Government Watch / Politics

The Bad Science Behind The Child Tax Credit Expansion

Child

Here is a story that helps explain why people have lost trust in public-policy experts:

As someone who spent almost 20 years managing social-service programs in New York City, I met recently with a Democratic senator on the proposed child tax credit.

I mentioned that the credits would be paid monthly by the Internal Revenue Service to parents regardless of income or employment status; that the checks would be in addition to other benefits, such as food stamps, that are already provided without any concern for employment; that the new credits were a direct rejection of President Clinton’s welfare-reform policies; and that they would undermine the ability of state and local agencies to help struggling people find work or address other challenges. Then I said, “And of course, this new policy will reduce employment among single parents.”

That’s when the senator objected. Oh no, he said, the child tax credit will have no impact on employment among its recipients. That’s what his experts had told him.

I cited scholars who had told me that employment would be reduced, and the senator referenced his academics who said it wouldn’t happen. We were stuck.

Why was this normally thoughtful and well-informed senator so sure he was right? Sadly, he was relying on a report by the National Academy of Sciences, which contains a significant error.

Commissioned by congressional Democrats in 2015 and released in 2019, the report contends that a child allowance, similar in size and cost to the one currently proposed, would cut child poverty by about 40% and cost roughly 150,000 jobs at most. The report’s authors asserted that such a tax credit was the single most effective reform to reduce child poverty among all the many policy options considered, coming close to achieving all on its own the 50% reduction in child poverty the report’s commissioners sought.

The influence of the NAS report grew in September 2021, when a group of 462 economists cited it in a letter supporting the child tax credit expansion in President Biden’s reconciliation package. The letter asserted: “The panel of experts who reviewed this issue for the National Academy of Sciences concluded that a universal child allowance would have a negligible effect on employment.”

But both the NAS and the scholars’ letter were wrong. Worse, they should have known it. A new paper by economist Bruce Meyer and his co-authors at the University of Chicago makes clear that the NAS report exempted the child allowance from employment-effect calculations it had applied to other proposed policies.

The existing child tax credit encourages work by growing in size as earnings increase for low-income households; the Democrats propose to remove that incentive. With other policy proposals, the NAS researchers simulated what would happen without the incentive to work. But in the case of the child allowance, they simply ignored the effect of the incentive’s removal.

By omitting this important effect, the NAS study vastly underestimated the number of people who would leave or stay out of the workforce because of a child tax credit expansion like the one congressional Democrats propose. Instead of 150,000 lost jobs, the total number would reach approximately 1.5 million, according to Mr. Meyer and his co-authors.

That uncaught mistake in the 2019 report was so troubling to Mr. Meyer and co-author Kevin Corinth that they recently sent a letter to the NAS asking it to issue a correction. The NAS has not responded.

Rigorous studies make clear that the key to reducing poverty and improving outcomes for children is a combination of work and aid, and that if the government increases aid without a connection to work, it will inherently result in less employment. That’s common sense, and it’s little wonder that polls show Americans largely disapprove of Mr. Biden’s new tax credit expansion. Why were the NAS experts and the hundreds of economists supporting them so oblivious to their obvious error?

It’s a larger problem than this one report. Many studies have noted that there is a serious disconnect between experts and the people, and that public trust in scholars is declining. This episode shows why. If you let your policy objectives get in the way of honest empirical research, you undermine your credibility.

The National Academy of Sciences made a mistake, even if it was an honest one. The only thing left to find out is if Democrats will force that error on an unwilling public.

Mr. Doar is the president of the American Enterprise Institute and from 2007 to 2013, he served as commissioner of the NYC Human Resources Administration.


Reprinted with Permission from - AEI by - Robert Doar

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Hal
2 months ago

One thing you can count on with the DemocRats, if they support lending a hand, you can bet your bottom dollar that their other hand is helping the DemocRat Party or its members also … probably a lot moreso.

