Tim Wainwright: Today, we have Matt Bruenig, president of the People’s Policy Project, and Oren Cass, president of American Compass, two long-time policy guys. And we’re talking about child benefits, how the government can support working families, and people who are raising kids. So, I’m going to do a little housekeeping right up front, to moderate this debate/conversation. No one’s ever perfectly neutral, so I’ll just tell you guys my biases up front.
I’ve taken a public stand in favor of the Romney plan, but my goal today is to be as impartial a moderator as possible, and let Matt and Oren get to the crux of the args. I’m going to begin the conversation just by moderating and directing questions in turn, and then I’ll step back and let you guys get into it and just ensure equal speaking time and all of that. I’m still hopeful that we can find common ground as self-styled populists. So are you guys relatively open to changing your minds? We’ve got maybe like a 1% chance of that happening I’d say, but… Is there a chance of us singing Kumbaya by the end of this?
Oren Cass: I’m not sure we’ll agree on everything. But one thing I am hopeful for is that we can find overlap of policies that both of us would support, because I think something is better than nothing.
Matt Bruenig: Yeah. I’m open to always… If a good argument it hits me and I’m not familiar with it and I don’t have a good answer to it, then I’m always open to being persuaded.
Tim Wainwright: Awesome. And to help us get in that mindset, I did make a little listicle of some things I think we have in common. So we all have kids ourselves, right?
Oren Cass: Yeah.
Matt Bruenig: Yeah, I have two.
Tim Wainwright: Awesome. I think we’re all millennials as well, so scary stuff.
Oren Cass: Not sure what millennial counts for at this point though. I think that just means old guy.
Tim Wainwright: Yeah. So we’re all aging, washed up people who still like Harry Potter. We’re all small business owners I believe. Oren, I’m not sure how well-funded American Compass is, but we all hung up our shingles, I think in the policy world.
Oren Cass: Yes. Yeah, that’s interesting. That’s true.
Tim Wainwright: Okay. And we’re all self-styled populous and I think we’re all happy that Neera’s play for OMB just got cratered. So we can all raise a toast to that.
Matt Bruenig: 100%.
Oren Cass: We might get into it… I don’t love the term populist, but I think it’s potentially an interesting dimension of this discussion.
Tim Wainwright: Okay. Yeah. That’s a word that has a lot of baggage to it, but I just throw it in as a relatively directional placeholder. So that could be an interesting way to guide the conversation. So, we’ve got so much in common guys, we can all just get along. And let me frame up the history of child benefits in the U.S. as I understand it, to make sure that checks out with you guys and we’re operating from a common context. So the government has an obvious interest in helping families and people who raise kids. And there have been various proposals over the years, incremental steps forward in the discussion. And it seems to focus on three levers. So number one, how generous should those benefits be, how much money are we sending out? Number two, who should be eligible to receive the benefits? And number three, how are those benefits going to be delivered and administrated? Is that a fair summary, guys?
Matt Bruenig: Yeah, I mean, those are three aspects. I’m sure there are dozens of more and if you really start digging in, but those are the big ones.
Oren Cass: Yeah.
Tim Wainwright: Awesome. Okay, so that’s a good high-level summary. So my first question is going to be for Oren because I thought something that you tweeted out earlier this week was a pretty good summary of the key disagreement at stake. So you said, as you published the New York Times op-ed, you separate the debate over child allowance proposals into two separate questions. Number one, should we send more financial help to working families? Check. Number two, should the safety net deliver unconditional cash to the non-working poor? No. So my question for you is, why not?
Oren Cass: Well, I guess the starting point to answer that question, and what’s implied by that division, is it seems to me there are two fairly different discussions here about what to do about the general trends in the American economy and society in recent decades, that I think have really put a lot of strain on families up and down the income spectrum up to a fairly high income level. And we can debate about exactly what it is. I think the folks who are earning $300,000 a year and still declare themselves middle class are probably a bit out of touch. But if you’re thinking about anyone from the single minimum wage earner up to say $60–70,000 a year, and similarly correlating to folks with particularly less than a college education, what you hear from folks, and we did a survey on this at American Compass, a huge share say that they don’t feel like they’re living the American dream, and about half say they don’t have as many kids as they want, most often because they don’t feel like they can afford to.
And I think the economic data on what’s happened to wages bears this out. This is probably a point of agreement between myself and Matt. And so I think there’s a really important policy discussion to be had about, should we be really trying to help these folks in the way that historically policy hasn’t been focused on helping them, I think much to the nation’s detriment. And so that’s bucket one from the tweet that I kept the check mark. That I think there’s a real case for channeling greater assistance to those folks, and essentially conceiving of a social compact that says, they are doing their part and it’s not making ends meet, or certainly not as well as it used to, particularly early in life when they’re having kids before they’re likely to have savings. It makes sense to give them more support.
I think there’s a second question, of how do we approach anti-poverty policy? And this is a debate that’s obviously been very long running, and goes through cycles from huge expansions of the welfare state, for instance, in the 60s, to the 80s and 90s contraction and welfare reform, to now we push to find ways to expand it and make it much more generous. And so first, just as an analytical point, I think these are different questions. I think the nature of the challenges faced by these two groups, are different in a lot of cases, I think the social and political implications of addressing their needs are different. And so I think as a starting point, that doesn’t mean the answer has to be different, but it means I think we have to have different conversations about it.
And my view when you get to the class of folks who are certainly below the poverty line, but importantly literally have a household where no one is connected to work at all. In my view the way to understand the challenges they’re facing and the way to craft a safety net that’s going to support them, isn’t a matter of just providing them cash so that we can declare them above the poverty line. It should be very different. It should be about making sure we meet essential needs, whether that’s food, shelter, health care, and so forth.
But then it should also be about making sure that they’re actually receiving the kinds of supports that aren’t things you buy with money that are addressing challenges they’ll frequently have, whether that’s related to mental illness or addiction, and so on and so forth. And so I think it’s important to think about them differently. And it’s important to have a goal at the end of the day, that while we’re meeting people’s needs, we’re not blurring the line and saying that the package of support that we provide to someone who’s not working, starts to not look all that different than what somebody can expect to achieve, if they are working.
Tim Wainwright: Okay. So just some follow-up to clarify. Do you have… It seems like there are some competing definitions of what non-working means as we look at the data in the policy world. So in the American Compass view, how do you define non-working poor?
Oren Cass: So, we’re looking in terms of earned income. And I think there’s also a very interesting discussion we might get into about how carers who are not in the labor market at all are surely doing work. But for the purposes of the definition that I have in mind, that’s tied to among other things being connected to and contributing to the broader society, having a foot on the economic ladder that could lead to upward mobility, exposing both yourself and your families to the norms of the workplace, I think actually some connection of the family to the labor market is important. And so what I think is somewhat distinctive about the proposal we’ve made at American Compass, that diverges a lot from what conservatives have typically looked at, is we’ve said, this shouldn’t be about how much you pay in taxes.
So there are lots of proposals out there that basically say, let’s try to refund people off their taxes. And I think that’s the wrong and a somewhat arbitrary definition of how much support we might provide someone. We’ve said let’s just look at how much you’re earning, and provide a benefit up to that same level. So the kinds of child benefits we’re talking about here for family with several kids, could easily amount to $8–10,000. So we’ve said that that full benefit, it should be available to someone who has $8–10,000 in earnings. That’s literally one part-time minimum wage job. So the goal isn’t to maximize hours, get all parents in the workforce full-time, and taking on second shifts and so on and so forth, but it’s to say first of all, we think it is valuable to the individual and the family, for the household to have connection to work. And as a matter of the model of support that we should be providing for folks, there should be an expectation that you have your oar in the water, so to speak, and are rowing as well.
Tim Wainwright: Okay. And one more follow-up question before we pivot to Matt and his context. I’ve seen that American Compass is also released data about the preferences of the working class when it comes to the division of labor and participation in the labor market between mothers and fathers. So would you say that it’s fair or accurate that your position, it stakes a moral claim that it’s good for one parent, typically the father, to be in the workforce while, the mother is able to stay home with the kids? Are you staking a sort of Institute for Family Studies claim that that’s good? That’s an optimal situation for raising good families?
Oren Cass: Well, we certainly haven’t made a distinction on which parent should be in the labor force if you’re going to have a working parent and a stay-at-home parent. So the questions we asked, asked both men and women, if they prefer a situation with a stay-at-home parent, or two parents in the workforce. But we did not ask them if they thought there should be some norm about which parent stays at home or is in the workforce. In terms of whether we have a preference for two earner families versus families for the stay-at-home parent, I think there’s an enormous social value associated with having stay-at-home parents, both for the benefits they provide to kids, and to the family, and also for the engagement that it allows in the community.
