How Child Tax Credit expansion will hurt children

By Roger McKinney, Contributor Monday, January 02, 2023

Last year, Congress increased the Child Tax Credit from $2,000 per child to $3,600 and eliminated the requirement that a parent be working to receive the credit, turning it into a welfare payment. According to the government, "The American Rescue Plan’s expansion of the Child Tax Credit will reduce child poverty by (1) supplementing the earnings of families receiving the tax credit, and (2) making the credit available to a significant number of new families."

As part of President Biden's $2 trillion American Rescue Plan, who could oppose giving more to poor children? That would be like opposing the rescue of drowning puppies. Some conservatives promoted the program to reduce abortions by paying poor women to have their children. It didn't occur to them that they are paying a form of extortion to keep their children alive, and that doing so will make the problem worse.

However, the Joint Committee on Taxation (JCT), a nonpartisan committee of the United States Congress that passed the bill, "finds that extending the American Rescue Plan’s (ARP) Child Tax Credit (CTC) expansion would result in costly economic consequences."

And one of the consequences could be that it hurts the children politicians intended to help. It does so by encouraging their parents to quit working. As the study showed, "The proposal is estimated to both discourage labor supply and capital investment. Because it changes the incentives for labor supply and capital, and these changes are larger than the effects on household consumption, JCT finds GDP declines by 0.1–0.3 percent."

In other words, the extra money from the federal government motivates many parents to quit working. That will make those families poorer and cause them to rely more on government handouts and charity to feed and clothe their children. The major cause of children living in poverty in the U.S. is poor, single women having children outside of marriage. Before Johnson's Great Society welfare programs, the number of children born into such households was small. Afterwards, the number exploded and now accounts for 70% of births in some groups. The expanded CTC encourages such growth. And we know that children from those homes are less likely to earn an education, and more likely to join gangs and become criminals.

Another cause of poverty is drug and alcohol abuse. The expanded CTC will make that problem worse because money is fungible, which is economic jargon for the idea that money can be used for many things. Promoters of the CTC assume that the mothers receiving it will use the extra money to feed and clothe their children.

Poor women have enjoyed many programs since 1968 to help pay for food and clothing for their children, yet according to many organizations, hunger among children is at an all-time high. The U.S. Department of Agriculture web site says, "The percent of U.S. households with children that were food insecure reached 14.8 percent in 2020, or 5.6 million households..."

The U.S. gives more to the parents of poor children to buy them food than anyone in all human history, yet child hunger is worse. How can that be? The answer is that the parents who get the money don't necessarily use it for food for their children.

But no one can say this, for fear of being cancelled. The evangelical left has made an idol of the poor. No one can criticize their behavior without the evangelical left charging them with blaming the victims. Contradicting the Bible, they believe people are born good, and society makes them into poor drug addicts.

Christians in the 18th and 19th centuries knew better, according to The Tragedy of American Compassion by Marvin Olasky. They understood the Biblical teaching that people are born with a strong tendency toward evil that only Christ can change. That tendency toward evil will cause some people to be lazy. "The soul of the sluggard craves and gets nothing, while the soul of the diligent is richly supplied." (Proverbs 13:4 ) And, "Slothfulness casts into a deep sleep, and an idle person will suffer hunger." (Proverbs 19:15)

And they knew that alcoholism leads to poverty: "He who loves pleasure will become a poor man; He who loves wine and oil will not become rich." (Proverbs 21:17) And, "For the heavy drinker and the glutton will come to poverty, And drowsiness will clothe one with rags." (Proverbs 23:21) Drug addiction produces the same results.

Christians before the 20th century believed that God knew more about human nature than socialists, and insisted on getting to know the poor, giving food and clothing instead of cash to those who can't work, and avoiding subsidizing the behaviors that cause poverty. As a result, Christians took good care of the poor through the 19th century. Only in the 20th century did a minority of evangelicals become deluded by the socialist nonsense that society, particularly capitalism, causes poverty, and the government must give them cash indiscriminately. Socialists ignore the mountains of evidence that the poor often don’t use money as politicians intend.

People made that mistake with the 40-hour work week, thinking fathers would spend more time with their families if the work week were reduced from 60 hours. In a similar way, parents will most likely not use the expanded CTC to feed their children, as the evidence of food insecurity for children demonstrates.

The CTC can do more harm to children than good. It’s time the evangelical left and Republicans face the truth about human nature and poverty. Private charity will feed the children without subsidizing the bad behavior of their parents.

Roger McKinney is the author of Financial Bull Riding and God is a Capitalist: Markets from Moses to Marx.