fact that it doesn't have an explicit work requirement.

Samuel Hammond:

There are two very different programs and two very different realities. And in the world we live in today contrary to the point that I made earlier, the bottom end of the labor market is significantly more insecure than it was from the perspective of labor demand. Look at Danny Robert's work on this in the context of globalization, when you expand the labor market to the world, you're not just competing with your fellow Americans, you're competing with outsourcing and jobs overseas. And even if that doesn't affect your income at a point in time, what it does is make your labor demand more elastic. And we see that in the bottom end today with declining family formation in former manufacturing towns, where people, they're falling back onto disability insurance and other systems to pay their basic needs, precisely because they don't have this alternative sources stability.

Reihan Salam:

Just to be clear, you believe that having that source of stability, would allow these families based on this larger body of evidence that's comparative that, that would allow them to make the necessary investments to become active participants in the labor force?

Samuel Hammond:

Yes. I mean, if there's any little bit of libertarian left in me, it is this the hierarchy and insight of the importance of local knowledge and time and place and circumstance. And we can't treat every family like they're the minority underclass in urban New York in 1970s. That's not how you create national policy. The nice thing about a universal child benefits is actually precisely how it's differential, depending on the type of family you have. We know this from extensive research indicating in context, but also in other contexts that parents use the money differently, depending on their circumstances. The stay-at-home mom with breadwinning bourbon father uses it differently than the never married mom who uses it for childcare. Having something that reflects the fact that we have this incredible diversity in the United States is very important.

Samuel Hammond:

I think a child Lance is precisely what we need for a society is relatively low trust and heterogeneous as the U.S. The family and provost, Utah's probably going to tie half the child benefit. And that's great. I think it's great to have the big injection of money going to families in rural areas that otherwise are starve for resources, and they can pull that money. They could just like, we have a homeschooling movement where sometimes families pull together their resources and established group homeschooling. We should be doing something similar with childcare. If we don't have a strategy on this, we're going to get steamrolled by the left because they know exactly what they want to do. They want to make it free, or nearly free to go to the accredited early childhood educator.

Samuel Hammond:

Who's going to teach them how to be an anti-racist baby or whatever, and it's going to spark a, you think the common core debate was ugly. It's going to be bad. And the entire time it's going to be addressed up in this technocratic guys, even borrowing some of the language it's costing you this right around intergenerational poverty and promoting opportunity. I think we just have to call that out at its foundation. Social conservatives have their own set of values, and we can't impose that on the rest of the country, but neither can the left impose their values on social conservatives. We need a solution that addresses the true economic material needs of families in a way that's spelling neutral.

Reihan Salam:

Scott, I wonder how you think about the comparative evidence and the usefulness or the limits of the Canadian case?

Scott Winship:

Yeah, I think there's not actually a ton of evidence on the Canadian case. There've been a couple of studies that have been done that Sam has cited before. They're not especially applicable. I don't think to the proposals that we're considering now. There were $100 a month for only little kids so much less generous. They came on top of a very generous set of benefits that already may have been discouraging work for some people including very generous paid leave policies. Other child benefits actually the outcomes that they looked at or only at the most three years out. And so the negative consequences that people like me worry about are not things that would necessarily manifest three years out.

Scott Winship:

When AFTC was started in 1935 had somebody evaluated it in 1940, they would not have seen the rate of non-marital childbearing would have something quadrupled over the next few decades. And even the authors here, I think Sam is glossing over a little bit, some of the complexities of that piece, the authors themselves, this wasn't an experiment. This was researchers trying to answer a very difficult question as best they could, but they say "We cannot dismiss the possibility that our estimates also capture a gradual change in the labor supply of all mothers with young children, relative to those with older children, driven by factors. We were unable to separately account for in our analysis. If an observable factors drove a relative increase in the labor supply of mothers with young children, the results presented here underestimate the negative effect of the child benefit on mother's labor supply."

Scott Winship:

So I tend to discount a lot of the international evidence in a lot of ways because the American experience is quite different as well. We have more long-term poverty. We have more kids living without their dads present. We have more violence, we have more crime, we just differ in a lot of ways versus other countries. And there are values differences. There are reasons that we don't have a consumption tax that we don't have the restrictions on inequality that other countries have. So I tend to look back at our own history as being more informative than comparing ourselves to other countries.

Reihan Salam:

Scott, I wonder what you make of the argument that though there may well be some downsides to the child allowance approach that it's simplicity deserves some praise and that there's some value in it?