And so, I think it’s something we need to recognize the value of, whereas the typical economic analysis these days says, well, the more people you have in the workforce, the higher your GDP is. But I think ultimately we should be deferring to people’s preferences. And so if a family would prefer to have both parents in the workforce, I don’t think it’s our place to say, actually, you shouldn’t do that. But I think we want to open up the space for families who do recognize the value in having a parent at home, which as the survey here showed is most families, especially once you get out of the upper class, I think our policy should be oriented to helping them achieve that.
Tim Wainwright: Okay, thanks. So Matt, over to you. So you’ve been behind a lot of the drive and it seems like the rise in considering universal benefits instead of the classic means-testing. Why is that a better approach?
Matt Bruenig: Well, if you think about the welfare state generally, the way it typically works in most countries is, we recognize from the outset that, in a capitalist society, the only people who receive income are people who are working and people who own a lot. But about half the population doesn’t work or own significant amounts of anything. And so they are locked out of the direct distribution of income in society. And so the typical response to this in developed countries, is you say, okay well, we’re going to create a cash benefit for every non-working group of people. And what they’ll usually do is they’ll slice them up into different groups. So if you take the 50% of people who aren’t working right now, you’ll notice a big chunk of them are old. They’re just too old to work. Okay, we’ll give an old age pension for people over the age of 65 or 66.
And then you look again, and you say, okay, well also a big chunk of them have a disability, a work-limiting disability. You say okay, well, so we’ll do a disability benefit for those folks. And then you look again, and you say, oh, well, a lot of them are students. They’re just young kids, they’re not working right now, they’re in school, and it’s like okay, well, so we’ll give them some student benefits, maybe some student loans, keep them covered during that period. And you keep going. And some of them are unemployed, that’s actually usually the smallest bucket, but some of them are unemployed, so we’re going to do some unemployment benefits. And then finally you get to kids, and you say well, kids don’t work. Kids are banned from working, legally forbidden to work, even if they were able. And so you provide a cash benefit to kids.
And the societies that do this the best, I think, are the ones that do all of those benefits in a universal way. Meaning that, they provide benefits to everyone in that group, without any look at where they live or who they live with or what the income of the people they live with are, and this does a number of things. One, it makes it super, super simple and super, super easy to get, which is important, especially if you’re trying to reach vulnerable populations who might struggle with bureaucratic hassles. The other thing is, and this goes very underrated, I think, in the U.S. discourse, that there’s an unfairness in some ways, to having someone who works having to support different numbers of dependents.
So, at one point when I was a kid, I was living with my dad briefly, and he had me and he had two kids, and he also had a disabled/unemployed brother living with him. So he’s got one income and he’s got four people to stretch it across. And that’s just tough. Whereas if he didn’t have any of us, if he didn’t have a kid or disabled brother he was helping, he would be so much better off. But the idea of these benefits is to smooth out those differences. Is to say that wherever these non-workers pop up, they’re about half the population, wherever they pop up and whatever household they pop in, we’re going to keep them covered socially. And it’ll mix in with whatever labor income or capital income anyone else in their family has.
And that’s just been proven very, very effective. Keeping inequality low, keeping poverty low, and I think importantly, to Cass’ point, has not proven to be an impediment really whatsoever to high employment rates. In fact, in these countries, the social democratic countries that tend to design benefits these ways, their employment rates are much higher, not just for women, but even for men, they have higher employment rates, especially in prime age. So there’s just really no… I feel like no real reason not to do it that way. One thing I would like to point out just to start engaging with some of Oren’s points is, I think he’s missed the mark a little bit on who is working and who isn’t working. A benefit for children, is a benefit for children. It’s cash for kids. It’s not a benefit for their parents.
And so, the fact that a kid isn’t working, that’s what entitles them to the benefit. It doesn’t really matter whether the parents are working or not. I mean, it would be like saying, we shouldn’t pay disability benefits to disabled people unless, they live with someone who currently has a job, or we shouldn’t pay benefits to elderly people, unless they currently live with people who have a job. Kids don’t have jobs, their benefits shouldn’t be based on whether the people they live with currently have jobs. I think that’s just a fundamental mistake in the way that he’s approaching this. But yeah, other than that, I mean, I don’t know. I mean, I get why he’s really interested in work. But I guess another aspect of this that I would emphasize here is that, we know from voluminous research that a good way to increase labor supply across long time horizons, is to make sure that kids don’t grow up destitute, because that really diminishes their intellectual capacities, tends to generate higher levels of crime, psychological problems.
If you can keep kids well fed and well housed and well resourced, you’re going to have a lot higher employment over the long run than if you don’t. So even if we have a uniform fixation on labor, and getting people working, crafting your child benefit in a way that’s designed specifically to exclude the poorest kids, that’s a really good way for keeping your labor supply lower in the long run. But yeah, that’s the basic gist of it, I guess.
Tim Wainwright: All right. So perfect. So, let’s give Oren a chance to respond. Oren, your thoughts?
Oren Cass: Yeah. I guess I’ll make a few points. A couple of them are technical. I like Matt’s breakdown of the sorts of people who are unemployed, but I—or excuse me, who aren’t working. But I feel like there’s an awful lot of fudging in the rundown. I mean, he sort of equated student loans as the form of benefit that we provide to students, which is not a cash benefit to support them as non-workers, the pensions we provide to the elderly, at least in this country, are explicitly tied to having worked and paid into the system earlier. And you can say that’s the wrong way to do it, but certainly that is the structure we’ve adopted in this country. And so, I think there’s a lot more variance in how we think about these groups than to just say, if somebody is not working, we have cash for them.
I think where there’s a more interesting conceptual question is with respect to how we think about kids. And I think this is probably… It’s a long running dividing line between left and right broadly, and probably informs some of the disagreement in this issue in particular. But to my mind the idea that children are essentially small disabled people who can’t work, and therefore should receive a benefit, just misunderstands the nature of human existence, to be overly broad about it. But also of the institution as a family. I don’t think we should or can think of children as these free agents who we send benefits to because they can’t work. They are their parents’ responsibility in both a sense of obligation, and as a practical matter. And you obviously see this when you try to deliver a benefit to them, which you can’t. You have to give the benefit to the parent, it’s technically a parent allowance.
And so, in my mind, the way we should think about this is not the child as an individual, but rather the family as a unit, and what kind of support we want to provide the family. I’ve found Matt’s example from his family an interesting one, where he would say it’s somewhat unfair to have his father in this case have more dependents to support. I guess I would say that’s a somewhat strange definition of fairness. I think we rightly ask families to support themselves as family units. And then finally, I would just note that, per the proposal that I’ve described and advocated for, assuming his father’s working, I do think we should try to get more support to that family, especially to the extent that it has kids. What I would take issue with is, if that’s a household where genuinely no one is working at all, is the right way to address their needs to just send them enough money to meet their needs anyway, or is the nature of that problem somewhat different?
Matt Bruenig: Could I… I want to jump in here on a few points.
Tim Wainwright: Yeah Matt, over to you.
Matt Bruenig: Just factual points, I guess. I know Oren has staked this position through a lot of posts, not just the recent ones, that in the U.S. when we provide these old age benefits or these disability benefits, you actually have to have worked to get them. And that’s how he threads the needle between saying, it’s okay to give it to them, but not okay to give it to kids. Now of course, conceptually it’s a little bit weird because little kids cannot have worked. That’s the nature of being a kid, they work later. Older people are too old to work, which means their work is behind them, and younger people are too young to work, so their work is in front of them.
So it’s a little bit weird to use that logic and apply it to someone whose whole status is that they’re too young to have ever worked. But it’s also true that we do give benefits to elderly people and disabled people who don’t have sufficient work records and who have never worked at all. If you reach 65 years of age in the U.S. and you haven’t hit your 10 years of work requirements for Social Security, they go ahead and give you Supplemental Security Income, which is an unconditional cash benefit. I think it’s $794 a month now, you get that. If you’re disabled, it’s the same thing. If you haven’t met your work requirements for SSDI, that puts you on SSI, and you can go down the line. There even benefits for children that have never worked before, such as SSI for disabled kids.
There are, I think 1.1 million kids who are on SSI, who are under the age of 18. Obviously they’ve never worked. It’s being paid to their parents, without any respect to whether their parents are currently working. In fact, if their parents work they start to lose some of those benefits, which is not ideal. So those benefits exist. They exist for every group of people except for, I guess, unemployed people. So it’s the same thing for students. Students get Pell Grants, which are cash benefits that they don’t have to have worked for.
