Another slow boring take request: you should spell out the connection you see between Hilary Clinton's anti-Bernie campaign strategy and the Great Awokening.
You often say that all Democratic politics discourse is about relitigating the 2016 primary. That's probably true, and the fact that its true means a piece arguing about it would get a million clicks. If we aren't ready to move on, we may as well argue about the thing that's really making us mad.
Oh, I thought the inclusion of the URL in the letters was helpful, as was the fact that people got a letter from the IRS that said they were GETTING money during the Biden presidency.
I'll put in my obligatory grumpy libertarian comment: If you are poor, don't have kids until you get your act together. No, it's not easy to climb out of poverty but it's much harder if you already have kids.
I'll put on my obligatory grumpy former libertarian hat: If you are poor, you shouldn't be required to forgo having children because your society chooses to reward the rich by letting them write the rules of the game to benefit themselves and screw you.
Thanks to those of you who have shared positive things that this additional money will mean for you and your family. I am very excited about the prospect of this becoming permanent, but since my youngest just turned 18, I was a little sad that it has taken this long. And then when I read about Jeff Bezos taking tax credits for his 4 children that I wasn't always eligible to get for my 2 children (I would never have opted to have 4 children in large part because of the additional cost) I started to feel downright churlish. But I have regained my equanimity and I prefer this approach to one in which TANF goes away, because California does a good job getting TANF dollars to the families of poor children because we never apply the work requirements to the child only benefit, thus even parents who lost their benefits because they have not found employment, can still get some support for their children. And as I say like a broken record, those benefits help the U.S. born children of immigrants and those immigrants are powering our economy and deserve the help.
Great well written post. But, I already miss Marc the intern's charts. I would love to see how much of an outlier the USA is on poverty, especially compared to recently industrialized countries such in Asia and Latin America or Big African countries like Nigeria.
The letter the IRS sent out is the lamest thing ever. It's dry and doesn't even say if I'm eligible --- just that I'll get money if I am. Way to sell the product.
I thought Trump's letters were tacky and dumb, but it was a smart move. His giant signature grabbed your attention. If Trump hadn't done it already, I wouldn't want Biden to do the same, but that cat is out of the bag. Also, Biden's signature straight up looks nicer than Trump's sharpie monstrosity.
"To recall, the expanded Child Tax Credit puts extra cash in the hands of virtually all American parents, leaving out only the richest."
This seems to be the newly favored way of doing "means testing"--give the money to basically everyone, except the explicitly wealthy. Doesn't this just make programs administratively burdensome while saving virtually no money? Is there any practical reason to exclude the rich?
In principle, I am all on board for making the expanded CTC permanent. We should be giving struggling families a hand. So sign me up! And yet . . . and yet . . . there are two things that niggle at me:
-- By the mid-1990s, there was a pretty wide consensus that AFDC was a failure and too often it supported a culture of dependency. The CTC isn't quite AFDC, but it bears a strong family resemblance. Have we decided that that view of 25 years ago was totally wrong and we should basically go back to the old system? If so, I must have missed that argument.
-- We need to spend more. Period. But any permanent program has to be paid for (unlike short-term bailouts, Keynesian stimulus programs, etc.) And I don't care if interest rates are low or even if we expect them to remain low. I may be able to manage a $300,000 mortgage at moderate mortgage rates, but if those rates are 0.0001%, that doesn't mean I can afford a $20 million mortgage -- the principal payments alone will kill me. So we have to generate revenue to pay for the CTC and the other things we want and need to do. But there's clearly a consensus in this country that 'ordinary' people (say, under $400,000 in household income) shouldn't see any tax increases. Elizabeth Warren notwithstanding, you simply can't run a Nordic-style welfare state only paid for with taxes on the wealthiest. (Not to mention that if you personally aren't willing to cough up the bucks for something, how much do you really value it?) So how will we get the middle and upper middle class to be on board for paying more for these undeniably good things we want to do?
AFDC required that you not work in order to qualify. It was designed to subsidize widows to allow them to maintain their way of life and raise the kids if Dad died. It just didn't age into the 1990s well.
The argument in the 90's was you should only get stuff if you are working. The CTC requires that you work. There is no full time mom with no husband getting money from this.
As to how do you pay for it? it will pay for its self as these children growing up in poverty will no longer grow up in poverty and they will make more money and be taxed more. However that will create a 10-20 deficit.
Not trying to give you a hard time, but the similarities between CTC and AFDC are superficial and it would be wise not to equate them… It’s a bit alarming to see this asked in good faith because AFDC is a big part of the legacy of the “welfare causes dependency” trope, which is true of poorly designed welfare programs.
I can’t remember the episode, but on the Weeds, Matt has described AFDC in terms very much opposite to “very well designed” (or whatever he said about CTC).
As others pointed out, AFDC had a strong disincentive to work, and this was by design: it was originally meant for widowed white women, who weren’t expected to work.
I don't know the exact details of AFDC, but everything I've read noted that it has a strong work disincentive. Basically it goes away if you start working, so many people decided not to work. Not providing a work disincentive is practically the number one rule of welfare programs, so AFDC was pretty seriously flawed.
The CTC doesn't provide a work disincentive. In fact, the old CTC provided a strong work incentive: you didn't get it if you didn't work. The new CTC has neither an incentive nor a disincentive. That may seem like a small thing, but it really sets it apart from the AFDC. This isn't going "back to the old system".
Yeah, the CTC is given regardless of work status and doesn't really benefit those that don't work. AFDC specifically phased out when the recipient started earning just about any appreciable income.
Maybe our revealed preference is that we don't actually want those things? Most of us have figured out how to carve out a decent life in this country. I recognize it's not great for everyone, and I certainly want to sand off some of the rough edges. But I also don't, for example, want to completely overturn the healthcare system or higher education or (etc.) because so far, few to none of the proposals I've seen actually address the core problems, vs. just wasting money.
I hope you're wrong. I'd like to see us do far more to make this a more equitable society, even if not all policies are a total success. But I fear that your first question may reflect the views of the median voter. That it's not rural state bias in the Senate, Electoral College skews, or gerrymandering that preclude passing these ideas into law and more that most voters are hesitant to see truly bold public policy.
