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The writer is an FT contributing editor and executive director of American Compass
Last week’s fight among US conservatives over the meaning of “welfare” exposed a deepening rift between the movement’s older anti-government institutions and a newer generation more interested in using public policy for good.
Descriptively, “welfare” can mean any government effort to provide people with resources. But in American politics the term’s connotations are traditionally more pejorative, usually referring to the framework of anti-poverty programmes established in the 1960s which provided benefits especially to single mothers who did not work, but withdrew them if the women began to earn their own income or got married. “Welfare reform” in 1996 ended these perverse incentives and many conservatives consider it the era’s signal policy achievement.
What to make, then, of a policy that provides resources to lower-income households, but does so only if they are working to earn income of their own, and rewards that work by providing more resources as earned income increases? Is it “welfare” or, said with disdain, welfare? A proposed expansion of the Child Tax Credit has put that question squarely on the table.
The CTC first appeared in 1994 as part of congressman Newt Gingrich’s famous “contract with America.” It became law in 1997 and has since grown in value from $500 to $2,000 per child. Critically, the initial credit could only be applied against taxes owed, meaning its full value could only be claimed by a family earning a sufficient income, which would in turn trigger sufficient taxes to be offset. The lowest-income families who would most benefit from assistance were left out.
Last month, Jason Smith, chairman of the House Ways & Means Committee, introduced legislation that would make low-income families with multiple children eligible for more of the credit faster — up to 45 cents of credit per dollar earned — and also allow them to use their prior year’s earnings to qualify if they did not have earnings in the current year. A family might receive a cheque from US Treasury at tax time instead of sending one in.
The proposal was pilloried by Robert Doar, president of the American Enterprise Institute, who called it an “ill-advised expansion of welfare spending that increase[s] government dependency.” Robert Rector, the Heritage Foundation’s poverty scholar, published a broadside that used the word “welfare” 36 times.
Like former high school quarterbacks who haven’t done much since graduation, some can’t stop talking about 1990s welfare reform. Every policy fight is that policy fight. Any proposal that sends resources to families “discourages work” and “increases dependency.” But unlike the perverse welfare programmes of the past, an expanded CTC would provide benefits only to families that work and ensure the same or higher benefits to families that work more, creating an especially strong incentive for a parent to take that first job. That’s not welfare of the kind that needed reform.
Fortunately, most of American conservatism has moved on. Senators Mitt Romney and Steve Daines have proposed a Family Security Act that would deliver a substantial monthly payment to working families. Senator Josh Hawley has proposed an even more generous Parent Tax Credit.
And in a sharp rebuke of the welfare complaint emanating from the institutions that historically called the shots in the Republican party, the GOP-led House of Representatives voted 357–70 for Chairman Smith’s bill, which also extended several business tax credits. Republicans supported it by 169–47, with several members of the ultra-conservative House Freedom Caucus voting in favour. The fight will now repeat in the Senate, where opponents will need to find some new arguments to have a chance of success.
