The Republican History of the Child Tax Credit and Why the GOP Should Proudly Embrace It

On July 15, the first monthly child tax credit (CTC) payments went out, and they’re already being considered as “life-changing” by the parents of the 88% of kids in America now receiving them every month through the end of the year. As a previous blog of mine explained, these payments won’t only help American families, but will also help many childless adults too by growing the economy and creating new employment opportunities. Small businesses in America will certainly appreciate the additional $4 billion a month injected into the hands of their customers. The conservative-leaning Niskanen Center estimates this additional consumer spending will create 500,000 jobs and disproportionately benefit rural America.

However, because all Republicans voted against the bill that contained the CTC expansion, Democrats are already shouting that fact from the rooftops and also already planning to leverage the success and popularity of the checks to help them win future elections. Republicans are now faced with a big decision: be against something that will likely be among the most popular policies ever by the end of the year, or embrace it as their own idea. I suggest the latter and the following is why.

The story of how the CTC came to be goes all the way back to 1988 when George H. W. Bush was running to succeed Ronald Reagan. It was during that campaign that Bush proposed a tax credit of $1,000 ($2,350 in 2021 dollars) per child to help low income families afford child care in their own home or in licensed child care centers. “Vice President Bush has proposed an innovative plan,” said Reagan of the CTC proposal, “one that would strengthen the family.” Reagan liked how parents could use the money to enable and support unpaid child care, lauding how it would “permit thousands of mothers to choose to stay home with their children.” It was a truly pro-family plan, and one that Republicans began to consider as reflecting their support of family values. Unfortunately, it was ahead of its time.

In 1989, Democrats considered taking the new CTC idea and running with it as their own, but their arguing over whether the better approach was cash for parents to make their own decisions, or a services approach of funding child care providers, resulted in choosing neither. As described in the book “Tyranny of Kindness” by Theresa Funiciello, “many daycare groups opposed [the CTC] - they wanted all of whatever money was going to be passed around for child care to go to themselves.” No compromise was possible and the bitter conflict among Democrats resulted in parents being left with neither a cash nor services approach to help them.

In 1991, the National Commission on Children then restarted the CTC debate after it recommended that a universal cash program for children of $1,000 per kid was key to reducing child poverty in America.

In 1992, Bush again proposed getting cash to Americans, this time during his campaign for president against Bill Clinton, in the form of a one-time stimulus check. Clinton on the other hand proposed an economic stimulus plan by way of federal spending on government contracts. It was a trickle-up versus top-down approach to economic stimulus where the Republican position was getting cash directly into the hands of the American people, while the Democrat position was getting cash directly into the hands of government contractors. Again, Bush was still ahead of his time, and stimulus checks would not be passed until the baton was passed to his son, who did finally do it - twice - once in 2001 and again in 2008.

In 1994, support for a CTC had grown among Republicans to the point it was included as part of Newt Gingrich’s proposed Contract with America. “We believe that parents ought to have the first claim on money to take care of their children rather than bureaucrats,” Gingrich would say as Speaker of the House in 1995.

In 1997, the CTC’s time had finally come. As part of the Republican Contract with America, it was passed into law within the Taxpayer Relief Act of 1997. Starting at $400 per kid in 1998, it grew to $500 per kid in 1999, and was then doubled by President George W. Bush to $1,000 per kid as a one-time stimulus, and also even allowed parents who didn’t owe any income taxes to receive the checks. The popularity of the $1,000 amount, although only meant to be one-time, led to an extension, and then permanence. Starting in 2004, it was officially and permanently a $1,000 CTC, and there it stayed with some minor adjustments, until Trump.

In 2017, as part of the 2017 Tax Cuts and Jobs Act, largely due to Marco Rubio, the CTC was doubled again by a Republican president, this time by Donald Trump. Besides making the new amount $2,000, the refundable portion was lifted to $1,400, and many more American families were included by expanding the CTC beyond single parents earning $75,000 and couples earning $100,000 to single parents earning $200,000 and couples earning $400,000. By making it more refundable, and making it more universal, Trump greatly improved the CTC.

