Building a Unified Front on Family Credits 

Robert Moses, the “power broker” and master builder of New York City, had a favorite saying—“Once you sink that first stake, they'll never make you pull it up.” That’s the same approach the Biden administration is hoping to take with their universal child benefit, scheduled to start paying out this summer. 

After establishing the precedent (and, presumably, working out the non-negligible administrative kinks), the Biden team is hoping to extend their $3,000-per-child payments for another five years in the American Families Plan (rather than making it permanent.) That choice helps keep the estimated cost down and expresses their confidence that once such payments are a regular feature of American life, they’ll prove impossible to scale back. 

This political gamble (and it is one) should push Republicans to marshal a unified front in favor of improving the design and administration of the child benefit. In a 50-50 Senate, their leverage may be limited, but it is not zero. Coming to the table with a full-fledged alternative that is a conceptual improvement may end up appealing to Democrats who still have some reservations about the Biden administration’s turn-on-the-money-hose approach to policymaking. 

The three contenders currently on offer from Congressional Republicans are: 

• Sens. Marco Rubio and Mike Lee’s Child Tax Credit expansion, which received unanimous support from Republicans during votes on the American Rescue Plan. Their newly expanded CTC proposed $4,500 for young children and $3,500 for older children (refundable only against income and payroll tax liabilities) as a postpandemic measure. But while their commitment to limited refundability and work incentivizes marks it as a favorite of the mainstream right, attracting a 51^st vote would likely be impossible.  

• Sen. Mitt Romney’s Family Security Act, offering a universal child benefit at $4,200 for young children and $3,000 for those in school, is especially appealing for the way it reforms the tangle of tax credits for lowincome families. It caps the maximum benefit a family can receive at $15,000 per year. 

• Sen. Josh Hawley’s Parent Tax Credit offers a different way of supporting families, offering a flat $12,000 to married parents (or $6,000 to single parents), paid monthly with a very modest earnings requirement, while leaving the Child Tax Credit untouched. This plan is almost better understood as a nostrings-attached child care voucher rather than a competitor in the child benefit wars, as it doesn’t scale with the number of children. It is, however, probably too generous, as it would be added on top of the existing CTC, rather than replacing some of it. 

There is also the Family Income Supplemental Credit (FISC), a very smart plan that introduces a backdoor work requirement by capping the total benefit received at last year’s earnings. The plan, published by American Compass (where, full disclosure, I am a contributing editor), would offers the most generous per-child amount on offer ($4,800/$3,000 per year.) Like the Hawley plan, it would approach a new level of generosity and universality, benefiting most parents (save those with the highest and lowest incomes), and deserves adoption by a Congressional champion. 

My personal sympathies continue to be with something very close to the Romney approach, recognizing its limited (though passionate) constituency on the right. Many on the right responded to the plan by stressing the traditional conservative emphasis on work and, putting my own preferences to leave as few low-income parents out of the benefit as possible aside, it’s clear a conservative alternative to the Biden proposal needs to account for that in some way. 

Ideally, a work requirement would be tied to the number of hours worked (or spent looking for work), rather than earnings, which obviously reflect a function of hours worked and hourly wages. The existing CTC structure, as well as the FISC and Hawley plans, use current- or prior-year wages since they are readily available, but in practice that ends up hurting workers with irregular schedules, lower earnings potential, or in an economically distressed area. But while earnings are reliably reported, hours worked are not, especially for self-employed or gig economy workers. 

While an hours-based work requirement would be conceptually ideal, it would be prohibitively difficult to administer. But the Romney plan would administer their benefit through the Social Security Administration, a system which already keeps track of “credits” for becoming eligible for Social Security—in 2021, for example, you receive one credit for each $1,470 of net earnings, up to the maximum of four credits per year. A parent benefit could be scaled to follow the number of credits received—four credits merit the full benefit, three credits mean a parent receives 75% of the value, and so on. This would ensure a plausible connection to the workforce while eliminating the modestly anti-natal effects of the benefit cap in both the Romney and FISC plans, while also slightly smoothing the abrupt 100% phase-in of the Hawley plan. 

Tying the most generous portion of a family credit to Social Security allows it to fit squarely in the social insurance space. One approach could look something like this: 

• Married parents could receive a $6,000 credit, paid monthly (with the option to opt-out for an annual tax credit instead), and single parents $3,000, regardless of the size of their household and scaled to the number of Social Security credits earned by the household the prior year as suggested above. It could phase out at, say, $50 for every $1,000 of income above the current taxable wage base for Social Security (in 2021, that would be $142,800 for singles and $285,600 for married couples).
• Each eligible child age 0-5 in the house could qualify the family for a $2,400 child credit, and each child age 6-17 would qualify for $1,200, also paid monthly (taking the place of the current CTC). The per-child component of the family credit would be universal and paid to all families, regardless of family income. 

Under this plan, a married-couple family with two young kids would receive a total of $10,800 in direct payments over the course of the year. Parents would only have to earn $5,880 to receive the full parent portion of the credit—again, the same amount we require them to earn now to count as eligible for Social Security. 

Something like this unified family credit proposal would retain part of the Romney plan’s simplicity while maintaining a clear connection to work that could make it more appealing to those on the center-right (and some on the center-left.) Shifting the structure to offer a lump sum of benefits with smaller marginal additions could reduce the push for a per-family cap. Ideally, Romney’s pay-fors and EITC reforms would also be included as part of the negotiation.  

To be clear—this is only how I’d design the benefit for a second-best world. I’d still prefer a Romney-like approach for its administrative simplicity, its egalitarian underpinnings, and its willingness to bite the bullet and acknowledge that for some parents, time in the workforce is simply less valuable than time with their children. 

But as Ross Douthat suggested in the New York Times, the problem with finding a conservative alternative may not be constructing a credit that passes plausible muster. The issue may be that the incentives facing each individual politician, especially those seeking higher office, push them to insist on their way or the highway. 

The result of a unified push towards a family tax credit may not be as simple or egalitarian as some of us would like, or as strictly tied to work as others may want. But if conservatives cannot coalesce around a plan that has plausible appeal to key Democratic senators, as an amalgamation of a Romney-Hawley plan likely could, they will be left watching the Biden administration put down stakes for a path from which there may be no turning back. 

Patrick T. Brown (@PTBwrites) is a former senior policy advisor to Congress’ Joint Economic Committee and a policy fellow at the Institute for Family Studies.