Scott Winship:

I think there are definitely are arguments that could be made around simplifying the safety net. We do have just a plethora of programs that each have their own eligibility requirements that are often run out of different bureaucracies. I think it is too hard for somebody who's trying to figure out what they qualify for for benefits, to actually figure out what are the different programs out there and how do I get on? And that is probably one of the more unfortunate aspects of welfare reform I think is it did make it very difficult for folks to receive the benefits that they're eligible for. So that's an area where there may be some more common ground. But I think for a lot of conservatives, it's just a non-starter to think about things that are going to potentially facilitate a lot of people moving from work to non-work. And then have the run the risk of increasing a single parenthood.

Reihan Salam:

Sam also raised the issue of value neutrality from the perspective of social conservatives who oftentimes feel marginalized and embattled given an elite culture that is oftentimes hostile to their values and sensibilities. And I wonder how you see that playing into the debate here, because it really is true that the idea of universal daycare and other more ambitious initiatives on that front really are alive political consideration. And one could argue that something like a child allowance is best understood as an alternative to something that could be more intrusive.

Scott Winship:

I don't take a position at all in terms of whether I think we ought to have more two worker families versus more one breadwinner, one worker family. I think that's not really any of the business of policymakers. And I think there are ways that policy nudges things one way or another that I would be in favor generally of making policy more neutral in that regard. Where I don't think policy can be neutral is in terms of the way that if used the social contract, there's a centuries long set of values going back to England around the social contract where we believe that the people ought to help folks who are in needs when they need help. But that in return, there is this expectation of reciprocity that families will also help themselves.

Scott Winship:

And so conservatives don't inherently love work requirements or time limits or benefits that phase out is as, as income grows from people that are relying on the safety net. These are just things that we feel like are necessary so that the safety net does not become one that violates our norms of reciprocity in that violates the social contract that promotes the expectation that you can that you can make choices and have taxpayers bear the costs of it when other people in your situation are making those same choices, but are bearing the cost themselves. I don't think we can be neutral about that.

Reihan Salam:

Sam, I think you'd like to add a response?

Samuel Hammond:

Well, on the validity of international evidence, I think just in general, comparative institutional studies are very underrated, can learn a lot from studying other countries precisely because they're population-wide. So you're right, that the Canada study that I cited was an event study that looked at the before and after connecting with the child allowance and study behavior. You could learn a lot from that even without doing a randomized controlled trial in part, because some of the studies that Scott has cited in the past around take the negative income tax studies in the '70s, that voter populations of 1,000 people living in squalor in Detroit, does that map to the nation? Probably not. And so to the extent that Canada has differences with the U.S. they are real, but there's also a lot of similarities or are both Anglo markets. We have very similar labor market institutions.

Samuel Hammond:

Canada does have a paid leave program. And maybe that is not really the big difference to me, Scott mentioned, quoted a line from the study where, so we can't rule out. That's just a normal academic covering your butt line where you say, well, there's a lot that's inconclusive about this. If we have them into variables that we haven't measured something, it could be higher, it could be lower. And that's true. And when I look at the wealth of evidence, even if you don't want to accept my strong case, that child allowance will be pro work. You can't come away from the wealth of evidence and say that this is going to prick the labor market and have a hemorrhage like it's a hemophiliac.

Samuel Hammond:

The level of certainty we have here is not absolute, but we're going to have an actual experiment, the Biden credit, was just Scott mentioned is not that dissimilar from what Romney has proposed is going to be happening. We'll have a natural experiment. Maybe we won't get the full 20 year longitudinal study that Scott wants before he'll support it, but we will have a natural experiment of some kind. Let's check back in a year and see if we have a crisis of legitimacy sweeping the country because people are getting 200 bucks a month.

Reihan Salam:

Not sure. We have quite enough time to see how that will probably play out. But before we get to questions from the audience, just one last thing. So to Sam's point, it seems very likely that something like the ways and means credit is going to happen. And then there's the question of its political resilience, how that might play out, there is a classic argument in the political science literature, that really the key thing when it comes to new social programs is just getting them over the finish line. And then once you create them, you create a constituency for them, they become incredibly difficult to dislodge or to reverse.

Reihan Salam:

I wonder what you both think about that. And I'm asking you to put on your political analyst hats now, do you see a very contentious debate over dislodging over not extending this program, not making it permanent. Do you see something like the Romney child allowance becoming something that has more widespread popularity as a way to make this a permanent provision, curious to see how it plays out, Scott would you care to go first?

