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Monthly Checks for Parents as a Free Market Approach to Economic Growth

The Conservative Case for the Child Tax Credit

Connor Murphy

April 15

Is giving people money a bipartisan solution to economic problems?
Since the onset of the pandemic, measures to keep the economy afloat have revealed that policies designed to put money into people’s hands have experienced relatively little ideological gridlock at the federal level.
These policies, namely the three stimulus checks and expanded child tax credit, have received vocal support from Democrats and Republicans alike.
So, with conversations in Washington including measures to make the child tax credit permanent, will there be Republican votes on the other side of the aisle for Speaker Pelosi and Leader Schumer?
“Direct cash payments have long been part of the conservative playbook,” said Scott Lincicome, a senior fellow at the Cato Institute, to the Daily Caller.
“There has always been an attraction among free-marketers for the most basic type of assistance, which is a direct cash payment,” said Lincicome. “Basically, you just give people money.”
The policy is more than just successful among conservatives in theory, according to Rep. Peter Meijer (MI-R).
“There are Republicans who are willing to enter into good-faith negotiations,” Meijer said of the American Rescue Plan, discussing how there were broad areas of agreement over coronavirus vaccine and testing aid and direct payments for individuals and small businesses.
There are a number of reasons why a policy such as the expanded child tax credit, which will benefit American parents with monthly checks starting on July 1, would be supported by conservatives.
Firstly, a permanent version of today’s child tax credit would provide a meaningful amount of support for Americans who would like to start a family but have doubts surrounding their level of financial security.
The American Rescue Plan’s expansion of the child tax credit will afford American parents $300 per month for every child aged 0-5, and $250 for children 6-17. 
Parents on the receiving end of these checks can probably visualize exactly how they would plan to spend that cash: Day care, clothes, diapers and formula, groceries, and school supplies all incur costs on the account balances of American families.
The beauty of direct cash for parents over other policies is that the support is flexible, and that flexibility matches the varying costs of raising children as they grow.
For those concerned about creating a financial incentive to have children, however, support from the tax credit is unlikely to encourage anyone to have children for the sake of collecting a check. A U.S. Department of Agriculture study estimated in 2017 that the average cost of raising a child for a middle income family in the United States comes out to $284,750.
For a child born just in time for the child tax credit to kick in, parents would receive $54,000 from birth until their 18th birthday. That means the tax credit would cover just under 20% of the expenses involved in raising a child, making it a helpful amount of money for those who do want to raise children without making parents out of Americans who don’t want children.
For anyone saving up in preparation to start a family, a permanent child tax credit would provide meaningful help in doing so. And that assistance would provide taxpayers ease of mind in knowing that every $1 spent on reducing child poverty results in $7 of savings with respect to the economic cost of poverty.
A permanent child tax credit that benefits parents on a monthly basis would also be experienced by families in virtually the same way that a universal basic income would. One of the most impactful effects of such a policy, much like a UBI, would be the injection of outside cash into small businesses and towns that have been economically hollowed out.
The growth of ecommerce has been especially hard on small towns and rural communities, as big-box companies have been able to offer consumer goods for lower prices than mom-and-pop small businesses. The result has been an exodus of cash from these communities, and many jobs with it.
With a permanent child tax credit however, much of that money leaving regional economies can be replaced with recurring stimulus brought about by parents looking to support their families. A town with 1,000 families could receive anywhere from $250,000 - $300,000 each month, which would undoubtedly increase the circulation of cash, reinvigorate small businesses, and create more jobs.
With healthier small town and rural economies, there would also be more reasons for people to stay if they so choose. Many smaller towns experience a significant “brain drain,” in which high school graduates move on, either to universities or to workforces in larger cities with more economic opportunities.
For those who would prefer to live in their hometown, a local economy reinvigorated by monthly cash for families would develop economic incentives that could compete for young people looking to join the workforce.
Lastly, a universal policy with straightforward implementation like the expanded child tax credit would result in very little fraud or waste of federal funds.
The IRS is already undergoing the relatively lightweight process of restructuring to fulfill the temporary advance payments to parents beginning in July. Sending cash to Americans is a high-efficiency form of benefit, much like a universal basic income would, as it requires little bureaucratic expansion to fulfill the policy objectives of the law.
It’s these reasons why the concept of sending unconditional payments to parents can succeed in conservative circles and in the Republican caucuses of Congress, and why the idea of making the expanded child tax credit a permanent part of federal tax policy can be passed with bipartisan support.
“There’s a recognition [among Republicans] that the government already constantly intervenes in the market,” Rachel Bovard, the senior director of policy at the Conservative Partnership Institute. “There is a growing number of people on the right who are saying, ‘we already do this, why aren’t we doing it for the family? Why aren’t we doing it to support the people who make up this country?’”
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