Even if democrats controlled everything, I don't think you would see M4A and free college (to use my two examples). My (possible) disagreement with your vision is that I don't see utopia as basically what we have now, just given to everyone. To continue an example, to fix higher education, I think we need to break the expectation that everyone needs a degree, that those degrees need to take four years, and that universities are the only place to get training. In this regard, I think Matt's full employment goal will actually do more to help than more free money.
Other countries that do have the things you want actually do implement some of the cost controls necessary to make them work, e.g., lower doctor pay, more tracking of students onto different paths, etc. (as I understand these things at least). I'd be more open if I saw the proponents here actually tackling these really difficult issues, but they don't because (1) they may not be interested anyway and (2) since it's politically impossible still, there's no point in bringing up the negative aspects.
All healthcare staff wages in the US is less than 10% of overall health care costs. You can be extremely aggressive at cutting doctor pay and you’re not going to get much overall bang for the buck.
I've lived the vast majority of my life in the EU, and after coming to the US I understand why tuition-free college isn't a good idea.
However, I would disagree with you on healthcare. Doctor pay in the EU is lower than in the EU, but all high-paying jobs pay less anyway. To the best of my knowledge, doctors are still the highest-paid employees or something close to that in the EU. On the other hand, you don't get that army of billing experts there, so I mainly view the US healthcare system as a make-work jobs program (but make-work is inefficient).
As a side note, I usually wait for my vacations back home to see doctors, as I trust them more than US doctors. Here, I just have the feeling that the doctor tries to steer me into useless stuff to increase the amount my insurance and I will have to pay.
>>>I understand why tuition-free college isn't a good idea.<<<
Why isn't it a good idea from your European perspective? I'm genuinely curious. K-12 education in the United States is tuition-free. I don't see the harm in expanding this dynamic to include college. If anything, the statistics I'm aware of suggest the growth of education attainment in America has slowed pretty dramatically in recently years. That is, it's still growing, but very, very slowly, and the US has been overtaken by other high income countries in this area.
I have written a few comments on this in past posts, but I'm not sure how to search for them. If you know, let me know!
Meanwhile, one quick point that I want to make is that it's "easy" to provide tuition-free college in the US. Just make it illegal for public universities to charge tuition. "Tuition-free" doesn't necessarily mean that the university gets from the public as much money as it wants. I think that this action would lead American universities to get closer to European ones in global ranking. (My past comments are much more detailed than this, but I can't find them now.)
Sure, I threw doctors under the bus because that's the one I remember, but I agree that there's a lot of really tough budgeting at the provider level in general that would need to happen to get to something like M4A, yet I don't think I've seen any proponents talk about. Even the ACA was a very complex, 1000-page bill and despite being a significantly less drastic change than M4A, it still had many unpredictable consequences.
Sure, I don't believe that M4A is necessarily a good idea. I think that healthcare should be treated like safety. A public tier available to everyone financed by taxes (police), and whoever wants something more can always go private (private security companies).
I have mostly used doctors outside of the public system back home, but I had good bargaining power because they knew I could just go to the public option and pay nothing, if they weren't clearly superior in terms of quality (and they didn't have a good quality to cost ratio).
So, direct provision of services (at the same government level that provides courts/police/firefighting) and optional unregulated private insurance is the optimal system I think. (I think that healthcare is one of the few things that we do better than the US back home.)
I went into the paid labor market when I was 18 and I just don't see how this is a good practice adulthood experience compared to sending people to 13-16th grade and increasing vocational and life skills classes. The labor market, just isn't concerned at all with humanistic development as it should be but most 18 year olds still need a lot of it.
Like the labor market is so much live ammunition. It wasn't intermediate comp that college was good for. It was really good adulthood practice, at least for a life as a professional.
In the not to distant past, I worked with a large number of new employees. 2/3rds were recent college grads while 1/3 were people without degrees but work experience. For most of what we needed, I would take a 22 year old with 4 years of work experience over someone who had been in college for 4 years.
We were going to have to teach them how to do almost everything anyway, might as well get someone whose perception had already been influenced by reality. The amount of recent college grads who were used to being able to skip work, get praise for mediocre work, and pushed back against the idea of doing entry level grunt work was incredible. There were a lot of good people who became excellent workers in there, but I was always shocked by the contrast.
I wasn’t really speaking about making better employees.
Like as an autistic person cooking was never going to teach me the kind of social skills I needed to cope with a post high school world. University made me a much more competent adult beyond just doing a job.
I agree that we're unlikely to have M4A and free college but mostly because those things really aren't popular (or their popularity wouldn't survive any sustained debate). I'm more concerned about things that people are generally in favor of but don't think they personally have to pay for them.
The ghost of '84 Mondale looms large over our political landscape.
So what things do you want to spend money on? I agree that expanding the CTC (or equivalent) is a potentially good one (as you note, we should take care to not fall into the same traps as before). I was extremely encouraged by Romney's (paid for!) proposal and then quite disheartened to see it get zero traction.
I'm not sure my preferences matter, since I'm not the median voter and I'd be fine paying higher taxes for things on my particular wish list, but #1 is to spend vastly more to fight climate change (rewiring our grid, vast expansion of renewables, greatly increasing penetration of EVs into the national fleet, etc.) Build on and expand the structure of Obamacare. Create more of a financial floor for struggling working families. Lots of other things!
These are great questions. Hope if answers. I think this is where I most diverge with Matt's progressive vision ... specifically the money-printer-go-brrrr approach to fiscal policy as if debt levels are disconnected from the economy and / or can be continually inflated away.
I think continuing Matt's post from yesterday and if you buy his arguments ... we can now say the last round of stimulus was too big, too compressed, and too short-sighted. Probably too soon to tell if we're facing any long-term risks. But I'm certainly not going to discount the possibility of coming systemic economic problems.
Cannot fucking wait until my daughter gets this. She is a single mom, going to school full-time to fix robots, but because she lives mainly on scholarships she didn’t get much of a child tax credit because her income was too low. She has a work-study job which is part time.
She is a great kid doing great, but it will be nice to see her head a little bit more breathing room.