When I was a student, I got Pell Grants, and some people think it’s only for tuition. It’s not only for tuition, because I had my tuition fully covered and I got a Pell Grant and it was just a nice little check in my account, which was lovely. So these benefits exist throughout the system. And so, I don’t know, I just find that a little bit of a weird quirk to say that this stands alone in that. It doesn’t. And we see this across the world as well, and in the social democratic countries, the way that they design these benefits is they have, a formula that has basically two kinds of benefits. One is based on your prior earnings, and one is a basic benefit that you can’t go below. Now, they don’t do that for child benefits because of course children never work and have never worked, so that’s a flat amount for the kids. But for the other benefits, it’s set up that way. And realistically, that’s kind of how we’re set up, since you do get SSI if you’re old or disabled and you don’t have an adequate work record.
The other thing I’d point out is, the other kind of move he makes here is he says, “Well, look, you want to conceptualize it as a benefit for kids, but kids are unique because you can’t actually pay a benefit to a kid, it’s really paid to the parent.” And again, I think this is maybe revealing a little bit of an inadequate knowledge of the U.S. welfare state. We have benefits that are owed to individuals but are in fact paid to other individuals. They are called representative payees; you can look it up. In the Social Security Administration, there’s a whole system for determining who a representative payee should be.
But the basic dynamics of representative payees, the kind of canonical cases, let’s say you have a 25-year-old son who has severe Down syndrome, really is not very functional and they are owed a benefit, whether it’s SSI or SSDI off their parents’ record. And for one reason or another, we don’t think it’s appropriate to provide that benefit to them. We don’t think that they’re capable of handling that. That benefit is instead paid to a representative payee, usually their caregiver who’s usually one of their parents. So it’s literally the same thing, the exact same thing as that, right? You have a kid, they’re not in a situation to really handle the money so we give it to a representative payee, which is their parent. And the parent is required to be a custodian of that money to provide for the kid just as the representative payee is in the case of a disabled adult who we don’t think can handle the money. The last thing I’ll say—
Tim Wainwright: Let’s zoom in on that, right? Let’s clarify some points here and let’s spend some time on this definition of what is a kid and can we conceive of this universal benefit as going directly to the kids and solving child poverty or is it an assist to a working parent? So Oren, over to you. Let’s sort of clarify this cosmic definition of what a child is.
Oren Cass: Well, I think we agree on the cosmic definition of a child, we may disagree on the cosmic definition of a family. And the idea of creating essentially a representative payee structure for a child allowance that says the money is going to a household, but must essentially be spent for the benefit of the kid, is sort of interesting as a legal structure. I’m not sure if Matt’s actually proposing that. Actually I’ll pause—Matt, are you proposing that a child allowance actually use a sort of representative payee legal structure, or are you just using it as an analogy?
Matt Bruenig: Yeah, well, as it’s implemented through the Social Security Act or the Social Security Administration, which is the Romney plan and your plan as well, there is the question of who does the money go to? Even in your plan, which account do you put it in? And as it is, the Social Security Administration has rules for that, they’re called the representative payee rules. They use those rules already, not only for SSI for disabled kids, but also for child’s insurance, which are mostly paid to people whose parents have died. Paul Ryan was on that benefit, for some reason I always think that’s the Paul Ryan benefit. He got that when his father died or maybe it was his mother, I don’t remember. And it’s just a bureaucratic way of—essentially, which parent do we put the money in, right? So it’s a kind of maybe jarring word, but it gets at the basic idea of, you’re going to have to figure out which account to put it in and they have rules for this already for the benefits they pay to kids, so sure, why wouldn’t you just adopt those rules, right?
Oren Cass: Yeah. Yeah, I mean, I think you’re right. In designing our program, this is sort of something we looked at and you can kind of imagine, particularly in the fraught edge cases of custody disputes and so forth, there’s a challenge here. But regardless of whose plan you’re talking about, sort of as you alluded to, there’s the same problem. And so you have to have that assignment to whose account the money goes into. And so I think the question here isn’t, can you do this? I think as we’ve sort of gone through these different examples, and obviously as the international context shows, you can do this, there isn’t an administrative challenge.
The question is, is should you do this? And so again here, this is where I come back to this distinction between households that are working and connected to the workforce—and there, I think Matt and I are in agreement that we should try to do this sort of thing—versus what is a very small set of households that are disconnected from the workforce entirely. And again, at least in our American Compass proposal, disconnected for a significant period of time. I mean, one of the things that we emphasize in our proposal is this isn’t a work requirement where we’re checking in on you every week, and if you lose your job, the benefit suddenly goes away as well. I think that’d be very counterproductive. Our proposal is to look back at the prior year and essentially ask over the course of the entire year, did you earn at least a fairly minimal amount of income? And if so, then you’re fully paid in for receiving the benefit this whole year, even if you lose your job during the year.
So again, I think the place where Matt and I are really disagreeing is on the question of this quite small subset of the population for which you have a household that truly is disconnected over the longer run from the workforce entirely. And question is, what do you want to do in that situation?
And as I’ve underscored repeatedly, my suggestion is not that we shouldn’t help those people or that we need to get tougher on them. I oppose work requirements in SNAP, I think that should be an unconditional benefit. I oppose work requirements in Medicaid. I support CCDF and think we should have additional programs and support that help move people into the workforce. But I don’t think that refusing to make any distinction between households that are in fact engaged in supporting themselves and those that for whatever reason are not, I don’t think we should be nervous about making that distinction. I think it’s actually very important to make that distinction and that we should want to be saying, families have an obligation to be working toward their own support. And that’s something that we value and treat differently than we treat a situation where they’re not doing that.
Tim Wainwright: I would agree that this is the crux of the debate, so let’s drill down on this a little bit. Oren, it seems like a counter argument that presents itself, at least in a popular sort of mid-brow debate around this is the definition of people who are, as you put it, completely disconnected from the workforce. And understand that we’re having a high brow, educated, polite conversation about this, but it’s really striking me as reminiscent of the whole welfare reform rhetoric about, what are the politicians going to take to the street whose policy people are listening to this? It’s going to be about welfare queens, it’s going to be about generational welfare and all of the stuff that goes along with that, right? But it seems like there’s a growing amount of data that suggests that there isn’t really anyone who is disconnected from work. But we’ve got this alternative sort of “the system” definition of entering the workforce and how the official channels capture that, judge it, measure it, right?
So, to me, we’ve got a little bit of a dissonance here between that sort of traditional focus on, okay, we want to have a pipeline between this subset of people who we think from the measurements we have are completely absent from the workforce and are this generational underclass of poor people. And we want to nudge them to work, we want to get them into the system, right? But then we’ve got this whole other conversation going on right now about the once and future worker and about the massive industrial revolution we’re sort of living through right now with the changing definition of work. So how are you guys going to respond to the argument that we don’t really do a good job in the U.S. today of being able to laser in and know anyone’s situation about how they’re relating to the workforce and target this stuff in a way that achieves the objectives that you want, Oren?
Oren Cass: Well, and there’s a very technical question here of how do you measure income? And this is something that we actually looked at a bunch for purposes of the proposal and have actually then solicited further comment from others on. Frankly, it’s part of the reason we prefer to run this out of the Social Security Administration and not the IRS, because I think the Social Security wage base, which does its best to keep track of not just your typical 40-hour-a-week job, but also a lot of other kinds of income, is the right one. And I think as work evolves, for programs we already have, we’re going to have to do a better job of keeping track of that and understanding what income people are earning.
So, I’m certainly supportive of having a very broad definition and understanding of earned income, and by the way, conversely, excluding capital income from the calculation. But it strikes me, I liked the way you put it, Tim. And this is what I find to be sort of a paradox or contradiction in the opposing case, is that there are kind of two worlds here, either you tell me this group that I’m supposedly concerned about is this political fiction and doesn’t really exist, in which case I’d say, “Well, that’s great. Then there’s no problem with my proposal, everybody’s going to get the benefit.” Or you acknowledge that there actually is a population here that is disconnected from the workforce and that we need to be concerned about, in which case I’d say, “Well, I’m glad that we are identifying that group, but let’s talk about how we want to help that group.”
And the one other thing I would then say is, are there people who are going to be talking about welfare queens and the long-term underclass and so forth? I suppose maybe, there are plenty of folks on my side and Matt’s side who I’m sure we would not want to associate with the rhetoric of, but that’s not the concern I’m focused on. The concern I’m focused on is that if you have a household that is truly disconnected from work, I would actually take the opposite view, which is I suspect there probably is a real problem there. I mean, a lot of the time I suspect it’s going to be either addiction or mental health related. Certainly when we look at homeless populations, the share of homelessness that’s attributed to those types of issues is very high.
