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Economic Policy Is Social Policy

Via Rod Dreher, here is a terrific column by First Things editor Rusty Reno, taking on a staff editorial from the Wall Street Journal that criticized Rick Santorum's proposal to expand the tax credit for children as "social policy masquerading as economics". As Reno points out, the WSJ's blinkered focus on the role of tax policy in encouraging economic growth assumes a social policy of its own, one according to which GDP is the sole or main measure of a society's health. Too, the WSJ's claim that a pro-family tax policy "merely rewards taxpayers who have children over those who don't" overlooks the role of tax policy in encouraging people to have children, and assumes once again that this -- as opposed to growing the economy, of course! -- isn't something that tax policy should be in the business of doing. In short, the WSJ editors are guilty of exactly the charge they lay before Santorum: they pretend to be putting forward a "strictly" economic platform, which actually embeds a social policy of its own.Here's a choice excerpt from Reno's response:

Unlike the acorn that grows into a tree without cultivation and encouragement, human beings dont just do what they are naturally ordered to do. Or more accurately, we dont automatically do it well and in a way that brings us the satisfaction that comes with living in accord with our natural propensities. We require cultivation, which is to say culture, which is to say social policies.The free market libertarianism that largely guides the Wall Street Journal editorial page does not deny the need for cultivation and social engineering. It wants to engineer tax policy in order to encourage us to do what were naturally inclined to do, which is to work and invest and otherwise try to secure for ourselves a better and more secure financial future. But what that same philosophy denies is that human beings have a natural end beyond economic self-interest, which is why the editorials criticizing Santorum see an increased child tax credit either as an unfair preference for one lifestyle over others, or as case of misguided social engineering.The underlying view of the human person in relation to society that leads to these conclusions fits with postmodern relativism, which says that we are motivated by a will-to-power or sexual desire (the two main options in postmodern theory), but not in accord with an essential human nature, and not toward any normative end. By this way of thinking there is no human nature, no natural as opposed to unnatural way to live. Society constructs norms (social engineering), and individuals do this or that in accord with their own personal wishes and desires (lifestyle choices).Take will-to-power and domesticate it as economic self-interest, and you pretty much have the political and social vision of free-market libertarianism. I see little future for what is today a very modern social philosophy in American conservatism. Yes wed like to be richer, but thats not all we want. We want to live in accord with our nature as human beings, and that includes contributing to and enjoying the primitive community of the family. If free market libertarians cant get their minds around that factand the fact that as we make personal choices about marriage and children were influenced by a manifold of social and economic incentivesthen I cant see how they will be able to formulate a governing consensus. Over the long haul people wont vote for politicians who wont work to implement policies that help them live the kinds of lives their nature desires.

One thing that might be added to this is that certain social policies, tax-related and otherwise, can positively thwart proper human flourishing, as e.g. when we drive up the cost of housing and education, and make it prohibitively difficult to live on a single income, thus keeping families small and driving their members apart. What are some other aspects of our "essential human nature" that require social policies for their proper cultivation? I can think of quite a few.


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Child-friendly tax policies can be good for the economy, but they aren't necessarily. What's needed is solid families, families that rear responsible children, not just families that grow babies. Presumably, Santorum has more in mind than just giving people a little more tax money if they have a child. Or maybe not - maybe the WSJ editorial writer thinks that's all he wants. I can see merit in opposing that.Why this need to attack someone's position in order to articulate your own? Why not make the case for what you want on its own merits, rather than saying or implying that your position is good because your chosen opponent's position is bad?

John, thanks for pointing out this Reno piece. I agree that it is terrific. And again, I find it bracing that Rick Santorum takes Catholic social teaching seriously and supports policies in pursuit of that teaching.Regarding your remark about housing and education: I agree that home ownership is a social good, and the appropriate public entities at all levels of governance should tailor their policies to support it. I just want to mention that there are already a number of government policies in place that provide incentives for home ownership, and these policies are typically considered to be very effective. At the top of the list would be the federal tax deduction for interest payments on mortgages. This longstanding policy needs to be mentioned, not only for the important role it plays in incentivizing home ownership, but because it seems to be at risk(!) in a number of schemes, including schemes proposed by Republican candidates (perhaps including Rick Santorum?), to close the federal deficit. If we view home ownership as an important social good, then we should be willing to take a stand in defense of the mortgage interest tax deduction.Another key piece is FHA loans, which significantly lower the bar for down payments for first-time home buyers. Of course, we could consider the roles that Fannie and Freddie played in enabling sub-prime loans - a policy that proved disastrous for the overall economy. But despite that policy misstep, it seems clear that government policy already supports home ownership. Perhaps more can be done, particularly for those who are poor. We've learned that ignoring credit risks is not the path forward.Regarding education, I agree that much more could be done via government policy. My list would include subsidies for private schools that are proven to do a good job educating (certainly including Catholic schools); vouchers that give children, especially at-risk children, educational choices; and policies that bring public-sector unions into alignment with the social goal of educating our children. The experiment in Wisconsin, if it is allowed to persist (Governor Walker is currently defending himself from a recall), should be well worth watching for lessons learned.