I feel like it was a big mistake not to make that bargain with Romney and do his plan instead. Almost as good at eliminating child poverty, gets some of that bipartisan cred that can be used in elections, and most importantly is just permanent. I feel like doing the CTC this was is going for "double or nothing."
Yeah, if the plan gets extended every year it's great, IF. We'll see if Democrats are able to keep getting this thing extended in like 2025 the next time there's a debt ceiling fight with a GOP senate majority and Ted Cruz holds the economy hostage again and demands to kill this or something.
Romney is one vote in the Senate. No other Senate Republicans came out in support of the plan, to my knowledge. And I can't think any House Republicans will back a tax credit associated with "Romney". So you'd need unified Democratic support on a plan that cuts certain anti-poverty credits (albeit, it makes up for those cuts with its tax credit) and pays for itself by further eliminating the SALT deduction (something that certain suburban swing-district Dems care a lot about)... seems unlikely.
I can imagine that might make couples *stay* together at the margins. In any case, I am against this program primarily because it is structured mainly as a middle-class entitlement rather than as an anti-poverty program.
In other words, a universal program that treats all children as of equal value, as opposed to a grudging means-tested benefit for stigmatized poor people?
I would rather see it otherwise. Every parent should get something, on principle, if nothing else to convey to well-off people that the community gives something to them, rather than just taking.
That's an understandable objection but the only government benefits that don't get stigmatized as "welfare" are those that are broadly available to the middle class.
Think of a woman working as a home health aid during the day and maybe driving for Uber eats in the evening trying to get by as best she can. Now I don't think you're one of those "just learn to code" folks. So I assume you agree home health aid with a side hustle might be the best she is capable of. Would you want to stigmatize her for being someone with limited ability?
Do you think there's something helpful about making people feel bad about themselves and others? I take it that this is prima facie a bad thing, unless there's some powerful good that it creates.
It used to be that women would assiduously avoid bearing children until they were married. We know that benefitted children. Removing that is prima facie a bad thing.
I mean, it's not fun, but we can probably all agree that there's a time and a place for negative emotions. There's a stigma nowadays against beating your spouse or drinking while driving; but that wasn't always the case. You'd probably agree stigmatizing those actions is OK, right?
More controversially - there's a stigma in East Asia against having kids out of wedlock. On the one hand I'd say it's awful to make single mothers feel bad or ashamed about their situation. But on the other hand there are very few babies born outside of two-provider families, which probably does a lot to reduce child poverty. There are probably similar pros and cons when it comes to stigmatizing being out of work
Depends on what you're stigmatizing. You can stigmatize those who benefit from the program as lazy or undeserving, inviting racial undertones. But in this case, I was referring to the perception of the program itself and whether it can garner sufficient political support to establish and maintain itself
Maybe Joe Biden should expend more effort on making sure it gains adequate political support instead of taking the lazy route and creating a new middle-class entitlement program.
This is EXACTLY wrong. During a downturn, the purpose of increased government spending is to return the growth curve to the state it would have been absent the downturn.
Thus, a one-time expenditure permanently increases the annual economic output of the nation FOREVER.
Conversely, failure of the government to respond and increase spending condemns the nation to permanently restricted economic output.
Many people believe that the past year or so has been characterized by an economic slowdown of some sort or other, and that we aren't yet out of it, even if some classes of goods are currently supply-constrained.
Why would their children pay down all the debt? If their children insist on reducing safe investments like treasury bonds than yes, they will definitely experience poor economic conditions. Looking at all debt as equal is very odd.
The kids get the money and also pay it back later. Govt coordination smoothes income and consumption across the lifecycle. Our basis is the idea that resources invested in someone early in their life provide more value than they would during the persons peak working years. This seems both intuitive and evidence based to me.
It is simply not true that the same kids who get the money pay it back as adults. And government coordination smoothing consumption is a monstrous policy.
Characteristically, someone's earning power starts out very low, increases over the course of one's career to a high, and then drops sharply as they retire. "Smoothing consumption" on an individual level refers to taking out loans during the early periods, paying them back with interest during peak earnings years, setting aside some savings during those earning years, and withdrawing them during retirement, so that one's living standards can be relatively constant, instead of having the same peaked shape. "Government coordination" of this often means that it can be done at the favorable interest rates available to the government, or even as direct payments from peak earners to others, so that finance costs of the consumption smoothing are smaller.
This is *precisely* what social security, and the child tax credit, are.
Isn't this is simply an argument to make it truly universal? If all kids (parents) get it, then it will get paid back by the same people who benefited.
I dunno, maybe it’s monstrous to you. to me, that seems like a question about what effect the policy has on people’s lives. but if it feels monstrous to you regardless of outcome, then god bless.
I’m more concerned by your statement that the future generation will experience generally lower growth than without the policy. To me, monstrous or not, it seems like a straightforward investment as little kids have a very hard time earning money but reap large benefits from consumption. I would often bet on private investment over public, but this seems like a great example for the public side, especially as it is filtered through the parents and not centrally planned.
Do these kids get significant long term benefit from additional resources? Seems like yes.
I think there's plenty of value in trying to improve the outcomes for all children, poor and non-poor, beyond what's possible to do by hard-pressed parents in a concentrated period of their lives. I don't see children as being owned by their parents, they are part of the nation at large, and pooling national resources to invest in their care and education is a smart move in that context. I can see that this might seem hard to understand if you don't see the world this way.
We’re talking about transfers it’s not a mystery. Govt could do similar stuff with forced savings or mandated insurance in other cases like retirement or disability but this seems like a clear situation for a direct transfer and I doubt these details of program design would answer what appear to be mainly ‘libertarian’ objections on your part.
I think borrowing is a good way to finance it since I think the payments effect should be pro growth down the line. But direct transfers would be fine with me as well. again assuming the program works!
