The Biden administration is planning to drastically expand the nation’s welfare state through increased child allowance grants quietly added into the latest stimulus, which some experts say is a move toward universal basic income.
As part of the $1.9 trillion COVID-19 relief package, the annual child tax credit was increased to $3,000 per child from ages 6 to 17, and $3,600 for children under 6. It will be made fully refundable, and payable in monthly installments of $300.
Before this, the maximum annual credit was $2,000 for every child under 17.
Notably, the program removed existing work requirements that would increase credit earned based on a person’s income from work. Now, all taxpayers earning under $200,000 with children aged 17 or under living with them at least half the year can claim the full credit. Tax experts have called the increase a “vast undertaking.”
Some experts describe the plan, if enacted permanently, as “the second-largest expansion of means-tested welfare entitlements in U.S. history,” one Feb. 10 Heritage report noted. The same report states that “in constant dollars, its annual cost would dwarf the initial costs of the Medicaid, food stamps, and Aid to Families with Dependent Children programs.”
Advocates of the credit increase say the expanded child tax credits will help reduce poverty for many Americans. One report from the Center on Budget and Policy Priorities, a progressive think tank, claims it would lift 9.9 million children out of poverty. But experts say this is based on faulty data, and on a false notion that the U.S. welfare system isn’t properly funded.
Robert Rector, senior research fellow of domestic policy studies at the Heritage Foundation and a leading authority on poverty and welfare programs, said the child credit program would cost the country about $80 billion a year in cash outlays and about another $40 billion in tax reduction.
The problem is that “it’s unnecessary, and it’s counterproductive,” he said.
“It’s $80 billion on top of a half a trillion dollars that the United States currently spends on cash, food, housing, and medical care for low-income Americans,” he told The Epoch Times. “And that half a trillion dollars is roughly six or seven times the amount needed to completely abolish child poverty in the United States.”
Most estimates say the cost of these expanded child tax credits will cost the country more than $100 billion, with the Committee for a Responsible Federal Budget identifying the cost at $143 billion annually. Although the current stimulus package notes this credit is only temporary and lasts for a year, experts say it paves the way to enacting a full-fledged, permanent policy.
During the 1990s, the U.S. welfare system was overhauled, shifting the focus away from giving cash unconditionally to one that focused on a work-oriented system. Rector noted that change slashed the poverty rate among children roughly in half while reducing dependence and increasing employment.
He says that what Biden is doing now is returning to a policy of unconditional aid that is “extremely expensive but also very harmful to the poor themselves, because when you do that you’re pushing them toward the social margin.”
Rector notes how experiments in these types of programs indicated that for roughly every $1,000 given, there is a loss of $660 in earnings. He said the child tax credit is “clearly intended” to move in the direction of enacting a universal basic income.
“They’re presenting this as if it’s a one-year change in response to the COVID crisis,” he told The Epoch Times. “But it’s clearly intended to be a permanent expansion.”
There is no possible sustainability in the child tax program, especially “when you factor in all the other social programs Democrats want to enact or are already enacted,” according to Nicholas Giordano, a professor of political science at Suffolk Community College in New York.
“Assuming that we don’t levy an increased tax burden, this program would cost nearly $1 trillion, and that’s if the program is only offered to those in poverty,” Giordano told The Epoch Times, referring to a universal basic income program. “Second, sooner or later, we are going to have to confront our enormous national debt that is growing exponentially.”
“With interest rates likely to increase due to inflation, servicing the debt will become a lot more expensive. This growing debt is unsustainable over the long term,” he added. “Thirdly, there is no fathomable way of implementing a program like this along with universal health care and education programs.”
In Finland and Canada, attempted pilot programs for universal basic income were terminated early due to the massive costs and the little benefit they provided, Giordano said.
One issue related to the debate over welfare is how the United States measures poverty levels. The government, when it counts income, doesn’t count money taken from the half-trillion dollars in welfare as income, according to Rector.
“Our poverty statistics are kind of meaningless,” he said. “When these organizations run a calculation and say, ‘Look at how much this credit reduces poverty,’ the credit calculations are based on these ridiculous databases that exclude all of the current spending, or nearly all of it.”
“Now, they’re saying if we’re spending new money, we’re going to say that it’s income, but if it was money created in the previous welfare programs and so forth, that doesn’t exist.”
It’s important for a variety of reasons to have a working adult in a household, according to Rector, who notes that it initiates social contacts, creates role models for the children, and improves the psychological well-being of the individuals.
“It’s a huge cultural trap that you’re creating, by creating this artificial environment where the poorest people are kind of set aside and told, ‘You’re not expected to work or do anything,'” he said. “And in here, we’re going to give you a lot of money and they’re there. It’s not just this program, there are still a lot of old programs that already do this.”