In 2021, the CTC has now been expanded again, this time by a Democrat in the White House, but only for six months. The new full amount of $3,000 for kids ages 6-17 and $3,600 for kids under 6 is now 100% refundable and available monthly for the first time. It’s estimated that child poverty will drop by up to 40% as parents who were already getting the CTC get more of it, and parents who didn’t previously get the CTC finally qualify. It’s also already very popular with 82% of recipients wanting it to last beyond 2021, including 76% of Republicans.

Democrats have put themselves in a very good position and are already making strategic moves. Putting their money on CTC being even more popular than it already is after six months of receipt, they’re now pushing to extend the CTC until at least 2024, where its election year expiration can be used as motivation to re-elect Democrats. Anti-CTC expansion Republicans seem likely to then face a huge backlash that could cost them greatly. Being anti-CTC is a losing strategy, and also a reversal of the entire history of the CTC being created and advanced by Republicans. The GOP should embrace it, remind voters of its GOP roots extending all the way back to Reagan, and propose to make it permanent immediately instead of letting it play a role in the 2024 election.

As part of embracing a permanent monthly CTC, as already proposed by Mitt Romney in a revenue-neutral way, Republicans should rediscover Reagan’s support for the CTC as an enabler of child care in the home instead of a big government approach of government-funded child care outside the home. What better way of strengthening the nuclear family is there than enabling the freedom of stay-at-home parenting?

Pro-life conservatives should focus on how extending the CTC to start during pregnancy as Romney already proposes, would do more to reduce abortions in America than any other policy. Over 70% of women seeking abortions blame financial reasons, and about a quarter say they’re the primary reason for getting an abortion. When Italy began its baby bonus, abortions fell more than births rose. The Christian right should be all over the CTC. In fact religious groups like CatholicVote already do support Romney’s proposal, as do taxpayer advocate organizations like the National Taxpayers Union.

Finally, Republicans should tout the pro-work incentives of the monthly CTC. Although it’s true that Biden’s CTC dropped the work requirement, work requirements don’t actually work, and by flowing to parents regardless of employment status, parents are always better off employed with the CTC than unemployed. And again, work in the home is work too. That work should be enabled and supported versus forcing parents to leave their kids in child care centers for the government to pay others to watch. Additionally, the evidence from basic income experiments is revealing that income that isn’t conditional on work actually helps connect more people to the labor market. In the Stockton pilot, monthly cash recipients were twice as likely to find full-time employment than non-recipients.

Whereas some conservatives currently claim it would be better to punish children for living in households with unemployed parents, that thinking just doesn’t seem to be in the actual interests of the actual kids forced to live in poverty regardless of whether their parents “deserve” poverty. It also doesn’t make any economic sense due to the over $1 trillion per year cost of child poverty. Spending $100 billion a year to annually spend $400 billion less on poverty is a pretty sweet deal.

The truly conservative take on a monthly tax credit is that it should be made even larger than Biden has proposed, and immediately permanent, in a revenue-neutral way. The CTC trusts parents as free individuals to make their own decisions with their own money. It avoids a big government services-based approach. It supports and enables the important work of care in the home and even homeschooling. It conserves economic resources by reducing crime, improving health, and increasing the lifelong incomes of kids as adults. It grows the economy by supporting small businesses, and it rewards employment by boosting all employed parents instead of facing parents with the usual choice of benefits or employment as most welfare programs do.

A permanent expansion of the CTC is a permanent expansion of personal freedom that further gets the government out of deciding which services are available to people and instead better enables individuals to decide for themselves how to best meet their own needs and the needs of their families.

The Republican party has the opportunity to embrace the CTC, honestly claim it as a historically Republican policy, and make it permanent before the sixth check even goes out in December. Or they can fight against what will most likely become one of the most popular policies in American history and see how that goes.