Your last objection is what interests me. Better off parents are not nearly as likely to turn an additional dollar into a great investment in their kid, we agree there. Matt says the point is to get some better off people to actually produce additional children. I think that sounds great but I’m interested to learn what happens in reality. I could see payments priming the pump in a sense, getting some middle class families to go for a third child even though it will require that they cut back luxury consumption elsewhere—the payments alone certainly won’t make adding a child easy for people who are strivers / class conscious / bougie/ whatever. So I could also see it being an extra vacation for the vast majority of these families and no extra child, which doesn’t achieve what I want at all. Time will tell I guess.
1. That it is a middle-class entitlement program, by and large. Maybe that helps make it politically palatable, but I do not see that as adequate justification.
2. It’s not paid for. If this is truly a program that has clear benefits then find some less worthy program to cut in its place.
I heard this same thing in the seventies and eighties when I was growing up. I guess we’re paying for it now. Has anyone ever tried to quantify what that means in practice?
“All told, the Administration projects real economic growth averaging 2.9 percent over the 2021–2030 period; in the baseline projections that CBO produced at the beginning of this year, real economic growth averages 1.7 percent over that period.”
Do you think the spending paid for by creating debt is worth more or less than the $345B we pay each year? I think it's worth more and the debt is a worthy investment in the US economy and society. What about you?
It depends right? I can be (e.g., the Apollo program). On the other side, it seems Summers' critiques of the American Rescue Plan are correct and that seems wasteful - both in the absolute size of the program and the compressed duration.
I think you can have arguments about efficiency and still see them as a positive. I was against the 2017 tax cuts as I felt it was an inefficient use of funds but it created the 2018 boom that led to 5-8% raises for my employees and for me as their manager that stayed with us for years as opposed to the standard 3%. It still was a positive net compared to not doing it in my view. Chick-Fil-A now has a standard pay of $18/hr. That's freaking huge and will have lasting impacts for years to come. Maybe in the short term it leads to some inflation but I think it's all worth it.
Matt seems to have a weird tick against doing anything about Climate change, which is a big part of Biden's infrastructure plan. Matt's stance on this one isn't really supported by research or popular on the left, or general public, so he just sort of elides it here. But it's a pretty big deal.
I agree with most of the rest of what he's written here, but at the end he seems to imply that there's some sort of trade off where not passing infrastructure makes extending the CTC more likely, and vice versa. Maybe he's just importing Summer's framing. But, in any case, I don't think that is true and would think that having a fight about extending CTC in an election year would be fine with most Democrats.
I agree--would like Matt to do a post soon on climate change. I think that's why Biden prioritized the infrastructure package in the first place--to try to use popular "roads and bridges" stuff (at least the Washington conventional wisdom is that it's popular...) as a way to also gets hundreds of billions for green-energy-tech rollouts (i.e., electric car chargers, electrified bus fleets, etc.) and research. So... does Matt think we're fine on the climate change front if we don't get any of the infrastructure plan? Some combination of Endless Frontiers and Surface Transportation Act reauthorization is good enough?
My impression from seeing coverage of this infrastructure plan in other places is that it hasn't been especially well structured to help address climate change - about as bad as the "Green New Deal". Lots of subsidies for electric cars, but still has more money for roads than transit, even if you ignore the electric car subsidies.
It's an improvement over existing policy in the ratios, but still primarily aimed at entrenching automotive infrastructure. Little if anything directed at making walkable neighborhoods easier, which is really the only thing that can tilt the balance away from transportation emissions and towards zero emission transportation.
The last part i strongly disagree with. Urbanism is pretty much a dead end in terms of climate change. There are 120 million housing units in the US right now, with new construction running at 1.2 million per year, even with some catch up needed we're lucky to get 15% replaced in the next ten years. Even with the most pro-urbanism policies one could imagine, most of those will be suburban.
The average car, by contrast lasts 12 years. Flipping those to electric and the grid to renewable is much more doable than any transit lead change.
It's easier to create walkable neighborhoods (something that we already know how to do) than go to 100% renewables (something that is being actively researched fortunately, but we still don't know how it's going to be done in most cases).
I believe "One Billion Americans" calls for immigration as a partial response to climate change. People in places close to the equator can flee to more welcoming climates...like the USA.
That isn't really a response. If anything it makes climate change worse (assuming this immigration is occurring prior to the US becoming nearly-universally renewable based). Adapting to the US lifestyle increases your carbon footprint.
Another slow boring take request: you should spell out the connection you see between Hilary Clinton's anti-Bernie campaign strategy and the Great Awokening.
You often say that all Democratic politics discourse is about relitigating the 2016 primary. That's probably true, and the fact that its true means a piece arguing about it would get a million clicks. If we aren't ready to move on, we may as well argue about the thing that's really making us mad.
Oh, I thought the inclusion of the URL in the letters was helpful, as was the fact that people got a letter from the IRS that said they were GETTING money during the Biden presidency.
It's fine with me.
I'll put in my obligatory grumpy libertarian comment: If you are poor, don't have kids until you get your act together. No, it's not easy to climb out of poverty but it's much harder if you already have kids.
I'll put on my obligatory grumpy former libertarian hat: If you are poor, you shouldn't be required to forgo having children because your society chooses to reward the rich by letting them write the rules of the game to benefit themselves and screw you.
Thanks to those of you who have shared positive things that this additional money will mean for you and your family. I am very excited about the prospect of this becoming permanent, but since my youngest just turned 18, I was a little sad that it has taken this long. And then when I read about Jeff Bezos taking tax credits for his 4 children that I wasn't always eligible to get for my 2 children (I would never have opted to have 4 children in large part because of the additional cost) I started to feel downright churlish. But I have regained my equanimity and I prefer this approach to one in which TANF goes away, because California does a good job getting TANF dollars to the families of poor children because we never apply the work requirements to the child only benefit, thus even parents who lost their benefits because they have not found employment, can still get some support for their children. And as I say like a broken record, those benefits help the U.S. born children of immigrants and those immigrants are powering our economy and deserve the help.
Great well written post. But, I already miss Marc the intern's charts. I would love to see how much of an outlier the USA is on poverty, especially compared to recently industrialized countries such in Asia and Latin America or Big African countries like Nigeria.
The letter the IRS sent out is the lamest thing ever. It's dry and doesn't even say if I'm eligible --- just that I'll get money if I am. Way to sell the product.
