As the Republican Party charts its path during a Joe Biden presidency, there will undoubtedly be calls from the corporate wing to return to the neoliberal orthodoxy that defined it under the Bushes, Mitt Romney, and Paul Ryan. This would be a profound mistake.
President Donald Trump has repositioned Republicans as the party of workers with his focus on trade, industrial, and immigration issues. By crafting an expanded platform directed at working and middle-class Americans, Republicans can build on Trump’s success to build a more durable and potent electoral coalition. Republicans must become not just the party of workers but also the party of families.
Biden’s COVID spending plan raises the urgency of this shift, as Republicans will have to respond to his proposal to raise the child tax credit to $3,600 from $2,000. Rather than countering with frugality, conservatives should counter with a larger program that will not only help parents balance the checkbook each month but also encourage having more children.
Housing, Education Are Eating Stagnant Income Gains
Over the past four years, Trump focused relentlessly on the income issues facing Americans after two decades of wage stagnation. Thanks to this, real median household income rose 6.8 percent in 2019, the fastest since at least 1985. From 1999 through 2016, real median income rose just 0.3 percent. In Trump’s first three years, it rose 9.2 percent—nearly $6,000.
While Trump’s policies addressed income stagnation, this is only half of the problem facing Americans, who struggle to raise families given ever-rising costs. Since 2000, the cost of education, according to the Consumer Price Index, has risen by 148 percent while the cost of shelter has risen by 73 percent. Both are well in excess of the 54 percent rise in the overall price level.
Republicans must address these affordability issues. Of course, the cost of housing and education are particularly important to would-be parents deciding how many children to have. This is critical, as our most pressing medium-term policy problem is the low birth rate.
Rock-Bottom Baby-Making Is a National Crisis
In 2019, the fertility rate hit a record low, with the average woman expected to have 1.71 children. For perspective, to hold the population flat, the fertility rate needs to be 2.1, a level the United States last hit in 2007.
The U.S. fertility rate first fell below 2.0 in 1973, coinciding with a prolonged period of significant inflation. While headline inflation is lower today, the products and services children require have steadily risen faster than wages, likely pushing countless Americans to have a smaller family than they want.
Most troublingly, birth rates fall in the wake of recessions, endangering the near-term outlook. Compounding this, 2020’s lockdown policies and limits on social interactions have left millions in a state of suspended animation, delaying the formation of relationships, marriages, and births that could echo through our society for years.
Due to lockdowns, there will likely be 300,000 fewer births in 2021 than expected, bringing America’s birth rate to the lowest in a century. There has never been a more appropriate time to launch an aggressive family formation platform.
A declining population, or one dependent upon an ever-increasing number of immigrants, poses severe problems. Increasing population growth by 0.5 percent would make our economy $4.25 trillion larger in in 25 years, generating an additional $900 billion in tax revenue. A larger, booming America will also ensure we maintain our global power status against an increasingly aggressive and imperialistic Communist China.
More Babies Equals More Creativity
Younger, growing societies tend to be more dynamic and innovative. Stagnation has gripped Japan for 25 years as they battle a shrinking population, and now Europe is increasingly Japanifying as their working-age population peaks. Perhaps the greatest evidence of this phenomenon is that we are currently debating whether our technology giants have become too powerful, whereas Europe’s problem is the absence of a technology sector.
Increasing births is also a cultural priority. Parenthood can make individuals think beyond their lifespan as they contemplate their children’s future, providing a vested interest in our country’s long-term future.
Families are critical links to the past, with institutions and traditions that safeguard our culture, which can be lost in a society dependent upon immigration. Children enhance one’s sense of community as a conduit to meet others at school, sports, and religious functions, while leading adults to settle down to provide stability.
Most fundamentally, parenthood enriches lives and gives life meaning. Studies show children increase happiness, but the stress emanating from the incremental costs of parenting can eliminate that gain.
Keeping the Trump Voters for Victory
That is why Republicans must directly address cost concerns. In fact, effectively tackling the worries of current and prospective parents could help Republicans regain ground lost in the suburbs while retaining Trump’s multi-ethnic, working-class coalition.
According to the 2020 exit polls, Trump won married Americans 53 to 46 percent while losing unmarried Americans 40 to 58 percent. Trump won both married women (51-47 percent) and men (55-44 percent). Accelerating the formation of nuclear families gives Republicans fertile electoral ground.