And so, in those cases, I don’t think the correct answer is to just say, “Well, we give them money to get them above the poverty line.” I think the correct answer is to have programs that actually try to address those problems. Again, I think we come back to this dichotomy of what is this non-working population and if it doesn’t exist, fine, but if it does, then I think we need anti-poverty policy that actually tries to take it on directly.
Tim Wainwright: Matt, over to you.
Matt Bruenig: Again, I think maybe it’s helpful to cut it up into different levels, right? So on the individual level we know who the non-working population is, it’s almost all children, elderly people, disabled people, and students. And then you have a smattering of unemployed people and people who are home caregivers, who, as far as I understand, within the kind of, Cass and even the kind of consensus conservative view, caregivers are okay as long as there’s someone also in their household who works. If that person dies, then now they’re bad, and they need to get out to work. We have that on the individual level, that much is clear. And so I always think it’s funny, like, “Are you disconnected for work?” I can’t tell you anyone in my life who’s more disconnected from work than my children, they’re completely disconnected from work. I cannot even get them to clean up the playroom, it’s a disaster, right?
So, on the individual level, that’s clear enough. But what Cass then does, and conservatives do this more generally, is they try to then move out to the family unit level and say, “Well, it really depends on whether someone inside the household is working or not.” And then at that point, for whatever reason, the people who are not working for legitimate reasons like children, those benefits should also be cut off. Except that he doesn’t then apply that reasoning to any other benefit, right? So it’s completely possible for an elderly person who’s receiving old age pension to live with someone who’s 50 years old and able-bodied, should be working but isn’t. And we don’t say, “Well, we should cut off that old age pension, because look at that, they’re a non-working household. They got no one in their household who’s working and they’ve even got an able-bodied 50-year-old who could work but isn’t.”
Cass would not then come in and say, “Well, we should cut that off.” And he can’t say, “Well, that person worked for it.” Because again, we go back to SSI, that elderly person could be on SSI, and I don’t think Cass wants to say we should cut off SSI for that person. And the same thing for any other benefit, someone could be receiving unemployment benefits. In that case, obviously, maybe no one in their household is working. Someone could be receiving disability benefits, disabled SSI, maybe they have non-disabled people in their household who could work, but they’re not. Does Cass then say, “Well, we should cut off that disability benefit in order to try to force out that person they’re living with.” I think when you start moving to that family level it gets very weird. And to apply that reasoning only to child benefits and no other benefits is even weirder. I mean, like I said before, the case for child benefits is the easiest you can make because it’s illegal for kids to work.
Aside from that… And the other thing is we can make this same point even for labor income, right? We don’t think of, for whatever reason, we don’t think of labor income as an income program, but I mean, we could. It’s the largest income program in the country, I think in excess of what, $12 trillion a year. But people who have labor income sometimes live with people who don’t, who maybe should be working. I mean, I know people like this, who they work, they receive labor income, and they have some lazy, freeloading adult kids. That’s a thing, right? And those kids need to go out and work, but they’re not. And so maybe we should cut off the labor income of their parents because that’s enabling the kid not to work, isn’t it? Right, we don’t do that for any other income. It only happens when we start thinking about children, and I just find that very strange.
The last thing I would point out here is, and these are really, I guess, questions for Oren, and I wonder what he would think about these cases, because when people start thinking about child benefits, they always have a kind of conception of where kids live, right? Well, the kid, and then they have a parent, and maybe they have two parents. But in fact, kids live in all sorts of households. And so, what about a kid who lives with their grandparents? Both the grandparents are retired, they’re receiving Social Security, should that kid receive a child benefit? Under Oren’s plan, no, they shouldn’t. Under my plan, yes. What if a kid is living with disabled parents? They have very disabled parents, they’ve been determined to be disabled by the Social Security Administration, receiving SSDI or SSI. They don’t work, should those kids receive benefits? Oren says no. I say yes. Right? I mean, you could go down the line.
And I think this gets to the point you were making, Tim, about the multiplicity of where people live. And when you start kind of trying to pigeonhole a specific family model that you have in your mind, you actually start missing all sorts of kids. There are millions of kids who live with their retired grandparents, millions of kids that live with disabled parents. And what are we going to do, are we going to start making exceptions for each one of them? So, yeah, I don’t know. Maybe I should just toss that over to Oren, does he think that a kid who lives with their grandparents that that kid shouldn’t receive benefits?
Oren Cass: Well, I think the grandparents’ situation in particular is a fairly easy one to address and comes down to the question of how you define income to begin with, right? So if you said, particularly actual Social Security at an earned pension, obviously there are already huge debates about the extent to which that should be taxable as income. And so, if you want to say, well, in that situation, that is sort of the elderly equivalent of what we have as income, then you can do that and then that household does have income.
Matt Bruenig: Not earnings, though. Your plan is earnings.
Oren Cass: Well, this is exactly what we just talked about, is how are you going to define what’s in the income bucket? I’ll be the first to admit there are all sorts of edge cases that you have to think about how to address. I think one thing that frustrates me somewhat about these debates is that folks on the left get extremely angry anytime somebody sort of talks about a scenario where you have people who could or should be working on our end, and that’s welfare queenism, et cetera, et cetera. But a huge part of the case you then get from the left-of-center is then dependent on kind of constructing alternative hypotheticals. Well, what if you have this single mother who wants to go back to college and she needs to earn these kinds of credits, et cetera, et cetera. Those folks exist too, but I think when you’re designing policy for the country, you have to engage in line drawing. And I want to sort of extend that in two directions.
One is, coming back to this question of kids, which, it’s fascinating the extent to which Matt and I just not only disagree, but sort of have trouble engaging on how we talk about this, because we’re starting from such different points. To me, it’s just extremely obvious that kids are a different group from these other ones, because we as a society define kids as people who have others who are responsible for them. That is, we are comfortable saying, “No, you as a child, you in a sense belong to someone. You have a parent who is obligated and responsible for providing for you.” We don’t say that for instance, about the elderly. Now, I find it very interesting—
Matt Bruenig: We used to, we used to.
Oren Cass: Well, that’s exactly right. So, there’s an interesting discussion, you could say Social Security severed that bond. Once upon a time, we would have said the elderly’s children are responsible for them and that’s who takes care of them in old age, and of course there are other—
Matt Bruenig: Or your disabled relatives or you’re unemployed relatives. I mean, all of them, all the categories work that way.
Oren Cass: So, there are cultures in which, among other things, you still… That responsibility is certainly culturally, if not even legally, still assigned to caring for the elderly. We said, and this is a signal implication of Social Security, we said, “No, we are going to take that on instead as a society.” Now, mostly through an actual program that expects people to have paid in, but as Matt points out, also in cases even where they haven’t fully paid in, we are going to take that on. And I think this is really at the core of a lot of this is, do we want to say the same thing about kids? Do we want to say, “Actually, we’ve decided that this notion that parents are fundamentally responsible in a non-negotiable pre-market, pre-government way for caring for and raising kids.” Or do we actually want to step in and say, “We like when parents do that, but actually we’re kind of declaring this the responsibility of the society or the state.”
And my view is very strongly that we don’t want to do that. And that preserving, and in fact finding ways to strengthen and reinforce that relationship is incredibly important both generally and given trends in our society. And so certainly something that informs my approach to this sort of policymaking is concern for how we conceive of that exact relationship.
The second thing I’ll say, and I just want to make this point briefly, because Matt I think kind of highlighted it when he said, “Well, we have all sorts of other relatives out there and so forth.” Is that I do think it’s important to have this discussion in the context of all of the other forms of support that exist in a society. I think it’s very frustrating for me anyway, to see this assumption that there’s sort of, “Okay, well, if the parent can’t provide the necessary support, then we either need a child allowance or we’re going to have starvation.” And Matt has very directly accused me of thinking that we should be starving kids. And the reality is that that’s not what happens. There are an enormous number of other supports, their extended family, there are religious institutions, there are other forms of community support, all of which have a role to play in this as well.
And all of which, though imperfect, in many cases do a very good job, and I think it is good that they exist. And if we want them to exist, we have to have a job for them to do. And so the vision that says, “Not only are we going to cut the parents out as unnecessary, but we’re also going to dismiss and ignore every other institution in society because we must have the central government distributing enough money to everybody at all times,” I think is a misunderstanding of how the world in fact works and pushes us in a direction that makes things worse, not better.
