A couple of months ago I wrote about letting human interest drive the minimum wage debate and how we are better off as a party arguing from a person centered position rather than a business centered position. Another similar opportunity rises regarding the democrats’ push for a basic minimum income payment. If we argue from a human standpoint we can diffuse their argument and bring some of their more moderate voting members into the big tent.
The dollar is an economically unusual currency in that it is not pegged to another currency, and it is not pegged to a precious metal to define value. The Federal Reserve can add or withdraw currency into circulation without a direct, quantifiable impact to the value of the dollar since there is no finite value it is pegged to. In some sense this means that the Federal Reserve can impact fiscal policy for taxation by simply increasing or decreasing the money supply available for taxation without regard to the value of the dollar. If more currency is in circulation relatively more tax revenue is generated; if less is in circulation relatively less tax revenue is generated.
The Democrats make an argument for a basic minimum income payment on humanitarian grounds and to the extent that fiscal consequences are concerned use the above reasoning of more circulation will lead to more tax revenue supporting the payment. The trick for Republicans is to make a proposal that will have a similar impact without actually adding more to the deficit. We can do that by allowing individuals elect to receive the child tax credit on a monthly basis rather than when they pay their taxes.
We already know the IRS has the ability to handle this task. Obamacare uses this idea with the tax credit to pay for health insurance premiums. The premium is calculated when you enroll in your healthcare plan for the year, and the government automatically pays the insurance company one twelfth of the credit each month. The stimulus payments have established the IRS has the ability to send stimulus funds to all taxpayers. From a logistical standpoint all the logistic infrastructure is in place.
From an economic standpoint this will not add to the deficit. Allowing individuals to receive their child tax credit on a monthly basis is using economic policy that is already in place so the budget impact is already in place. Releasing the credit 1/12 every month leads to an economically more efficient use of the credit as putting the money into circulation spurs economic activity leading to an end result of more taxes collected.
However, the entire credit should not be released. In order to be economically beneficial the amount released each month must be low enough that it is likely to be spent rather than invested or saved. The idea is to make sure everyone has a sustenance level of income that is going to be spent in order to make sure need is remedied and economic activity is increased. Since this is a credit that is being released early it could have disastrous consequences at tax time and placing a limit on the amount available for release each month caps the negative impact of the early release at tax time.
Acting in a economically responsible way to address need while at the same time boosting economic activity serves both the fiscal and social wings of the Republican party’s needs. If the democrats accept the proposal we take the issue off the table for the Democrats to use going forward. If they don’t accept the proposal it exposes the Democrats cry for a basic minimum income as something they are using for a political tool rather than a genuine desire. Either way we come out ahead, and have acted within our value set.
Howie Katz says
Monthly payments for the child tax credit instead of a minimum wage seems like good idea, but what about those who have no children?
Greg Degeyter says
That’s a good point, and no plan is perfect. This wouldn’t replace minimum wage, but rather would be used to end the far left point about instituting a minimum basic income that the left simply wants to pay everyone by virtue of residency.
Anything we can do to frame the debate in our favor and expose the extent to which the far left is unwilling to compromise moves the needle in our direction.
The minimum wage should be zero and the federal government should have no say on the issue.
Assuming the democrats have any motive outside of raw political gain is foolish.
Greg Degeyter says
Howdy Dan, regardless of whether the government should be involved in the decision making they are. The question is how to go about working within the current political decision making to undercut the democrats talking points.
Using the current policy decision in place – the child tax credit – and saying that individuals should be allowed to take a portion of that each month is an alternative the the guaranteed basic income talking point the far left is pushing. When the far left rejects the compromise it shows them to be unwilling to work with Republicans.
If we simply obstruct the next 4 years without offering any policy alternatives of our own we are no better than what we complained of when the democrats obstruct Republican presidents. By offering counter proposals we frame the debate in a light more favorable to our beliefs. The risk involved is little. If we win the discussion and get the policy implemented it’s no impact on the budget since the proposal uses preexisting economic policy, but it does so in a more economically efficient manner.
If we don’t get the policy implemented then we win because we show just how radical and uncompromising the far left portion of the democrat party has become. It’s a wedge we can force into their voting block. Any splintering we can do helps in 2 and 4 years.
Dan, I assume you are against laws prohibiting wage theft by employers, mandatory overtime payments after 40 hours for certain workers, and all safety laws. You appear to be in favor of going back to the good old days, when life was brutish and short. The days when one of my Uncles worked 32 hours straight because other employees didn’t show up and he was given the choice of working or being fired. Oh, he didn’t get paid for the last 16 hours because the guy running the drilling rig told him after the fact that he didn’t work hard enough.
I bet you’ve never worked a hard manual labor job in your life, or you wouldn’t be spouting such garbage. I am really beginning to understand my Dad’s saying that “Republicans don’t give a shit about anyone but themselves”.
As for raw political gain, we just had 4 years of that from Trump, whose every move was designed to enrich him , his family, or his friends.
You’d lose that bet cupcake. Your uncle sounds like the same kind of loser you and your dad are so I guess it runs in the family.
Your last comment shows how out of touch you really are. Trump donated his entire salary while he was in office. How about providing the list of moves Trump made to enrich him, his family or his friends.