There are many policies we can pursue towards this end, like loosening zoning restrictions and expanding apprenticeship programs, but we must act quickly, boldly, and decisively to position conservativism on the side of family formation. We often talk of the need to invest in our future. As children are quite literally our future, we should explicitly incentivize more births to married couples.
Pay Married People to Make More Americans
We should rally behind a new $5,000 refundable tax credit for a married couple’s first child, $10,000 for the second, and another $5,000 for the third. A family of five would receive $20,000 annually, providing $360,000 of support until their children reach adulthood. On average, it costs parents about $700-750,000 to raise three children, meaning this program would cut the cost of having kids in half for a middle-class household, revolutionizing parents’ thinking about the affordability of having children.
Importantly, this idea would empower parents, giving them the authority to spend it how they want without disincentivizing work, unlike the growing, complex web of welfare programs. A refundable tax credit could immediately impact birth rates, giving time for other measures to address underlying cost issues. Housing reform takes years to affect the supply of housing, for example, whereas this boosts income instantly.
Unlike Biden’s expanded child tax credit, this program would explicitly incentivize having a larger family, by providing more for the second child than the first. Adding this new tax credit as a supplement to existing policy would do far more to cover the cost of parenthood and actually bring the fertility rate to a sustainable level. And by providing the same incentive to all families, no matter their income, we signify that raising a family is a social good, whether you are in the upper, middle, or lower class.
Take Note, GOP: Largest Tax Cut in History
This would be the largest tax cut in history, about $500 billion per year. Given the potential to accelerate population growth, this investment could largely pay for itself over time. Still if the price-tag is jarring, rolling back deductions and preferential tax rates for capital could mitigate its cost.
There is no doubt that after years of inaction, our politicians will face tough decisions soon, as Medicare and Social Security exhaust their trust funds. Yet improving America’s demographics is essential to supporting a growing population of retired beneficiaries. By embracing this plan, we lay the groundwork for Republicans to be the family formation party.
Yes, Paying for Babies Generates More
Now, some may question whether a financial incentive will boost fertility rates. Nations like Canada and Germany that provided a one-time payment saw just a temporary boost in births that faded away as parents simply pulled forward having children.
However, France, whose tax code provides ongoing benefit for having a family, has a birth rate of 1.9, higher than the United States’ and much higher than that of European peers. Israel is a stand-out with a birth rate of 3.1, thanks in part to a monthly child allowance. Even college-educated women in Israel have more than two children.
Israel may be a unique case given the role religion plays in national identity, and religious women consistently have higher fertility rates. Still, Israel’s unique ability to maintain its birth rate while developing economically points favorably to its pro-family policy.
Moreover, rather than separating Israel’s religious nature from its financial incentivizes, we should recognize their linkage. Governments invest in cultural priorities.
Reinvigorate the American Public Square
Yes, Republicans should use their bully pulpit to advocate for marriage and family, but words without action ring hollow. Just as we bemoan the hypocrisy of a Republican establishment that calls itself pro-life but funds Planned Parenthood year after year, we should see the same hollowness in a movement that urges childbirth but doesn’t provide the necessary financial support to encourage larger families.
Given this evidence, a significant, recurring financial incentive seems likely to increase U.S. fertility. However, this should just be a centerpiece of coordinated policy proposals to encourage marriage and family formation, from eliminating welfare policies that discourage marriage to re-engaging against secular progressive forces in America’s cultural fights.
America is suffering an epidemic of emptiness. We see it in rampant drug addiction, a disinterest in marriage, and falling birth rates. It has many roots, from secularism to stagnant wages, and COVID-19 has exacerbated it.
No single government program can end this epidemic. But proposing significant financial support to families will enhance the credibility of conservative leaders as we encourage having kids.
Absent policy action, our demographic crisis will worsen. We must actively endorse and incentivize getting married and having kids, not only to deal with the crisis of meaning so many young Americans suffer from but to safeguard our culture and economic future. Fighting for workers and providing support for parents positions the GOP as a populist party that can compete in rural, suburban, and urban precincts among voters of all ethnicities.
A federal fertility tax credit combined with coordinated actions by state leaders will show Republicans not only put America First, we put American Families First. We must use the next four years to deepen our pro-family policy platform to build on the successes of Trumpism rather than turn away from it.