Matt Bruenig: Now, the idea that we should impoverish some people so that charitably minded people have something to do, which just strikes me as very strange, and also, again, would be applicable to any other group of people. Now, one thing I’d like to point out here is the shifting of the argument here between saying, “Well, it’s important, we need to get people out working.” And then when you kind of push him on that, and you’re like, “Well, wait a minute, don’t a lot of people receive benefits when their relatives don’t work when maybe they should, and so on?” Then we get a shift into saying, “Well, I want to say children are different.” Children are different, children are kind of like appendages of the parents, of course, unless maybe grandma takes care of them, or maybe their parents die, or it could go on and on, maybe they’ve been the adopted. Children are kind of appendages of their parents, and so we want to treat them very differently. And so to take care of their income needs on a social level, that would really sever that tie.
And then you say, “Okay, very interesting. That’s actually an argument against all the child benefits.” That’s an argument against Oren’s own proposal, right? He’s also severing the link between a parent’s earnings and how much income is available for the child. He’s severing it for what, 95% of households? And he’s bravely and valiantly, he’s aggressive and happy about how he’s severing it. He starts the whole debate off saying, “I’m unlike those other conservatives who only want to try to kick back the taxes parents pay back to the parents. No, I’m going beyond that.” Right?
So, his whole project is to sever that link for everyone, except for poor kids. When it comes to poor kids, then that link is super, super, super important, and only labor income should suffice for those kids if you get above that threshold. Now the whole society can come and kick in 4 or $5,000 a year to you. It just doesn’t add up. And I think it just seems very under-theorized and very moving back and forth between different kinds of arguments.
Oren Cass: Well, I think it’s a little bit pedantic to say that if you’re providing any support to a household, then you’ve severed the link. I think obviously correlating the support you might provide to the family, having also been working itself, is obviously very important here and ensures that that link isn’t severed. I also think to your point about under-theorization, this probably gets to another core disagreement of ours, which is what is a well-theorized conception of public policy. In listening to your analysis, I think it’s obviously exceptionally well-theorized in a formal, technical sense, but then I think it’s incredibly under-theorized as it relates to how people actually think about and understand the world and their relationships to each other.
And both of those things are important. We have to do both. We have to have something that is coherent in how it’s structured for the technocratic analysis, but we also have to have something that’s coherent in how it’s structured for people actually living in the society. I’m always drawn to Jonathan Haidt’s work on this point, contrasting the way liberals and conservatives approach public policy and his I think very good point that liberals bring a very important emphasis to the table on just saying, “Look, there are people in need and we should care for them,” but conservatives also bringing a very important point to the table and saying, “Look, for our cooperative society to function, we actually need to remember there are values here besides just giving everybody what we think they need, and how public policy in particular acts needs to be considerate of and responsive to those things as well.”
So, for instance, this principle that, look, if you are working and trying to support your family, we want to find a way to contribute to that, as different from, look, this household is not working to support itself at all. We probably have a different attitude toward that. That’s not an under-theorized distinction. That is a core to human nature distinction that we need to be attentive to. And Matt, I think it’s one you’re aware of as well. I mean, even in pitching your Family Fun Pack, you emphasize the point that the parents should be at least working to support the themselves, even if we’re wanting to address the needs of the kid.
Matt Bruenig: Yeah. And well, I think for certain individuals who are working age, able bodied, non-students, job-seeking is important. Now if they can’t find a job, I think they should receive a benefit. But I think you can sever that from the kid. But I would like to add, and I’ll let you shift it, Tim, but I just want one little bit. I see Oren as saying like, “Okay, yeah, very interesting theory. Everything checks out in a logical sense, but we need to be more realistic about the practice of human beings and relationships and all the rest of it. And for our cooperative society and for the relations and the ties and Jonathan Haid type stuff, this child allowance that could be paid even to kids whose parents are not working for whatever reason, maybe they’re in school, maybe they’re disabled, maybe they’re loafers, that that would sever that.
But I think if we’re going to now shift into reality and outside of abstract theory, if we’re going to go into the reality game, then at that point, we need to start moving into other countries because that’s reality. Go up to Canada. They have a child allowance that goes to kids, regardless of their parents’ work. I don’t know too much about their social fabric, but from a distance, it seems fine. Same thing in Germany, same thing in France, same thing in the United Kingdom, same thing in Finland, Norway, Denmark, Sweden, Belgium, on and on down the line. Those are not ideal countries, but I would say they’re not any more problematic than we are, vis-a-vis family and connections and all the more squishy stuff.
The weird thing is not the person, like in a reality sense. The weird thing is not someone saying, “Yeah, child benefits should go to the poorest kids as well.” That’s not weird. That’s normal. That’s every other country pretty much in the developed world. The weird thing is Cass saying, “No, we’re going to make a singular exception for those people.” That puts him very at odds with the rest of the world. And the rest of the world seems, they seem to be getting along, the families seem okay. What’s the big deal?
Tim Wainwright: All right. So let me jump in here, because we keep circling back to this pendulum swinging between the technical apparatus of how we’re going to design our programs and our moral worldviews about the nature of the family and the nature of work, and these moral claims that we can’t avoid. We can’t just get into the technocratic aspect of it. We’re going to have to deal with this. So let me jump in as carving out this economically populist, but pro the faith-based social fabric layer of mediating Robert Putnam style institutions at the SPC. And I was just in prep, Oren, it’s funny thinking about the language and all of the aesthetics and things that go into the impossibility of communicating across people who begin from left personalities and right personalities, and the moral language you speak.
As prep for this, I was just listening to Matt on another podcast last week where you have all these radical leftists talking about how if the state can’t raise functioning families, then what kind of civilization and core fabric do we have? Which is common ground, I think, with what you’re talking about, about the value of an intact family. So if we look at the discourse in right-of-center family discourse, we seem to have this consensus of over the last hundred years, the breakdown of the “traditional family” and all of these structures. And that’s the situation we’re dealing with today. So I guess I come back to this gap between dealing with and trying to nudge in favor of the ideal versus dealing with the specific situation that we’re in today.
It seems like the approach of trying to means test it and apply the specific policy nudges at the specific points along this life cycle is the approach that’s been the dominant bipartisan approach to public policy for the last 50, 100 years. And I think we all share a consensus on this call that we’re doing a super shitty job. The administrative class, the ruling class is leaving behind the American worker, all of these people. So regardless, maybe means testing is the right approach if we could do it. But my question for you guys is can we effectively means test? Can the American administrative state as we currently have it do that effectively? And what does the data as you guys see it support that one way or another? So Oren, let’s start with you on that.
Oren Cass: Well, it depends partly on what you mean by effectively. I mean, if you mean can the systems apply a policy proposal? In a lot of cases, sure. Can we design policies that actually would work is obviously a harder question. But I do think it’s important in that context to ask what has the lesson been from say the last 50 years? And this is probably another point of significant disagreement between me and Matt. I look at the history of the war on poverty and see a failure that we’re at risk of just running into and repeating. And what I mean by that is, it’s fascinating, if you look at the actual data on the poverty rate for households with children, what you see is for 1965, it’s at about 16%. And all these Great Society programs coming in and it immediately falls, drops five points in five years. And everybody’s thrilled, presumably.
You fast forward to 1996 at the time of welfare reform, and it’s right back up. It’s actually higher than it was in 1965. Now welfare reform happens. Matt would tell you it’s a catastrophe. 2019, it’s dropped another five points. So what was happening there? The interesting thing that was happening is that on its own terms, the Great Society programs worked. In other words, if you focus in on a group like single mothers, the poverty rate for families with a single mother actually fell steadily throughout the period I just described to you. The problem is that, whereas in those initial few years, you got no increase in the rate of single motherhood, and so you get the big poverty drop, over the ensuing decades, families with a single mother more than double, as a share of all households. And so even though you’re helping them, you also have so many more of them.
Now, once you do welfare reform, and I’m not saying welfare reform is entirely the cause of this, the increase in the rate of single motherhood stops. And so now you actually get the decline in the overall poverty rate again. And the reason I’m belaboring this story and the data is again, not to say, well, as you can see X exactly caused Y and then Z exactly caused the opposite of Y. It’s to say that this is a lot harder than just, well, if you give resources to people who need resources, you solve the problem. I don’t think it’s at all possible to look at the story of our approach to anti-poverty policy and say that that’s happened. And that’s why I say, whereas when we look at what we want to do to support families that are working, I think there’s a lot to do. I’m very skeptical of this idea that, well, this is just merely a case of, we need to just send everybody money, and if you don’t, then you hate the poor or are trying to impoverish them.
Matt Bruenig: Yeah. I mean, I don’t know if we want to have a long fight about what the data series are. I mean, one thing I will just point out is the drop from the war on poverty, at least as was measured in the official poverty metric, was largely driven by the decline in elderly poverty, because they just jacked up Social Security benefits.
Oren Cass: That was just households with children.