Scott Winship:

Yeah, I can't speculate too much about what Romney world had in mind in releasing the proposal. Obviously, I think they care very much about child poverty and I think they believe that their proposal would be better than than what the Democrats are offering. I think practically, the outcome of it's gonna help the Biden proposal pass. There are not enough votes there for the Romney plan. Democrats would never agree to get rid of TANF, which was quite ironic because Democrats generally have nothing good to say about TANF. And they certainly won't get rid of the state local income tax deduction as well. However, it's going to help them pass the house Democrat version of child allowances in the next week or two, and it's going to help them at the end of the year when they try to make it permanent, which they absolutely are going to do in which they will have the votes for, I think, I've seen one of the Democrats-

Reihan Salam:

You mean by creating bipartisanship that is going to help them make the case?

Scott Winship:

Yeah. I don't think it's ultimately going to be a bipartisan vote and I don't think at the end of the year when they vote on it, that it will be a bipartisan vote, but under reconciliation rules it won't need to be. So it's really going to come down to whether some of the swing Democrats will defect or not. And if they don't, then we will have a permanent child allowance, most likely at the end of the year.

Reihan Salam:

Sam.

Samuel Hammond:

Yeah. Well, first of all, I don't think that Romney coming out of his proposal helps Democrats one iota. This is been in the works long before he ever released his plan. It was already in the reconciliation bill when he released his plan in February 4th. And they had the votes already. What I think Romney is looking ahead that is the sense that this sets up an annualized battle where a tax credit that Republicans pioneered literally in the contract for America it is going to be something that they're on the opposing side of and that debate is really ugly from point of view of the 2022 midterms for example. The Republicans are in a good position to take back the house if they play their cards right. But the last few cycles, the strategy has been to regaining the congressional majority, just campaign on the failures of the incumbent.

Samuel Hammond:

And that could work with the Affordable Care Act, because that was a very controversial program that wasn't really fully implemented until 2014. Democrats have learned their lesson and they're doing something that is big, salient. That is a wedge issue for Republicans. So it's it's very politically savvy. It's going to be very popular too. We can extrapolate from the popularity of stimulus checks in other countries' experience child benefits are extremely popular. And if Republicans want to be the party of working class families, they need to step up and give their alternative. I think it's actually a great move on Romney's part to look forward and say, "If you're going to make this permanent, there are some conditions we want to pay for it. First of all, number two, we want to eliminate marriage penalties in the tax code, which have been there for eons, but you can never do it because it's too expensive and we want to do it through social security."

Samuel Hammond:

And the reason to do that is anticipating that this IRS version is going to run into lots of administrative problems. And I think we're going to look back in a year or two and say this program that was nominally Democratic has a chance to be branded as a Republican thing. And I think it really needs to be if we want the Republican party to move beyond pure cultural war theater and into a an agenda focused on supporting work.

Reihan Salam:

I'm going to ask three questions. And I ask that you give quick answers despite the fact that they're all questions that really demand a lot of care, sophistication and nuance. So the first is a question from Caitlin. Scott spoke about single parent families as an issue where we've made much less progress than we would have hoped, but it also feels like an issue that no longer receives the public attention it once did, is that because we lack plausible policy ideas to reverse the trend, Scott?

Scott Winship:

Yeah. I think that's a big part of it. We don't actually really know how to reduce rates of single parenthood or the non-marital birth rate for instance the things that we've tried, you haven't had a lot of success with or a marriage promotion programs that were tried in the Bush administration that were disappointing. They were rigorously evaluated, didn't have much impact. But that said, when we enacted welfare reform, there were a number of trends that stopped getting worse. Things like teen pregnancy, the non-marital birth rate after increasing for something like four decades stopped increasing, and things are getting a little bit better in the last 10 or 15 years. Now, can I tell you for sure those are because of welfare reform? I cannot.

Scott Winship:

But I think part of the reason why we haven't made more progress is we don't know how there are a number of good policies, I think, around reducing marriage penalties, some of which the Romney plan would do. I don't think that's going move the needle as much as probably we want. And so I think ultimately we need to think about other reforms to the safety net that reduced the cost of single parenthood and even things like promoting marriage more in the tax code, I've proposed expanding the child tax credit for married couples as one way of doing that without making it less generous for single parents.