CaRepub
2 months ago

We should never be shocked or even mildly alarmed when anyone in this administration and more broadly the Democratic Party speaks or follows convenient lies. You can’tbuy votes without spending money, opening borders, reparations to illegals or continuing the lies you’ve been telling all along. I’m afraid an old joke that’s actually become anything but a joke is simply”how do you know when a Democrat is lying? Their mouth’s moving”. The election in Virginia is hopefully just a very small step in stopping the lies. Sadly, apparently the message still wasn’t loud enough in New Jersey. Half the electorate still bought into the lies. Work hard to support candidates that you feel actually represent you. It’s the first step in fighting back.

HocasPocas
2 months ago

I don’t really think that the democrats/communists care about what damage is done to the citizens of this country

Sam
2 months ago

They refuse to recognize that people today don’t get married, they shack up. So if you get a child tax credit monthly, don’t have to pay a sitter $150 a week for taking care of the kids, and have an adult on unemployment there at the house on playstation, you don’t need a job. The biggest benificiaries of this program are tatoo artists and liquor stores.

HocasPocas
2 months ago
Reply to  Sam

And drug dealers and democrats/communists

Lynn
2 months ago

This nonsense seems obvious to the lay person who works like a dog to support a family. Less people employed means fewer people paying taxes. Only working idiots are left to carry the tax burden for policies we think are stupid and destructive.

Becky
2 months ago

This is INSANE!
America has been throwing billions of dollars at kids and families since the 60s. The ONLY result has been increasing welfare dependency.
Try something new. STOP WELFARE!!
Make PARENTS responsible for their OWN kids. Their kids aren’t ours. Therefore, stop using OUR money to support them.

HocasPocas
2 months ago
Reply to  Becky

What are they going to do for all the illegals that they are letting in. We haven’t seen anything yet , the best is yet to come

Kyle Buy you some guns,and learn how to shoot
2 months ago

CHILD POVERTY. ! ! ! ???? While in a ice cream parlor yesterday I overheard a 10 year old boy asking for a job.

PaulE
2 months ago

Whenever I hear a politician say “the experts have told me otherwise”, my response back is to ask who the so-called expert is by name. Invariably, it is a college professor from either Harvard, Yale, Columbia or Princeton in 99 percent of the cases. In particular, it usually comes down to a list of about two dozen names. All who regularly generate these so-called studies for Democrat politicians and various left-wing think tanks. Last I heard, honest and accurate ideas should be ideologically unbiased and able to stand up to close scrutiny. To say these supposed “experts” are all proponents of Marxism would be putting it mildly, based on their past position papers. None of these people has ever held a job outside of academia in their entire adult life. These studies are NOT designed to hold up to rigorous examination, but rather to be used as simply a supposed statement of fact that should never be questioned. In essence, edicts from the academic left as to what should be done without question.

When I challenge a politician on the specific merits of what his “expert” has proposed, the politician quickly just keeps repeating “my expert assures me this is all valid” over and over again. Like a deer caught in the headlights of on oncoming truck, that is all most of these puppets are capable of doing. The politicians themselves know nothing of basic economics, human motivation or much of anything else. They know how to do public speaking quite well and give off an air of what is supposed to be authority on what they are talking about. In short, most politicians are actors reciting lines written for them by somebody else, but a surprisingly large percentage of the public buys into the act.

Max
2 months ago
Reply to  PaulE

Kudus on second paragraph.

Becky
2 months ago
Reply to  PaulE

Excellent. Exactly correct.
The more diplomas and the less thinking ability in these robots, the more esteemed they are.
What a crock.

George
2 months ago

You keep confusing liberals and democrats with reality and actual facts. You know it makes them grumpy!

Jeb
2 months ago

The true test of this will come April 15th

Kay
2 months ago

Just another free give away at tax payor expense. Once in place you will never get rid of this credit and employment an issue as WHY work when the government takes care of you. Moving into
socialist believing “the government owes me a living” Terrible idea

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