Matt Bruenig: Right. So the overall rate went down primarily because of that, because of the elderly thing. Which I don’t know. I look at it and I say, “That looks like a good model. Let’s copy it in other contexts.” But I think we can all agree that AFDC was a weirdly designed program. I look at AFDC and you know what’s funny, I look at it and I think, it really makes sense if you think about the way that we have Social Security and we have SSI. Social security is for elderly people and disabled people with a certain work record. And then if not, you get SSI. And AFDC was like the same basic idea, but for widows, because we have a program for widows called survivor’s insurance, but it’s only if the dad that died had had a certain work record. And if you didn’t, you would kick onto AFDC. That was the initial idea of it.
And it turned out to be a little bit ill-fitting because at the time of course you would say, “Well, a widow shouldn’t work,” but now we don’t really have that same view. But we should have just gotten rid of AFDC with all of its benefit traps and put in a child allowance. That would have been quite successful as judged by any other country.
I mean, what’s really remarkable if you look across the world and these countries that have benefits like these really robust benefits, like Finland is a good example. The Family Fun Pack, literally, basically I just copied Finland. I mean, almost word for word, their welfare state. If you look at their child poverty rates—
Tim Wainwright: Dammit, Matt, I thought you put a lot of work into that thing.
Matt Bruenig: No, no. It was a little bit of adjustments.
Oren Cass: A lot of work into the graphical design. It looks amazing.
Tim Wainwright: Both of your websites are beautiful. But I like that you’re just stealing the policy papers from other countries.
Matt Bruenig: Yeah, yeah. No, they have a brochure that looks almost exactly like that. And their child poverty rate, if you look at the market distribution of income, is actually higher than our child poverty rate. But if you look at the disposable distribution of income, it’s super, super low. It’s like 4% or something. Whereas ours is like around 20% using the relative measure. So, I don’t know. It tends to be pretty successful. But I mean, I don’t want to sit here and sing the praises of the war on poverty. Outside of the old age pension increase, the war on poverty was, I would say pretty underwhelming. Well, and Medicare, but Medicare doesn’t show up in poverty stats because it’s not money. Same for Medicaid.
Other than that, the emphasis on the war on poverty, if you actually look at it, was very much a Cassian emphasis on promoting self-sustainability through getting people work training, and get them back into work. That was the emphasis of the war on poverty. And I think that was a mistake. I think they should have gone full social democracy and been able to get the low poverty rates that they get in those countries, which is not driven primarily by differences in the distribution of market income, though they do differ a lot there, but primarily due to differences in the welfare state. Because like I said, most poor people, they don’t work anyway. So, you change the distribution of labor income or capital, it doesn’t really matter for those folks. It’s really, the welfare state is a big thing for them.
Oren Cass: So, I want to come back to something Matt just said about how SSI is actually an interesting analog to AFDC, which is just funny because SSI was just the example he was giving of the kind of benefit that we have for the elderly that’s not tied to work. So if we say, “Well, we need this different program for each category of people,” then you would imagine that the category for, the program for children might look something like AFDC. Now, I don’t know if Matt was around in the 1960s, if he would have been pounding the table for LBJ’s program, but I think we should at least have the humility to recognize that a lot of folks like Matt were pounding the table for LBJ’s program, and the result was not what they wanted it to be.
Matt’s been emphasizing the cross-country examples, and I think that’s definitely an important and valid point. The thing that I would look at though is, I mean, especially when you’re talking about a place like Finland, but a lot of the social democracies generally, is that yes, they, as you say, if you give money to these folks, then you will see that the poverty rate after having given them the money is lower. But if you look at something like their marriage rates or their fertility rates, those things are, I would say, catastrophically low.
Matt Bruenig: Well, ours are at that level now as well.
Oren Cass: Ours is falling. It is not nearly as low as theirs.
Matt Bruenig: Sweden’s got us. Sweden’s got us on fertility at this point. That’s how far it’s fallen in the U.S.
Tim Wainwright: But Hungary is an interesting example here, and one that is enjoying a catwalk sexy moment in the post-liberal right. They’ve got a child allowance, and it seems to be moving the fertility rates. I want to touch on a point that we haven’t really brought up yet, but like the political dimension here in terms of the simplicity versus the complexity model when trying to get any of this across the line. So it seems like we’ve got in this moment, as American Compass and others are trying to ostensibly carve out what post-Trump, post-libertarian conservatism is going to look like.
You’ve got the Romney plan, which has the benefit of being very simple to explain to a voter. And it seems like these checks, as we’ve seen from the COVID relief, have been very, very popular across all of these different constituencies. So Romney releases this plan, and it seems like the left and the populist left reacts pretty positively and prefers it to the milquetoast corporate Biden plan. And right when we could get this collaborative coalitional moment to try and bang around about it, we have some infighting on the right. What is the political calculus or the political element to trying to forge something that we can actually get done? So how are you guys going to reckon with the simplicity argument in advocating for these proposals?
Oren Cass: Go ahead, Matt.
Matt Bruenig: Well, yeah. The advanced monthly refundable tax credit that’s based on annualized variables is a mess. Now Oren’s plan is a lot simpler than Biden’s plan. It’s not quite as simple as Romney’s plan, and none of them are as simple as mine, of course. So, as far as the politics point, I should say, in terms of the inside baseball here, I would have to quibble a little bit with the premise. It’s definitely true that, I don’t know, the online left and even the New York Times and Vox, they ended up all coming out and saying, “Hey, this Romney stuff’s pretty good. It may need some changes around the edges, but it’s a good structure.” But the institutional Democratic Party and the center left, as represented by places like the Center on Budget and Policy Priorities, they were really down on Romney and really mad at this Romney plan and mad at people like me for saying it was better than the Biden plan.
And the Romney plan was like, it’s kind of a dead letter because of stuff we aren’t even talking about, stuff like the state and local tax deduction and stuff like that. That’s the stuff that Democrats really get worked up about. So yeah, I don’t know that there was, I don’t know, that there was a place for people to join hands outside of the internet, which would have been nice because wouldn’t it be lovely if we could do that on the internet. But I just would throw a little cold water on it in that sense.
Oren Cass: Yeah. I think we found somewhere where Matt and I agree. If we have a little bell we can ding or something as a sound effect, that would be good.
Tim Wainwright: I’ll get on that.
Oren Cass: I think he’s right, both in describing the political, off the internet dynamic of this, both on all the reasons the left-of-center wasn’t actually jumping on it, and I think likewise, a lot of folks on the right-of-center obviously weren’t happy with it. I also agree with him on his hierarchy of simplicities and share his disdain for the tax credit structure of everything and all the complication that that introduces. The one twist I might add to it, and this goes back to my prior comment about theorizing, is that when you’re thinking about simplicity, particularly in political terms, the literally most technocratic simplest thing isn’t necessarily the simplest from a political perspective.
And so that’s again where I come back to this distinction between working families and non-working families. I think actually trying to sell in the American political context, the universal benefit that includes just completely unwinding welfare reform and saying, “We give unconditional cash to all families,” you can believe in the abstract state of nature not yet formed nation, that that’s the way to go, but that doesn’t mean that’s actually either politically plausible or even makes sense and sounds right to people here. So, I really think it’s important, I guess I’m repeating myself, to separate this and say, “Should we have a long fight about how we can make the safety net better and should cash be a larger element of that?” I’d love to, and maybe we should spend a couple minutes on it here, because I also think there are tons of things wrong with the safety net and ways we could make it better.
But if we actually want to have any hope for something that is bipartisan, potentially going to be widely understood and embraced within the country and become a durable addition to the social compact, I think something more like what we’ve proposed at American Compass that says, “Here’s a lot of help we can get to working families,” is the thing that has more promise. So I guess it’s a direct question for Matt, just as a legislative matter almost. Is the Fisc, which we call our plan, better than no Fisc? If that’s the policy that you could actually make progress on, is that something that you would want to see progress made on or do you see it as actively impoverishing or harming people in the process?
Matt Bruenig: It’s always a tough question with half measures, can you make them full measures down the line? I mean, that would basically be the calculation, would be, do I think that we could put this in and then like a year later snap off that exclusion of the poor? Because interestingly, that is where the child tax credit is going. I mean, none of us really like the Biden approach, but that thing’s about to pass. It passed through the House and it’s going to get through this COVID bill, I’m pretty sure. So we’re already about to see a benefit that flows to even the poorest people in the country, at least nominally, of course. There’s going to be a lot of difficulties for those folks in claiming that benefit because many don’t file taxes and all the rest of it, but we’re already going to be there.
Oren Cass: And we should say it’s a one-year thing. I think Democrats selling that as a permanent program a year from now would face different calculus.