I thought Trump's letters were tacky and dumb, but it was a smart move. His giant signature grabbed your attention. If Trump hadn't done it already, I wouldn't want Biden to do the same, but that cat is out of the bag. Also, Biden's signature straight up looks nicer than Trump's sharpie monstrosity.
"To recall, the expanded Child Tax Credit puts extra cash in the hands of virtually all American parents, leaving out only the richest."
This seems to be the newly favored way of doing "means testing"--give the money to basically everyone, except the explicitly wealthy. Doesn't this just make programs administratively burdensome while saving virtually no money? Is there any practical reason to exclude the rich?
In principle, I am all on board for making the expanded CTC permanent. We should be giving struggling families a hand. So sign me up! And yet . . . and yet . . . there are two things that niggle at me:
-- By the mid-1990s, there was a pretty wide consensus that AFDC was a failure and too often it supported a culture of dependency. The CTC isn't quite AFDC, but it bears a strong family resemblance. Have we decided that that view of 25 years ago was totally wrong and we should basically go back to the old system? If so, I must have missed that argument.
-- We need to spend more. Period. But any permanent program has to be paid for (unlike short-term bailouts, Keynesian stimulus programs, etc.) And I don't care if interest rates are low or even if we expect them to remain low. I may be able to manage a $300,000 mortgage at moderate mortgage rates, but if those rates are 0.0001%, that doesn't mean I can afford a $20 million mortgage -- the principal payments alone will kill me. So we have to generate revenue to pay for the CTC and the other things we want and need to do. But there's clearly a consensus in this country that 'ordinary' people (say, under $400,000 in household income) shouldn't see any tax increases. Elizabeth Warren notwithstanding, you simply can't run a Nordic-style welfare state only paid for with taxes on the wealthiest. (Not to mention that if you personally aren't willing to cough up the bucks for something, how much do you really value it?) So how will we get the middle and upper middle class to be on board for paying more for these undeniably good things we want to do?
Answer those two points and I'm a happy guy.
AFDC required that you not work in order to qualify. It was designed to subsidize widows to allow them to maintain their way of life and raise the kids if Dad died. It just didn't age into the 1990s well.
The argument in the 90's was you should only get stuff if you are working. The CTC requires that you work. There is no full time mom with no husband getting money from this.
As to how do you pay for it? it will pay for its self as these children growing up in poverty will no longer grow up in poverty and they will make more money and be taxed more. However that will create a 10-20 deficit.
Not trying to give you a hard time, but the similarities between CTC and AFDC are superficial and it would be wise not to equate them… It’s a bit alarming to see this asked in good faith because AFDC is a big part of the legacy of the “welfare causes dependency” trope, which is true of poorly designed welfare programs.
I can’t remember the episode, but on the Weeds, Matt has described AFDC in terms very much opposite to “very well designed” (or whatever he said about CTC).
As others pointed out, AFDC had a strong disincentive to work, and this was by design: it was originally meant for widowed white women, who weren’t expected to work.
I don't know the exact details of AFDC, but everything I've read noted that it has a strong work disincentive. Basically it goes away if you start working, so many people decided not to work. Not providing a work disincentive is practically the number one rule of welfare programs, so AFDC was pretty seriously flawed.
The CTC doesn't provide a work disincentive. In fact, the old CTC provided a strong work incentive: you didn't get it if you didn't work. The new CTC has neither an incentive nor a disincentive. That may seem like a small thing, but it really sets it apart from the AFDC. This isn't going "back to the old system".
Yeah, the CTC is given regardless of work status and doesn't really benefit those that don't work. AFDC specifically phased out when the recipient started earning just about any appreciable income.
Regarding point one, isn’t the main difference to AFDC that recipients list their benefits if they got a job? That’s not the case here.
*lost
(just fixing an error that unfortunately Substack won't let you fix.)
Maybe our revealed preference is that we don't actually want those things? Most of us have figured out how to carve out a decent life in this country. I recognize it's not great for everyone, and I certainly want to sand off some of the rough edges. But I also don't, for example, want to completely overturn the healthcare system or higher education or (etc.) because so far, few to none of the proposals I've seen actually address the core problems, vs. just wasting money.
I hope you're wrong. I'd like to see us do far more to make this a more equitable society, even if not all policies are a total success. But I fear that your first question may reflect the views of the median voter. That it's not rural state bias in the Senate, Electoral College skews, or gerrymandering that preclude passing these ideas into law and more that most voters are hesitant to see truly bold public policy.
Even if democrats controlled everything, I don't think you would see M4A and free college (to use my two examples). My (possible) disagreement with your vision is that I don't see utopia as basically what we have now, just given to everyone. To continue an example, to fix higher education, I think we need to break the expectation that everyone needs a degree, that those degrees need to take four years, and that universities are the only place to get training. In this regard, I think Matt's full employment goal will actually do more to help than more free money.
Other countries that do have the things you want actually do implement some of the cost controls necessary to make them work, e.g., lower doctor pay, more tracking of students onto different paths, etc. (as I understand these things at least). I'd be more open if I saw the proponents here actually tackling these really difficult issues, but they don't because (1) they may not be interested anyway and (2) since it's politically impossible still, there's no point in bringing up the negative aspects.
All healthcare staff wages in the US is less than 10% of overall health care costs. You can be extremely aggressive at cutting doctor pay and you’re not going to get much overall bang for the buck.
I've lived the vast majority of my life in the EU, and after coming to the US I understand why tuition-free college isn't a good idea.
However, I would disagree with you on healthcare. Doctor pay in the EU is lower than in the EU, but all high-paying jobs pay less anyway. To the best of my knowledge, doctors are still the highest-paid employees or something close to that in the EU. On the other hand, you don't get that army of billing experts there, so I mainly view the US healthcare system as a make-work jobs program (but make-work is inefficient).
As a side note, I usually wait for my vacations back home to see doctors, as I trust them more than US doctors. Here, I just have the feeling that the doctor tries to steer me into useless stuff to increase the amount my insurance and I will have to pay.