Reihan Salam:

Question from Todd, Sam has talked about the need to revive the new deal of broad social insurance, as opposed to the welfare bureaucracies that grew out of the great society. Can you talk a little bit about what he thinks this returned to an older ideal would accomplish? Is it just a less kludgy bureaucracy or is there a cultural impact?

Samuel Hammond:

Yeah, there's enormous cultural component to this. I already mentioned the sense in which our social insurance state has been heavily tilted towards the senior citizens and that is already creating very difficult political economic issues. But I also think we're a very divided country right now. And Reihan, I'd actually be curious of your thoughts on this, because I know you've heard a little bit about this in the context of immigration, but we have one reason to do this in this administration is to guarantee that this is a citizens only program. And the nice thing about the universal child allowance would be to better demarcate and delineate what the entitlements of citizenship entail. I think that can have a solitary impact on uniting the country around something that's truly universal, which is having children, raising families and the economic insecurity that comes with that.

Reihan Salam:

Finally, a question from Daniel, one attractive point in the Romney plan is it's reduction of marriage penalties, including through the 10 off cut, mainly for Scott. At what point would the danger producing work incentives get outweighed by the advantage of reducing artificial disincentives to marriage?

Scott Winship:

Yeah. This is an interesting question, and I think it's not gotten... I think it's been misportrayed a lot by frankly one of my colleagues, Lyman Stone, all the talk about how child allowances would encourage marriage for around these marriage penalties, which I just mentioned, if you're somebody who is single and you would like to get married and you're looking at the relative cost of staying single or getting married the Romney plan does do some things which make it less costly to get married. And that's a good thing for sure.

Scott Winship:

That's not the only thing it does by providing more income without any strings attached to it. If you're somebody who would be single but under the current status quo, you would be married or you would be somebody without a child, but under the new plan, you might become a single parent, that additional income is enables more people to become single parents. And so it's not at all clear on that whether the proposal would actually be pro-marriage or not. I think Lyman has just been wrong on this. Everybody can watch us debate on Tuesday next week ourselves. I think for me, it's not even clear that the trade-off works in the way that Daniel suggests, if there were a trade-off between work incentives and marriage incentives? Yeah. That would be a much tougher consideration, but I just don't think it's that clear at all.

Reihan Salam:

One last question for you both, we started out by thinking through how you guys are conceiving of the larger challenges to families. And it's fair to say, Scott, that you see the poverty problem really, as a problem that demands, focus resources, some degree of paternalism perhaps for more like one in 20 households. Whereas Sam, do you see this as an issue for, let's say one in two households where there are real problems of how you resources across the life cycle and therefore you need a much more universalistic program?

Scott Winship:

I think so, I'd probably say one in 10, it is the group that I'm most concerned about. But yeah, I do think that social policy has to be paternalistic to some extent that is a perspective that seems to be falling by the wayside as the Gen Xers age in the same way that people don't appreciate grunge music anymore. But I do think the idea that we can just give people cash and not worry about it, everything will sort itself out is a naive view.

Reihan Salam:

Sam.

Samuel Hammond:

Yeah. On the marriage penalty point real quick. If a 15% phasing rate is so effective at pulling people in labor force, I think losing 15 to 25% of your entire income from getting married on the ITC, has to move some people. The other component with the child allowances again, through the family stability channel, just the fact that stability reduces domestic strife, quite significantly. When it can be expanded their job benefit, consumption of alcohol tobacco fell 6 cents on the dollar. If that's a marker of household stress, I don't know what else is a big picture. I think the conservative movement is facing this undergoing a large realignment. And we have to think about what our priorities are, what assumptions we're willing to question?

Samuel Hammond:

What legacy sacred cows are willing to stay in deep with the altar, because we were facing many, many problems in this country. And I agree that travel is not a panacea, but the new deal was mentioned if you really want to get respect voters, you really want to get African-American voters, you have to do something that responds to the material interests and treats them with equal dignity and respect and treating them paternalistically I don't think it works, but I also think it's a recipe for remaining the shrinking party.

Reihan Salam:

Scott and Sam. Thank you so much. This is been a very clarifying and insightful conversation, and I'm sure our audience has been given a lot to think about. I encourage everyone watching to follow Scott and Sam's work on this topic and many other issues besides. Thank you to everyone in the audience for your time and your many thoughtful questions. If you'd like to hear about more conversations like today's or interest in supporting our mission, I'd encourage you to subscribe to the Manhattan Institute's newsletters, or consider making a donation. There are links for doing some of the comments window on your screen. Thank you, everyone. This was great. And I look forward to seeing you again soon.

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