“I’ve never really felt it was society’s responsibility to take care of other people’s children.” So says Ron Johnson, currently a candidate for a third term as US Senator from Wisconsin. In his view, the care of children should be the sole responsibility of the family. All payments, whether consumption items like food, clothing, nutrition, or investment in education, skill development, housing, are all the responsibility of parents.
His sentiment surely is a long way from "it takes a village to raise a child!" It is also contrary to long-established policy: government does complement the economic well-being of virtually all children through its taxation and spending authorities (just as it does for virtually all businesses, including Mr. Johnson's). Some expenditures in support of children are long-standing: public financing of K-12, community colleges and state universities being the most obvious. Other examples include public health services, the Supplemental Food and Nutrition Program (SNAP), rent subsidy, investments in hospitals, research universities, disease control, vocational schools, and polytechnics, to mention just a few ways in which taxpayers assist in "taking care of other people’s children."
DIRECT PAYMENTS TO PARENTS
Johnson's current objection is directed at government assistance to children via direct payments to their parents, either by a tax credit or rebate. For example, he opposes extension of President Biden's child tax credit (CTC), a key element of the American Rescue Plan that lifted approximately 30% of poor children above the federal poverty level during the pandemic. That subsidy expired in December but its revival is included in the now-stalled Build Back Better plan, along with additional assistance to children that Johnson opposes, including a proposed subsidy for child care, and universal pre-K, which would enable more parents to go to work knowing their kids are safe and in productive learning environments.
The United States economy is primarily a decentralized market system that guides economic activity via price incentives. But all modern market systems require a strong public sector to produce goods and services which benefit society but which will not be produced in the market due to insufficient incentives. Modern democracies have devised public policies to assist parents rather than rely solely on the powerful but inadequate forces of the market.
The prominent "conservative" and Nobel-prize-winning economist Milton Friedman reasoned that some government assistance on behalf of children is best managed by their parents; better to enhance parental ability to pay than to make choices for them. For example, addressing a national goal of better nutrition requires both money and decision-making. Rather than have government deliver pre-determined food packages, the SNAP program provides a debit card to pay for food, leaving the food choices up to the parents.
Another example promoted by Friedman and implemented by President Reagan was the earned income tax credit (EITC). This program adds to after-tax hourly wages which, in turn, enables lower-income workers to provide more for their children. A third example is the child tax credit (CTC), which pays parents $3,000 per year per child under age 17; $3,600 if under age 6.
WHY DOES IT TAKE A VILLAGE?
If investment in children is so vital to the performance of the economy, why won't the free market make those investments? Investments are inherently intertemporal: spend money now for benefits later. To support the upbringing of children, parents can spend out of current income or via borrowing, but only if those resources are available to them; the parent with no access to investment funds can at best meet immediate needs. The market provides investment funds only through loans with expected repayment plus interest, an impossibility for people who cannot make those assurances. In the world that Johnson envisions, cycles of poverty will not be broken.
The US is designed as a market system guided by representative-government rulemaking. Both function better with full development of their people. Thomas Jefferson instructed us that the benefit of investment in people extends beyond the individual to benefit society as a whole; democracy is strengthened when its populace is educated. We the people have to invest to produce that public good.