>>>I understand why tuition-free college isn't a good idea.<<<
Why isn't it a good idea from your European perspective? I'm genuinely curious. K-12 education in the United States is tuition-free. I don't see the harm in expanding this dynamic to include college. If anything, the statistics I'm aware of suggest the growth of education attainment in America has slowed pretty dramatically in recently years. That is, it's still growing, but very, very slowly, and the US has been overtaken by other high income countries in this area.
I have written a few comments on this in past posts, but I'm not sure how to search for them. If you know, let me know!
Meanwhile, one quick point that I want to make is that it's "easy" to provide tuition-free college in the US. Just make it illegal for public universities to charge tuition. "Tuition-free" doesn't necessarily mean that the university gets from the public as much money as it wants. I think that this action would lead American universities to get closer to European ones in global ranking. (My past comments are much more detailed than this, but I can't find them now.)
Sure, I threw doctors under the bus because that's the one I remember, but I agree that there's a lot of really tough budgeting at the provider level in general that would need to happen to get to something like M4A, yet I don't think I've seen any proponents talk about. Even the ACA was a very complex, 1000-page bill and despite being a significantly less drastic change than M4A, it still had many unpredictable consequences.
Sure, I don't believe that M4A is necessarily a good idea. I think that healthcare should be treated like safety. A public tier available to everyone financed by taxes (police), and whoever wants something more can always go private (private security companies).
I have mostly used doctors outside of the public system back home, but I had good bargaining power because they knew I could just go to the public option and pay nothing, if they weren't clearly superior in terms of quality (and they didn't have a good quality to cost ratio).
So, direct provision of services (at the same government level that provides courts/police/firefighting) and optional unregulated private insurance is the optimal system I think. (I think that healthcare is one of the few things that we do better than the US back home.)
*“Doctor pay in the EU is lower than in the US”
I went into the paid labor market when I was 18 and I just don't see how this is a good practice adulthood experience compared to sending people to 13-16th grade and increasing vocational and life skills classes. The labor market, just isn't concerned at all with humanistic development as it should be but most 18 year olds still need a lot of it.
Like the labor market is so much live ammunition. It wasn't intermediate comp that college was good for. It was really good adulthood practice, at least for a life as a professional.
In the not to distant past, I worked with a large number of new employees. 2/3rds were recent college grads while 1/3 were people without degrees but work experience. For most of what we needed, I would take a 22 year old with 4 years of work experience over someone who had been in college for 4 years.
We were going to have to teach them how to do almost everything anyway, might as well get someone whose perception had already been influenced by reality. The amount of recent college grads who were used to being able to skip work, get praise for mediocre work, and pushed back against the idea of doing entry level grunt work was incredible. There were a lot of good people who became excellent workers in there, but I was always shocked by the contrast.
I wasn’t really speaking about making better employees.
Like as an autistic person cooking was never going to teach me the kind of social skills I needed to cope with a post high school world. University made me a much more competent adult beyond just doing a job.
I agree that we're unlikely to have M4A and free college but mostly because those things really aren't popular (or their popularity wouldn't survive any sustained debate). I'm more concerned about things that people are generally in favor of but don't think they personally have to pay for them.
The ghost of '84 Mondale looms large over our political landscape.
So what things do you want to spend money on? I agree that expanding the CTC (or equivalent) is a potentially good one (as you note, we should take care to not fall into the same traps as before). I was extremely encouraged by Romney's (paid for!) proposal and then quite disheartened to see it get zero traction.
I'm not sure my preferences matter, since I'm not the median voter and I'd be fine paying higher taxes for things on my particular wish list, but #1 is to spend vastly more to fight climate change (rewiring our grid, vast expansion of renewables, greatly increasing penetration of EVs into the national fleet, etc.) Build on and expand the structure of Obamacare. Create more of a financial floor for struggling working families. Lots of other things!
These are great questions. Hope if answers. I think this is where I most diverge with Matt's progressive vision ... specifically the money-printer-go-brrrr approach to fiscal policy as if debt levels are disconnected from the economy and / or can be continually inflated away.
Where do we see the higher levels of debt in the US causing economic problems?
I think continuing Matt's post from yesterday and if you buy his arguments ... we can now say the last round of stimulus was too big, too compressed, and too short-sighted. Probably too soon to tell if we're facing any long-term risks. But I'm certainly not going to discount the possibility of coming systemic economic problems.
https://www.nytimes.com/2021/06/15/opinion/inflation-federal-reserve-powell-biden.html
https://www.bloomberg.com/news/articles/2021-05-28/lawrence-summers-says-biden-budget-risks-oveheating-economy
https://www.bloomberg.com/news/articles/2021-03-20/summers-says-u-s-facing-worst-macroeconomic-policy-in-40-years
Social security for kids would be a worthwhile and exciting legacy
Cannot fucking wait until my daughter gets this. She is a single mom, going to school full-time to fix robots, but because she lives mainly on scholarships she didn’t get much of a child tax credit because her income was too low. She has a work-study job which is part time.
She is a great kid doing great, but it will be nice to see her head a little bit more breathing room.
He did it! “slow boring of hard boards.” I’ve been waiting to see that show up.
I feel like it was a big mistake not to make that bargain with Romney and do his plan instead. Almost as good at eliminating child poverty, gets some of that bipartisan cred that can be used in elections, and most importantly is just permanent. I feel like doing the CTC this was is going for "double or nothing."
Yeah, if the plan gets extended every year it's great, IF. We'll see if Democrats are able to keep getting this thing extended in like 2025 the next time there's a debt ceiling fight with a GOP senate majority and Ted Cruz holds the economy hostage again and demands to kill this or something.
Romney is one vote in the Senate. No other Senate Republicans came out in support of the plan, to my knowledge. And I can't think any House Republicans will back a tax credit associated with "Romney". So you'd need unified Democratic support on a plan that cuts certain anti-poverty credits (albeit, it makes up for those cuts with its tax credit) and pays for itself by further eliminating the SALT deduction (something that certain suburban swing-district Dems care a lot about)... seems unlikely.
I was curious about what happened to it, and I just found this piece. It says that both democrats and republicans found things not to like, which sounds like good policy to many of us but also has made it DOA when combined with Romney's outsider position already: https://www.theatlantic.com/politics/archive/2021/05/mitt-romney-child-tax-credit/618955/
Never underestimate Democrats’ ability to run away from any good idea they passed.