There's a vigorous and ongoing debate at First Things that stakes out these two positions quite clearly:

Yes, that is ... vigorous. I hope someone else will respond to it -- it will take me a while to find the time!

ere are the main points of Santorum's plan, as summarized by the WSJ:* A revised but still-progressive tax rate for personal income ("He proposes a return to the Reagan-era top rate of 28%, and a second rate of 10% for middle-income Americans.")* A cut in the capital gains tax, presumably to stimulate investment ("He also wants a 12% capital-gains tax, down from 15% today, and half the 23.8% rate that Mr. Obama has promised in 2013.")* Closing of various loopholes, but keeping some of the most popular ("Mr. Santorum wants to eliminate deductions for business and the wealthy, but he'd retain some of the costliest deductions, including those for mortgage interest, charities, health care and retirement savings. ")I believe a serious argument can be made that this is the Preferential Option for the Poor, Tax Edition. It does fail the conservative purity test (particularly if the standard for purity is set by WSJ editors): it is not a flat tax, it keeps some loopholes open.

It is a fundamental error, often indulged in, to believe that a tax deduction or tax exception is somehow receiving a benefit, much less a benefit from the government. It is not. To believe that is to believe in the false premise that all wealth and income belong to the government and it is, ipso facto, entitled to take whatever it wants or claims to "need."Government is entitled to and may rightly lay claim to NOTHING. All wealth and income (and political power) rightly belongs to the individual, with government receiving only what the people say it may have, not the other way around. A so-called "deduction" is nothing more than a person keeping what already rightly belongs to them.Moreover, especially when it comes to income "deductions" for tax purposes, individuals and their families have a fundamental and inalienable right to first provide for their own sustenance, to first pay for their own living expenses. Government does NOT come first before paying for housing or food or clothing. A child tax "deduction" is nothing more than a family rightly prioritizing to put food in the mouths of their children first.Children and family come first in line for the fruits of one's labors. Government does not come first. Once the entire family is fed and clothed and sheltered and educated and all the other things that are essential to life, only then may one morally provide a share of the proceeds to the government, and only then to the extent that it is truly necessary for the common good.

Once the entire family is fed and clothed and sheltered and educated... in schools paid for by the government with tax money... and all the other things that are essential to life, ... such as being protected from robbery, thanks to police paid for by the government with tax money... only then may one morally provide a share of the proceeds to the government

Bender, my view is that when the people consent to be governed, as is the case in the US, part and parcel of that consent is acknowledgement of the moral obligation to pay via just taxes for the services which a government may properly be expected to deliver.Once that consent is received and that obligation acknowledged, it becomes an exercise in nitty-gritty details: what should be taxed, should people in different life situations be taxed at different rates, and so on.If the government abuses our consent, then we have an opportunity every two years to send new Congressional representatives to Washington who will represent our points of view.

That is the purpose of personal exemptions and personal deductions and child deductions to insulate from taxation those first few thousands of dollars that are necessary for a person and his family to live on.I agree.

acknowledgement of the moral obligation to pay via just taxes for the services which a government may properly be expected to deliverNothing I said precludes that. But no one can seriously dispute that a large portion of the government's budget is spent on (and taxed for) things that are not essential services, but merely wanted.In any event, would it be morally permissible or consistent with social justice for government to abolish all deductions for income tax purposes if there is a moral obligation to pay taxes for services?Consider the guy trying to survive on an income of $10,000 per year from the part-time job he's lucky to have. After rent, food, utilities, and other living expenses, he is lucky to have $10 left over each week. Or consider the family of four struggling on an income of $20,000 and can't make ends meet as it is?Shall we do away with income deductions for them? Should the government be able to barge in and say, "before you pay your rent, before you feed yourself and your kids, give us our 15 percent cut"? If taxes take priority, if government gets paid first, then the rent can't get paid. If the government gets paid first, then the kids starve.Or does a person have a fundamental natural right to provide for his own living expenses first? Is it a matter of fundamental social justice that a person be able to deduct from his "income" that money which is not something extra, but is needed to survive? That is the purpose of personal exemptions and personal deductions and child deductions -- to insulate from taxation those first few thousands of dollars that are necessary for a person and his family to live on.The income earner who takes deductions for children does not end up with more extra wealth than the earner without children. Whatever earnings that are retained as a result of government not taking it in taxation is used to support someone's life, not to buy fancy dinners and big mansions and boats and other toys, which is what the childless person would do with the money.

I would rather talk about Romney making about $15 million a year and paying @ 15%= $2,500,000If he paid @ 35%, which is the rate well paid wage earners pay in taxes, he would have to pay 5,250,000. I call not paying $2,750,000 a tax break..Bender...please forget/talking about the 10K guy and 20K family and get withit.

A tax deduction or credit is absolutely a subsidy/benefit if it is enjoyed by some but not all taxpayers. Homeowners receive a tax deduction that renters do not; the mortgage deduction is a subsidy intended to promote the public policy goal of encouraging homeownership,whether or not it actually accomplishes that is another question.I agree with other commenters: I believe certain essential credits and deductions should be much higher to reflect peoples' actual fundamental needs: personal exemptions and child care credits/deductions should be expanded, medical expenses should not be subject to the 7.5% floor and education credits should be expanded to name a few.But more importantly, I think the lens through which we need to look at any upcoming tax reform is, does it leave people at the bottom of the economic rung better or worse off? When Obama not so long ago successfully achieved the extension of the middle class tax breaks (with substantial compromises to benefit the wealthy), the only people who ended up paying more taxes under the scheme were the working poor. Hardly social justice.

Bender, you and I are in agreement. Irene, I also agree with your comment that the proper way to look at tax policy is through the eyes of the poor.

From an evolutionary point of view, there is nothing more important to survival than producing a next generation. All of society can be viewed as a means of encouraging and caring for children. Evolutionary psychology also claims that there is a psychic unity to the human species.