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Child Allowances vs. Child Tax Credits

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Child Allowances vs. Child Tax Credits

Pairagraph May 21, 2021
OtherChildren & Family
Urban PolicyTax & Budget

Two points in Mr. Hammond’s response help clarify where he and I disagree. Each is important in isolation, but together they reveal what seem to be our different conceptions about the proper role of the federal government in our lives.

First, he thinks it is largely a “distinction without a difference” if a family receives $3,000 annually as a monthly government hand-out (an “allowance” from Uncle Sam) or through earned income protected from taxation.

I think there is a world of difference between an individual’s working to earn money (e.g. in what it reflects about duty to self, family, and community; what beliefs and habits it instills in us; what it contributes to society; etc.) and an individual’s passive receipt of state aid. In my opinion, this difference is fundamental in policymaking.

Second, Hammond improperly implies that I associate all redistribution with dependency (I don’t) and inaccurately states that I’ve implicitly ruled out, a priori, all social insurance (I haven’t). In fact, I believe there are instances where the government (including occasionally the federal government) should distribute financial benefits.

But I firmly believe in—and offered—rules of thumb for determining which types of programs we should support and which we should not. Absent such restraining governing principles, the state swells. I argue we should aim for programs to be “proximate, limited, targeted, rehabilitative, and temporary.” Federal child allowances violate all five principles.

To be clear, many government programs I support track these principles. For instance, state and local governments provide an array of services to those in need. Unemployment benefits typically last only a few months and are intended to bridge the gap until a worker secures another job. Trade adjustment programs provide job training and short-term financial supports to trade-affected workers so they can get back on their feet. The major federal welfare program called TANF—the “T” stands for temporary—is primarily administered by states and includes work requirements. There are a range of state and federal programs to assist low-income individuals unable to afford medical care.

The guides I follow are designed, among other things, to limit Washington’s ability to become a permanent fixture in key parts of our lives. We have learned the hard way that perpetual federal payments can disincentivize work, that well-meaning federal disability programs have ballooned in participation and can be terribly sticky for participants, that huge federal spending programs can crowd out charitable spending, that a behemoth bureaucratic state can weaken mediating institutions, and so on.

In short, large-scale federal programs almost always claim to be generous and efficient, but they often distort individual behavior and warp the social fabric. Policy should aim to support the proper ordering of our lives: promoting personal responsibility; fostering close-to-home institutions and loyalties; preserving pluralism; respecting the role of non-state bodies; and, importantly, limiting the influence of powerful, distant, impersonal, homogenizing entities.

Free federal money distributed in monthly checks is not how you strengthen families and civil society in the long run. It’s how you weaken them.

This piece originally appeared at Pairagraph

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Andy Smarick is a senior fellow at the Manhattan Institute. Follow him on Twitter here.

Photo by AsiaVision/iStock

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