I fail to see how this plan encourages women to marry before having children. Or is that plan coming next?
No one said it did. It just seems like you want an excuse to complain about how others live their lives.
You would allow parents to treat their children however they wished?
? Is this how this how professional trolling works, change the subject and make a wild accusation?
“How others live their lives” includes how they treat their children. Do you want society to have a say in how parents treat their children?
The phaseout for married couples is at a much higher level of income than for single people
I can imagine that might make couples *stay* together at the margins. In any case, I am against this program primarily because it is structured mainly as a middle-class entitlement rather than as an anti-poverty program.
In other words, a universal program that treats all children as of equal value, as opposed to a grudging means-tested benefit for stigmatized poor people?
This plan treats kids whose parents earn over $150K per year as less equal.
I would rather see it otherwise. Every parent should get something, on principle, if nothing else to convey to well-off people that the community gives something to them, rather than just taking.
Principle would be ensuring that poor children are not poor.
That's an understandable objection but the only government benefits that don't get stigmatized as "welfare" are those that are broadly available to the middle class.
What’s wrong with stigmatization?
Think of a woman working as a home health aid during the day and maybe driving for Uber eats in the evening trying to get by as best she can. Now I don't think you're one of those "just learn to code" folks. So I assume you agree home health aid with a side hustle might be the best she is capable of. Would you want to stigmatize her for being someone with limited ability?
Never. My presumption is that anyone who works at a for-profit business is entitled to my respect.
Do you think there's something helpful about making people feel bad about themselves and others? I take it that this is prima facie a bad thing, unless there's some powerful good that it creates.
It used to be that women would assiduously avoid bearing children until they were married. We know that benefitted children. Removing that is prima facie a bad thing.
I mean, it's not fun, but we can probably all agree that there's a time and a place for negative emotions. There's a stigma nowadays against beating your spouse or drinking while driving; but that wasn't always the case. You'd probably agree stigmatizing those actions is OK, right?
More controversially - there's a stigma in East Asia against having kids out of wedlock. On the one hand I'd say it's awful to make single mothers feel bad or ashamed about their situation. But on the other hand there are very few babies born outside of two-provider families, which probably does a lot to reduce child poverty. There are probably similar pros and cons when it comes to stigmatizing being out of work
Depends on what you're stigmatizing. You can stigmatize those who benefit from the program as lazy or undeserving, inviting racial undertones. But in this case, I was referring to the perception of the program itself and whether it can garner sufficient political support to establish and maintain itself
Maybe Joe Biden should expend more effort on making sure it gains adequate political support instead of taking the lazy route and creating a new middle-class entitlement program.
Is that something it claims to do? Perhaps you are actually succeeding at seeing how it doesn't.
“Is that something it claims to do?”
No. This is lazy policy.
"...who to thank for it."
This is financed by borrowing, right? They can thank their children who will be paying higher taxes and living in an economy experiencing less growth.
There's some long term economic benefit to fewer children living in poverty, right? Longer life expectancies, more education, etc.
Absolutely! So let’s target the poor with this policy.
This is EXACTLY wrong. During a downturn, the purpose of increased government spending is to return the growth curve to the state it would have been absent the downturn.
Thus, a one-time expenditure permanently increases the annual economic output of the nation FOREVER.
Conversely, failure of the government to respond and increase spending condemns the nation to permanently restricted economic output.
What downturn?
Many people believe that the past year or so has been characterized by an economic slowdown of some sort or other, and that we aren't yet out of it, even if some classes of goods are currently supply-constrained.
“Many people believe that the past year or so has been characterized by an economic slowdown of some sort or other, and that we aren't yet out of it.”
Who are those ignoramuses?
Why would their children pay down all the debt? If their children insist on reducing safe investments like treasury bonds than yes, they will definitely experience poor economic conditions. Looking at all debt as equal is very odd.
The kids get the money and also pay it back later. Govt coordination smoothes income and consumption across the lifecycle. Our basis is the idea that resources invested in someone early in their life provide more value than they would during the persons peak working years. This seems both intuitive and evidence based to me.
It is simply not true that the same kids who get the money pay it back as adults. And government coordination smoothing consumption is a monstrous policy.
"government coordination smoothing consumption is a monstrous policy"
Sounds like someone thinks Social Security is monstrous!
What does “government coordination smoothing consumption” mean to you?
Characteristically, someone's earning power starts out very low, increases over the course of one's career to a high, and then drops sharply as they retire. "Smoothing consumption" on an individual level refers to taking out loans during the early periods, paying them back with interest during peak earnings years, setting aside some savings during those earning years, and withdrawing them during retirement, so that one's living standards can be relatively constant, instead of having the same peaked shape. "Government coordination" of this often means that it can be done at the favorable interest rates available to the government, or even as direct payments from peak earners to others, so that finance costs of the consumption smoothing are smaller.
This is *precisely* what social security, and the child tax credit, are.
“‘Smoothing consumption’ on an individual level” is finance by an individual. Government transfer programs are something else.
Isn't this is simply an argument to make it truly universal? If all kids (parents) get it, then it will get paid back by the same people who benefited.
“Isn't this is simply an argument to make it truly universal?”
No.
Ken, what is your justification for hating government so much? What makes it so monstrous exactly?
What does “government coordination smoothing consumption” mean to you?
And I do not hate government when its goal is protecting liberty.
Kenny's answer above seems pretty good to me.
Does Social Security protect liberty?
It does not.
I dunno, maybe it’s monstrous to you. to me, that seems like a question about what effect the policy has on people’s lives. but if it feels monstrous to you regardless of outcome, then god bless.
I’m more concerned by your statement that the future generation will experience generally lower growth than without the policy. To me, monstrous or not, it seems like a straightforward investment as little kids have a very hard time earning money but reap large benefits from consumption. I would often bet on private investment over public, but this seems like a great example for the public side, especially as it is filtered through the parents and not centrally planned.
Do these kids get significant long term benefit from additional resources? Seems like yes.