Matt Bruenig: Oh yeah. Yeah. I’m sort of unclear. I mean, obviously they want to make it a permanent thing, but I’m unclear on how—I don’t know the mechanics of that. Is that harder? Do they need 60 for that? I don’t know. But yeah, so we’re at least going to have one year of it. And of course we’ve had three checks. Well, we’ve had two checks. We’re about to have a third, that also went to people who have never worked, with these stimulus checks.
So, I don’t know, I’m interested. I don’t know about the political dynamics of this. I think it’s a little hard to say, because the examples we have in the past, like AFDC, that was a benefit that only went to very poor people. And so that’s a little bit different than a benefit that goes to everyone, including very poor people. I think you’re going to have a little bit of a better go of the universal one than you would hyper-focused on only non-working single mothers. That’s a real bad idea politically.
But the universal one, I think it could go because I think once it gets out there, what would you do? You’d have to run some campaign in which you’re like, “Hey, all these benefits you guys get each month in your check, in your account, I know you love them, but what if we cut off like people, the bottom 5% of kids because they’re not working nor their parents aren’t. I don’t know. I just don’t think people are going to go for it. I think once they’re receiving it and they’re happy with it, the fact that very poor people are also receiving it, I don’t know that it’s really going to grind their gears enough to want to, I don’t know, mobilize to get rid of it in the same way, a benefit that was only for the very poor.
Tim Wainwright: Okay. I think that’s an interesting conversation, but so let me summarize this, because then I do want to spend, Oren, as you teased out some time talking about other areas of potential overlap, right? But if I’m summarizing what I’m hearing right, it’s that, the kumbaya dream of AOC and Steve King going on a joint hunger strike in the rotunda until the Romney plan got passed, not going to happen. Nice to think about, maybe, certainly get some good video clips out of it, but we are going to get the Biden thing through. So we’ll get to see how it goes for a year and reassess from there. So we’ve staked out our positions and we can keep having the technical debates about it, but that seems like what’s going to happen and we’ll wait and see as things develop. Is that a fair summary?
Oren Cass: Yeah, I think that’s right.
Matt Bruenig: The way I view it is, okay, so the Biden thing is through, we made some efforts to try to change it a little bit. Both I did, Romney did, there was a little bit, they moved things a little bit around to try to make it a little bit more administratively better, but as Oren points out, it’s going to be gone in a year. And there’s an expectation from a lot of people that we want to make something like this permanent. So that’s where I see the next stage is to say, in a way, because it’s going to expire in a year, now we have a year to fight about what should the permanent thing look like. Should it look like what Oren is proposing? Should it look like what Romney is proposing? Should it look like what I’m proposing?
And I suspect there might be a lot of competing bills on this as people jump into the fray based on maybe Oren’s piece. I don’t know if he’s got some folks lined up or based on my proposal. And then of course, there’s going to be the people who are saying, let’s just keep doing the Biden thing, but make it permanent. That’s how I see it. The next fight is how’s this thing going to be made permanent? What should it look like when we make this child benefit thing permanent.
Tim Wainwright: Oren, would you agree?
Oren Cass: Yeah, I think that’s exactly right, and I think Matt’s point about the political dynamic of if this is already going to be… If both sides are agreeing, this should be out there for most people. What is the dynamic around the fight over the contested group here? And is it something where most Americans say, hey, if we’re doing this, let’s just do it for everybody. Or is it going to be something where people say, woah, what are you talking about doing it for everybody? And I think that’s the central question. And so one piece of it will be folks making the affirmative, persuasive arguments that it should be for everybody or it shouldn’t be for everybody. And one piece of it will be a reaction to how that lands on the nation and what politicians think will and won’t be popular. And as much rightful complaints as there are about everything that’s wrong with our democracy, I don’t know, I look at this kind of issue and think like, this is probably the kind of thing that is going to end up being fairly responsive to the sentiments of the country.
Tim Wainwright: All right, so that’s a helpful summary. So let’s spend some time talking about other areas that we could potentially work together on. So Oren, it sounded like you maybe had a couple ideas, is that right?
Oren Cass: Yeah. We can get into very wonky specifics. I think a place where I generally agree with critiques that I’ve seen Matt certainly make of the way the safety net operates today is that it’s a mess. It is complicated and difficult to use. It has a lot of unnecessary phase-outs and bad incentives. It doesn’t necessarily provide the kinds of support people need in a lot of cases. And so this is really where I started my career as a policy wonk, was saying within the right-of-center, look, guys, anti-poverty policy is not a budget fight about where we can find cuts. We may need to have budget fights and talk about cutting across the budget, but anti-poverty policy is about looking at the money that we are spending on fighting poverty and figuring out all sorts of ways we could surely do it better than we are.
And so, I think that’s a debate we should have and a focus we should have on the merits, independent of just… And I think we’ll do a better job of it if we’re not just saying, well, let’s just give everybody money instead. I suspect where Matt and I will disagree, I’ll just say my position on it… It’s that I think a huge piece of success is further localization. And I think a huge problem is that we’ve made it everything about the safety net a national fight about how to do it and how to design the programs, whereas a lot of stuff I think would be much better done sending resources to state, local, and even community non-government organizations to actually try to deliver programs and services.
Matt Bruenig: On the localism point, I actually think there’s an interesting divide here to get back to some degree to Oren’s point about charity and civil society and won’t this all be displaced by the central government’s money machine. I think that the money benefits, really welfare benefits more generally, are usually definitely much better administered on the national level. You look at SNAP and Medicaid and UI, oh my God, it’s just like really badly done, and I suppose it could be done better, right? Why couldn’t a state do it better? They just don’t ever seem to. And this is where I feel like the role for the local parts come in and maybe for some of the more charitable minded and civic society minded and religious community minded is there is a role for local, whether it’s governments or non-profit organizations, or just civil groups and clubs and whatever in helping people.
But I think the way that they can help people is a way that the government simply cannot, which is one-to-one connections, relationships, working with people, helping people in a very kind of very niche basis. It’s very hard. Maybe someone does have a drug problem. That’s something you’re going to need someone there to help you with and maybe social workers, but it’s a little bit uncomfortable. But the money part, like in many ways, I feel like getting the money stuff set up, really frees local groups to focus on the stuff they’re going to be better at, which is helping people in these kinds of soft touch situations with day-to-day problems and relationship issues and addiction issues and stuff like that, that money doesn’t really fix. And if you get them out of the business of having to try to collect cash so that they can keep people alive, you take care of that, then you free up the local groups to do what I think they’re the best at.
Oren Cass: Yeah. So I think this is probably a broad point of agreement on what you just said about the local function, Matt, but also the point about the money distribution being a national function. One of the policies I work on a lot is the concept of a wage subsidy, and I’ve always said, look, take the safety net, put a whole bunch of that money into a wage subsidy that absolutely makes sense to be administered nationally, but then take the other kinds of programs we’re doing and ask what if that actually should be national versus at the local level.
I think probably where we disagree in thinking about how that support at the local level can function is that I think you really undermine it quite badly if you start from a pre-commitment that the actual resource-related needs of the household are already going to be fulfilled by the federal government. I jotted this down when you said it, because it was again a striking example of how we think about things differently. When I initially brought up the local role and you dismissed that as we shouldn’t impoverish people, so that local organizations have something to do, which is just an interesting definition of the default, right? It doesn’t strike me that declining to create some massive cash program is impoverishing people. People are impoverished—
Matt Bruenig: Well, the government determines the distribution of income through lawmaking, right?
Oren Cass: Well, to some extent, the market does as well. And obviously the government has a role in—
Matt Bruenig: The market is created by the state, right?
Oren Cass: Right. And the government has a role in defining how the market operates. But I don’t think it’s right to say essentially to use an active verb and say, anybody in the world who is impoverished or in the country that’s impoverished, we have impoverished. There are people who are impoverished and at least in my view, we start with a world in which people are impoverished and ask, what should we do about it? So the fact that we haven’t created a cash benefit for someone already doesn’t mean we have impoverished that person. And we may disagree on this point. I highlighted as point where starting from a different point then leads you to think differently.
And so, in my mind, it’s not a matter of the federal government denies a benefit, thereby impoverishing people, thereby sending them to local organizations. It’s that there are impoverished people and local organizations can do a tremendous amount of effective work with them. And they need resources to do that work. But in a lot of cases, I actually think, trying to solve in advance any problem related to the impoverishment, in a lot of cases, it’s going to undermine the ability of the organizations to actively work with them. And so I think there needs to… I think you want to have more of a direct linkage where the support and engagement at the local level is about both addressing the impoverishment and addressing problems in people’s lives that are contributing to the situation.
