The Biden government proposes a massive expansion of the welfare state, which is known as “child benefit”. This policy aims to revolutionize a large but little-known program called Child Loan. According to the government, the focus of the policy would be “tax cuts for America’s families and workers”.
In reality, the plan would not offer long-term tax breaks to working families with children. Even in the short term, around 74% of grants would go in the form of cash grants to families who do not pay income tax; only 26% would opt for a tax break. But even this limited tax break would be temporary and end in 2025.
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Instead of tax breaks, most of the short-term and permanent provisions of the plan would give cash grants to families who do not work or work relatively little. The plan would also disproportionately support unmarried and unmarried families. Roughly a quarter of all children live in unmarried families, but according to the plan, almost 60% of permanent new aid would go to these families.
Contrary to the rhetoric of the administration, the primary focus and only permanent characteristic of the child benefit policy would not be tax relief, but the abolition of all work requirements and work incentives from the current child benefit program. With this change, the government is expressly seeking to overturn the foundations of welfare reform established during the Clinton presidency.
The Clinton-era welfare reform understood that it is not good for society or for recipients to pay able-bodied people not to work. Such payments tend to drive individuals out of work and to the margins of society, hindering social participation and advancement for both adults and children.
The social reform was based on the concept that social assistance should not be a one-way street, but that aid should be mutual. Society should support those in need, but able recipients of help should, in turn, be required to work, or at least prepare for the work, in exchange for the help given. Almost 9 in 10 Americans support this approach to welfare.
On the basis of this common sense principle, the social welfare reform of 1996 abolished the “Aid for Families with Dependent Children” (AFDC) program, which provided unconditional monetary assistance to single parents who worked very little or no work. AFDC was replaced by a new program called Temporary Aid for Families in Need (TANF), which continued to provide cash benefits but for the first time required parents to work or prepare for work in order to receive this assistance.
The consequences of this change were dramatic. The dependence on social assistance decreased; Employment rose. The child poverty rate, frozen for almost a quarter of a century, has fallen dramatically. Today, single parent poverty is around 60% lower than before the reform.
Other large programs, such as the child allowance and the income tax allowance, have followed this work-friendly strategy by requiring and incentivizing benefit recipients to work. For example, under the current child loan program, a family must earn at least $ 2,500 during the year to be eligible for cash grants. To encourage continued work, the program greatly increases cash grants as work and income increase.
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The Biden child benefit policy tries to tear these work requirements and incentives out of the child loan and to explicitly overturn the principles of social reform. Under the Biden Plan, the federal government would give unconditional cash grants to families who choose not to work during the year for the first time in a quarter of a century.
The Biden Plan is a classic “bait and switch maneuver” that promises tax cuts, but actually reshapes the foundations of the welfare state. While President Clinton tried to end welfare as we know it; The Biden government is trying to “restore welfare as we knew it” by reinstalling the worst features of the system before reform.