Ideas From The Right: An Exclusive Interview with National Affairs Editor Yuval Levin
August 26, 2014Print
This issue is the latest in our new commentary series, “Ideas From The Right: Conservative Approaches to Tax Credits for Working Families.”
For this issue, Tax Credits for Working Families director Lauren Pescatore sat down with Yuval Levin, founding editor of National Affairs, fellow at the Ethics and Public Policy Center, former White House domestic policy staffer under President George W. Bush and contributor for Room To Grow, a collection of essays from conservative thought leaders on policies to strengthen the middle class. Mr. Levin’s responses have been edited for brevity.
You served on the White House domestic policy staff under President George W. Bush. How has the conservative view on tax credits like the Earned Income Tax Credit (EITC) and Child Tax Credit evolved since that era?
The EITC and Child Tax Credit were both very important to the Bush administration. The EITC was expanded and reformed to address the marriage penalty during the Bush years, and the Child Tax Credit was improved.
I think there was some falling-off of interest around these credits early in the Obama years as conservatives had what I’d call “bigger worries” – concerns with the administration in those first two years. But there’s certainly been a regenerated interest in the credits as conservatives start to look towards the future.
How does increasing these credits help policymakers advance conservative goals?
Conservatives are committed to an agenda that makes work pay, and that means providing benefits for low-income people that encourage them to work rather than creating incentives to drive them away from the workforce. That, of course, is the core idea behind the EITC – making work pay.
The Child Tax Credit, meanwhile, plays an important role in helping people get out of poverty, which it does very effectively. It also plays an important role in addressing an imbalance that’s created by our entitlement system. I think that’s worth laying out for a minute – I think of it as a kind of intergenerational bargain that every society makes. The very young and the very old in any society can’t support themselves, and so people in their prime years care for both the youngest and the oldest with the understanding that today’s elderly once did that for them and today’s young will someday do that for them too.
In the past, this bargain happened within families. But most modern societies have socialized a part of that work – while many older people still get help from their families, they also get basic support from Social Security and Medicare that’s all paid for by working people through their taxes. So today’s seniors get benefits funded by today’s workers, and those workers will get benefits tomorrow, funded by tomorrow’s workers. This only socializes half of the bargain – the cost of raising tomorrow’s workers is still born within families. And this means that people who raise children basically pay twice for old-age entitlements, while people who don’t have children benefit from these enormous investments that parents make.
This lays an unfairly large portion of the cost of that intergenerational bargain on parents. The Child Tax Credit is a way to offset that burden – it provides enormously helpful relief to many struggling working families by letting them keep more of what they earn.
So, why then have we seen such an increase in interest to expand the EITC for childless workers?
The EITC is not just about helping families. It isn’t part of the intergenerational bargain. It’s an anti-poverty program. The EITC has become increasingly more generous for working families with time, I think for good reasons, but it has become less useful at addressing what is now one of the most chronic and difficult-to-address elements of our poverty problem. Which is, men without children and unmarried men get very little help. Expanding the EITC is a way to encourage them to find work and ensure that that work pays them enough to be able to improve their condition.
There have been a number of different ideas proposed for how to fund an increased EITC for childless workers – from Paul Ryan’s proposal to end certain welfare programs to President Obama’s proposal to cut tax benefits for the wealthy. Where do you see an opportunity for finding common ground on how to fund the increase?
The Ryan proposal doesn’t pay for the EITC expansion by cutting any of the typical welfare programs for low-income people. It’s paid for by eliminating a few federal programs that I think a lot of people would agree don’t really achieve their goals. He talks about cutting certain elements of what you could call “corporate welfare” – green energy subsidies, a program that helps big corporations market their products abroad, etc. He proposes reducing Child Tax Credit fraud rates to save some money. I think these are all worthwhile changes to make anyway, and it’s an added bonus that Mr. Ryan would use the extra money to expand the EITC.
The key difference between the two proposals is that one pays for the EITC expansion by reducing other tax expenditures and one pays for the expansion by reducing other spending. And that’s a difference, a significant one, but it’s not the biggest difference in the world. I think there are ways of taking elements from each proposal to bridge the gap and find bipartisan consensus. We’re seeing more people interested in the end goal – an EITC expansion – which is rare enough. I think figuring out how to pay for it is definitely doable.
Some have recently voiced their support for an increased EITC as an alternative to an increased minimum wage to help low-income workers make ends meet. Others would argue that the two work best as complementary policies and are hesitant to increase one without increasing the other. Do you think it has to be one or the other?
I’m certainly in the first group you described. I think a significant increase in the minimum wage would increase the cost of employment, just when we need it to keep growing. By putting people’s jobs at risk it would undercut its own purpose.
I think the EITC is a much better way to achieve the same goal because it helps increase the wages of the same workers but it does so without raising the cost of employing them. I don’t see the two as complementary policies. I think they’re fairly contradictory. Putting them together wouldn’t help form a bipartisan consensus. I think there’s growing bipartisan support for an expanded EITC for childless workers but not for an increased minimum wage. So I think they should be kept separate, otherwise we’ll end up with neither one.