Matt Bruenig: Yeah, I do want to dwell on that just a second, because I do think that’s a good point. Because what Oren essentially does is he takes factor payments, payments to labor and capital. And he just buries those as a baseline thing. It’s like, that’s just a thing that exists.
Tim Wainwright: State of nature sort of thing?
Matt Bruenig: And then whatever poverty results from the distribution of factor payments that is like, that’s just normal poverty, and no one caused that. There was no cause of that. It’s just, you didn’t get the factor payment. I don’t know. Own some more capital. Work some more hours, I guess that’s on you. But I think that’s completely mistaken, right? Factor payments are just as much driven by government policy as anything else, right. The government creates economies. They create contract law, they create property law. They create the whole thing that drives the factor payment engine.
They have courts, they have police, all that drives factor payments. And so I think what you want to do is take a step back and put a whole range of options on the table and say, okay, here’s society number one. In society number one, the government has created a system in which income is only distributed according to factor payments and I guess separately through private transfers. Here’s society number two, the government has decided, yeah, we’re going to use factor payments for a lot of the income, maybe half of it, but we’re also going to use other payments, non-factor payments, for the other half of the income. And those non-factor payments would be payments to elderly people, disabled people, students, caregivers, unemployed people, and children, right?
And you go, okay. If you pick option one, there’s only factor payments. Dude, you’re going to have a lot of poverty because half the people don’t receive factor payments. Those half of the people are not distributed evenly across families. Some families have like eight people who aren’t receiving factor payments. Some families have no people who aren’t receiving factor payments. You go that route, you know what’s happening, you know what’s going to happen. And if you pick option one over option two, that decision—you’ve made a pro-poverty decision. I think that’s, I think the correct way to view it. But obviously Oren disagrees.
Oren Cass: Sorry, Tim, if you’re trying to go elsewhere.
Tim Wainwright: No, Oren, respond. Yeah.
Oren Cass: I think this is such a great place to wrap things up in a sense because it does speak to what is underlying so much of the disagreement and even just in the framing. Yes, in the economics classroom, we would talk about these as factor payments. In society, we talk about them as earnings, and the basis of the democratic capitalist society in all sorts of ways is built around this assumption that people support themselves through their earnings. And that has all sorts of implications. Some of which are economic, but many of which have to do with our basic understanding of what people’s obligations are to each other, to their families, to the society.
And frankly, I think it is a good setup. I think there are a lot of very desirable things about understanding that the distribution of income in the society and what people have is tied to what they are able to earn in the market, which at the end of the day means what they are able to earn by doing something of value for someone else. Now, obviously there are tons of problems with how that works and more so than pretty much any other conservative, I’m very open to acknowledging and talking about all those failures, how we can address them, how we can have an economy that actually works and supports that system better for more people. But my starting point and overarching goal is to say, we want to have that be a system that works well because of how it effectively reinforces the cooperative community we have, which is a miracle and not something to be taken for granted in human history.
And then we identify exceptions where that model just isn’t going to work and we are going to need the government to step in in other ways as Matt was describing, and we should be open to doing that. But the idea that families who have children is somehow just an inherent exception that we shouldn’t use this model as a starting point for, I think is a mistake. And so again, thinking, not just from the technocratic perspective, but also from the, how does a society actually function well perspective, I think a real focus on earnings and saying that, where it can be, the support we provide is going to be tied to those earnings. And we recognize working and earning as a meaningful and important thing that people do that is distinct from a state of being in a household that doesn’t do that, I think are things worth recognizing the value of and trying to preserve as we make policy.
Tim Wainwright: Yeah. Let me put a button on this as we’re coming up on time, but as I’m looking back on our conversation, the areas that I think would be helpful to think about for the future and stake out as we build out the project and what this is going to look like is just… Again, I don’t think we’ve solved or adequately considered the structural changes that are happening to that system, as you describe it. And our current institutional capacity to reckon with automation, AI, blah, blah, blah. And we’re going to have to… Any catch-up, whether you still want to say like, no, we need to solve for specifics and still nudge people along those moral lines is going to still have this massive time delay between how rapidly things are shifting out there in the culture and the economy and the massive bureaucratic apparatus’s ability to catch up.
And it seems that that is going to leave people behind. And it just seems like that’s ostensibly the focus that you guys are trying to chart out, and I’m just not sure we’ve solved for how quickly the technological pace is rendering some of the ways we have of capturing the traditional sort of full-time work model in a way that these interventions can really get at the heart of things. So I’m putting that on my to-do list for our future conversations. But guys, before we wrap up, any closing shots. Let’s give you each a couple of minutes to put your own button on it. Anything you want to plug? How we can follow what’s going on in the future. Matt, let’s start with you.
Matt Bruenig: Oh yeah. You can follow my work at peoplespolicyproject.org. Yeah. I don’t know that I have much to say. I guess I’ll just sum it up again. In my view, everyone should receive an income. For workers, that’s paychecks; for owners, that’s dividends, interest, rents. I actually don’t think that they should receive that, but we’ll put that aside for now. But for non-workers, that’s of course, some kind of welfare benefit, whether that’s student benefits, unemployment benefits, child benefits. And I think if you do that, you’re going to have a nice, equal, low poverty society. Not fully equal. There still will be variation based on how much you work, and that will provide plenty of incentive to work. But if you make sure everyone at least gets some kind of basic payment, including every kind of non-worker in society, I think you go a long way to having a nice stable egalitarian society, which as far as we can tell from other countries does not seem to be especially damaging to work or family or anything like that.
So, I don’t see any reason not to do it. And I think a lot of the arguments that Cass provides for not doing it actually either apply to his own proposal because he’s also proposing giving a lot of benefits to children that exceed anything that their parents earn in the labor market. They either apply to his own proposal, or they’re super, super narrow and focused only on the encouragement to work stuff, which really just seems mostly irrelevant empirically. And also, like I said before, seems sort of under-theorized. I don’t think Cass is going to say that a woman who’s 20 years old in college and gets pregnant and decides to have a kid that she should be excluded from child benefits, because she decides that she wants to finish her degree while she’s taking care of her kid.
I don’t think he would say something like that or would say that elderly parents shouldn’t get it or disabled parents shouldn’t get it. He really has in mind a very, very, very niche group of people that he doesn’t want to give it to. But his policy is not designed to target those people. It ends up hitting lots of people that he probably doesn’t want to hit. And it’s just much better to not worry about this just handful of people that you super-duper don’t like and make sure all kids get some kind of benefit. And then to the extent that you want to fix other problems in society, fix those problems. Encourage people to marry. If that’s what you want, encourage people to work, help people if they have problems with addiction, do those things. That doesn’t require, I think, starving them out of cash.
Tim Wainwright: Matt Bruenig of the People’s Policy Project, thanks for joining. Oren.
Oren Cass: Thank you guys, both for this, has been fantastic. And maybe this is surprising to say, hopefully not, I love Matt’s work because I think he does such a great job stripping away all of the noise in a lot of these debates and getting to the actual core arguments, which has therefore allowed us here to really focus on those. And I think hopefully listeners will come away really understanding how it is that two people who both are focused on developing policy that’s going to help folks up and down the income spectrum can end up then with very different assumptions and conclusions about what the best way to do that might be.
I guess the two brief closing thoughts on the policy. One is to the point Matt just made, there is an interesting question with any policy of who’s included and who’s not, and I think it’s actually important to make those distinctions as opposed to say, oh, it would just be easier to not have any. I think policymaking is a lot about thinking about those issues, and so as Matt ran through the list, I wouldn’t say that a college student who gets pregnant and still wants to complete her degree should then be eligible for the child payments. Fortunately, there are an enormous range of other supports out there in the world that would likely be accessible to her. And so as we talk about any given policy, I think it’s really important to remember that they operate in that larger context and it’s not a matter of if this specific policy doesn’t meet all your needs, then starvation is the only thing that’s left.
And then the second thing I would say, just coming back to Tim, the point you made in closing, is I think it’s a great point that there’s many other things changing in the world and automation and AI and so forth. But the reality is that we don’t actually see those impacts necessarily in the labor market to a significant extent. And this is something that I’ve done a lot of research on and I’ll be the first to acknowledge that if someday robots have taken all the jobs, then we’re certainly going to have to come up with a different answer. I would just caution against preemptively worrying that the robots are going to take all the jobs and therefore thinking that we need to change our approach to everything as opposed to a lot of the work that we do at American Compass, which is asking how can we pursue the reforms that are actually going to ensure we do still have an economy where everybody can earn a good living and support a family. And so that’s a lot of what we’re up to and we’re at americancompass.org.