But, if no, then the policy looks bad!
“…if it feels monstrous to you regardless of outcome, then god bless.”
What does “government coordination smoothing consumption” mean to you?
“I’m more concerned by your statement that the future generation will experience generally lower growth than without the policy.”
This is financed by borrowing, no?
“Do these kids get significant long term benefit from additional resources?”
If this were for poor families, or near-poor families, I would agree. But its not that: This is broad welfare for the middle class.
I think there's plenty of value in trying to improve the outcomes for all children, poor and non-poor, beyond what's possible to do by hard-pressed parents in a concentrated period of their lives. I don't see children as being owned by their parents, they are part of the nation at large, and pooling national resources to invest in their care and education is a smart move in that context. I can see that this might seem hard to understand if you don't see the world this way.
I am perfectly fine with a community pooling some of its resources to care for children. The United States, however, is not a community.
We’re talking about transfers it’s not a mystery. Govt could do similar stuff with forced savings or mandated insurance in other cases like retirement or disability but this seems like a clear situation for a direct transfer and I doubt these details of program design would answer what appear to be mainly ‘libertarian’ objections on your part.
I think borrowing is a good way to finance it since I think the payments effect should be pro growth down the line. But direct transfers would be fine with me as well. again assuming the program works!
Your last objection is what interests me. Better off parents are not nearly as likely to turn an additional dollar into a great investment in their kid, we agree there. Matt says the point is to get some better off people to actually produce additional children. I think that sounds great but I’m interested to learn what happens in reality. I could see payments priming the pump in a sense, getting some middle class families to go for a third child even though it will require that they cut back luxury consumption elsewhere—the payments alone certainly won’t make adding a child easy for people who are strivers / class conscious / bougie/ whatever. So I could also see it being an extra vacation for the vast majority of these families and no extra child, which doesn’t achieve what I want at all. Time will tell I guess.
I have two objections to this program:
1. That it is a middle-class entitlement program, by and large. Maybe that helps make it politically palatable, but I do not see that as adequate justification.
2. It’s not paid for. If this is truly a program that has clear benefits then find some less worthy program to cut in its place.
Both of these smack of lazy politicians.
I heard this same thing in the seventies and eighties when I was growing up. I guess we’re paying for it now. Has anyone ever tried to quantify what that means in practice?
“All told, the Administration projects real economic growth averaging 2.9 percent over the 2021–2030 period; in the baseline projections that CBO produced at the beginning of this year, real economic growth averages 1.7 percent over that period.”
https://www.cbo.gov/publication/56301
1.7% is dismal.
Interest payments on the debt are currently about $345B per year.
Do you think the spending paid for by creating debt is worth more or less than the $345B we pay each year? I think it's worth more and the debt is a worthy investment in the US economy and society. What about you?
It depends right? I can be (e.g., the Apollo program). On the other side, it seems Summers' critiques of the American Rescue Plan are correct and that seems wasteful - both in the absolute size of the program and the compressed duration.
I think you can have arguments about efficiency and still see them as a positive. I was against the 2017 tax cuts as I felt it was an inefficient use of funds but it created the 2018 boom that led to 5-8% raises for my employees and for me as their manager that stayed with us for years as opposed to the standard 3%. It still was a positive net compared to not doing it in my view. Chick-Fil-A now has a standard pay of $18/hr. That's freaking huge and will have lasting impacts for years to come. Maybe in the short term it leads to some inflation but I think it's all worth it.
Matt seems to have a weird tick against doing anything about Climate change, which is a big part of Biden's infrastructure plan. Matt's stance on this one isn't really supported by research or popular on the left, or general public, so he just sort of elides it here. But it's a pretty big deal.
I agree with most of the rest of what he's written here, but at the end he seems to imply that there's some sort of trade off where not passing infrastructure makes extending the CTC more likely, and vice versa. Maybe he's just importing Summer's framing. But, in any case, I don't think that is true and would think that having a fight about extending CTC in an election year would be fine with most Democrats.
I agree--would like Matt to do a post soon on climate change. I think that's why Biden prioritized the infrastructure package in the first place--to try to use popular "roads and bridges" stuff (at least the Washington conventional wisdom is that it's popular...) as a way to also gets hundreds of billions for green-energy-tech rollouts (i.e., electric car chargers, electrified bus fleets, etc.) and research. So... does Matt think we're fine on the climate change front if we don't get any of the infrastructure plan? Some combination of Endless Frontiers and Surface Transportation Act reauthorization is good enough?
My impression from seeing coverage of this infrastructure plan in other places is that it hasn't been especially well structured to help address climate change - about as bad as the "Green New Deal". Lots of subsidies for electric cars, but still has more money for roads than transit, even if you ignore the electric car subsidies.
It's an improvement over existing policy in the ratios, but still primarily aimed at entrenching automotive infrastructure. Little if anything directed at making walkable neighborhoods easier, which is really the only thing that can tilt the balance away from transportation emissions and towards zero emission transportation.
Here's David Roberts on the Biden plan in terms of climate change.
https://www.volts.wtf/p/the-coolest-parts-of-bidens-expansive
The last part i strongly disagree with. Urbanism is pretty much a dead end in terms of climate change. There are 120 million housing units in the US right now, with new construction running at 1.2 million per year, even with some catch up needed we're lucky to get 15% replaced in the next ten years. Even with the most pro-urbanism policies one could imagine, most of those will be suburban.
The average car, by contrast lasts 12 years. Flipping those to electric and the grid to renewable is much more doable than any transit lead change.
It's easier to create walkable neighborhoods (something that we already know how to do) than go to 100% renewables (something that is being actively researched fortunately, but we still don't know how it's going to be done in most cases).
I believe "One Billion Americans" calls for immigration as a partial response to climate change. People in places close to the equator can flee to more welcoming climates...like the USA.
That isn't really a response. If anything it makes climate change worse (assuming this immigration is occurring prior to the US becoming nearly-universally renewable based). Adapting to the US lifestyle increases your carbon footprint.
"Adapting to the US lifestyle increases your carbon footprint."
The answer to that is to fix the US's carbon-based economy, not stop people from getting better lives.