A Reconciliation Kids Menu

Bite-size portions of family-friendly tax policy

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• The Main Event: Cooking Up Some Affordable CTC Improvements

• Adiós, Francisco: Pope Francis (1936-2025)

• It’s Me, Hi: Mentioned at the Examiner and the Times

• Parting Shots

The Main Event

Previously, on Family Matters…The odds of expansion of the top-line value of the Child Tax Credit (CTC) were rated as “rather slim” back in early March, with Highly Informed Experts (me) pointing out that when it comes to tax policy, “the GOP’s eyes will inevitably be bigger than its stomach.”

Since then, the dance has been extremely delicate, but so far, Speaker Mike Johnson has been able to finesse his way through keeping his thin majority’s various factions onside. Big, potentially unresolvable questions remain; first and foremost, whether the Senate’s dereliction of anything close to fiscal responsibility will be allowed to carry the day, or whether the House’s preference for spending cuts can make it through without requiring cuts to Medicaid.¹ As Ramesh Ponnuru suggested for the Washington Post, “The difficulty of passing a Republican-only bill should be evident from the fact that a mere framework for it passed the House, with its small Republican majority, by only two votes,” suggesting that bipartisanship may end up being a necessary fallback to get any final deal across the finish line.

Stock photo via Flickr

But while the broader tectonic plates crash, surprising signs of life around pro-family provisions have begun to bubble up. Senate Finance chairman Sen. Mike Crapo (R-Idaho), has publicly expressed his interest in expanding both the CTC’s top-line amount as well as the non-refundable portion (what people receive who have federal income tax liability lower than what they would otherwise get back.)² Long-time CTC stalwart Sen. Josh Hawley (R-Mo.) has made clear that a push for expanded refundability of the CTC (and other tax credits) will be a big part of his negotiations. Sen. Chuck Grassley (R-Iowa) told a town hall that the Senate was considering expanding the CTC, paid for, at least in part, by allowing top tax rates to bump up. And in an article profiling pro-natal efforts, the New York Times’ Caroline Kitchener reported that the White House has been pitched on the idea of a $5,000 baby bonus, to which President Donald Trump replied, later this week, “sounds like a good idea to me.”

So let’s say that Congress is interested in including some family-related provisions in the upcoming reconciliation package, either on a party-line or modestly bipartisan basis. If Congress felt like a full pro-family meal, the best policy option remains the Family First Act, sponsored by Rep. Blake Moore (R-Utah) in the House and Sen. Jim Banks (R-Ind.) in the Senate. It consolidates existing child-related benefits, improves marriage penalties in our tax and transfer programs, increases support for when families need it most (around childbirth and while kids are young), and folds in other tax benefits to keep things fiscally sane. Pushing for its inclusion would be a big swing for the fences, but if passed it would be a home run.

But barring a political earthquake, it’s likely Congress will be looking for something a little easier to bite off. What sort of options might be on the table, and how much might they cost? Thanks to a little back-of-the-envelope math, estimates from the Tax Policy Center, and tinkering with the invaluable Committee for a Responsible Federal Budget’s “Build Your Own Child Tax Credit” calculator, we can give lawmakers who might be interested some options for relatively affordable family-friendly policy ideas — a kids menu:

• Improve refundability for low-to-moderate earners
  One-year cost: $1.5 to $8.8 billion

  • Tinkering with how refundability (the Additional Child Tax Credit, or ACTC) is calculated was the basis for the Wyden-Smith compromise that failed last Congress, but some of the ideas are still very much on the table, such as switching the phase-in rate from 15 cents on the dollar per tax unit to per child (cost: $3.4 billion), which would benefit moderate-income families with more kids. Lawmakers could also allow the ACTC to start phasing in at the first dollar earned, rather than the 2,500th (cost: $1.1 billion), or allow the total refundable amount to reach parity with the $2,000 CTC rather than artificially capping it ($1.9 billion.) None of these would change the CTC’s connection to work, and would concentrate most of the benefits for families in the $10,000 to $30,000 income range. Doing all three would cost approximately $9 billion.

• Upfront assistance for new parents (a “baby bonus”)
  One-year cost estimate: $5.3 to $11.7 billion

  • The idea is straightforward — have a baby, file for its social security card, and get a check (or direct deposit). As the Niskanen Center’s

    Leah Libresco Sargeant
    lays out in a new report, the case for a “baby bonus” is less so the idea that it will unleash a new American baby boom (it won’t) than that it will give parents a little more stability at a unique time of life when expenses go up and income often goes down. With a phase-in and an earnings requirement, she estimates a $2,000 baby bonus could be had for as little as $5.3 billion, or $7.7 billion for a universal program. My preferred policy design, that would give essentially all married couples $4,000 and single parents $2,000, would be a little under $12 billion. (The universal $5,000 mentioned in the Times piece, by contrast, would run about $18 billion.)

• Increase CTC top-line amount for children under six by $500
  One-year cost estimate: $15 billion

  • Babies are expensive, but so, too, are toddlers (kid-related expenses do rise with age but parents’ income profiles tend to rise as well.) If Congress was interested in championing parents with young kids, it could focus on expanding the Child Tax Credit for children under six, when most parents are paying for some kind of child care. If you kept everything else about the CTC the same, but boosted the top amount from $2,000 to $2,500, it would be cost about $15 billion (a more modest, $300 boost would clock in around $10 billion.) Child care costs are highly salient, and intentionally recognizing and responding to the needs of parents of infants and toddlers in this way could make for a signature win for the Trump White House, particularly if coupled with some of the cheap refundability tweaks mentioned above.

• Index the $2,000 CTC for inflation

  One-year cost estimate: [ undefined ]

  • The Child Tax Credit is a nominal value set by statute; it does not go up automatically with inflation unlike other portions of the tax code (say, tax brackets or the Earned Income Tax Credit.) Establishing that, henceforth, the CTC is now going to be indexed to inflation would be locking in some of the erosion in real terms since the beginning of the first Trump administration, but it would prevent future loss of purchasing power. This one is incredibly sensitive to your predictions about the future — you’re easily looking at $100 billion over ten years even if rates stay reasonable…which they may not.

• Increase CTC top-line amount for all kids by $500

  One-year cost estimate: $40 billion

  • The big enchilada. In 2017, Congress doubled the CTC from $1,000 to $2,000 (while also getting rid of the inflation-adjusted dependent exemption). If that level had kept rate with the pace of inflation, the CTC would be worth right around $2,500 today. Adjusting the CTC for the effects of inflation would ensure parents don’t end up worse off than they were prior to the TCJA. It would also be the most expensive option, clocking in around $40 billion per year. You could mitigate the cost somewhat by expanding social security requirements to cover both parents and kids (which would save a couple billion dollars), or tinkering with phase-out rates and levels.

You’ll notice the prices listed here are per-year, rather than the more conventional 10-year budget score. First, I trust that the august Family Matters readership is capable of adding a 0 to the end of many of these provisions to get the rough ballpark 10-year score. Second, some of the tax ideas being talked about are being discussed for a shorter time window than the full ten years; per Punchbowl’s Laura Weiss, negotiators at looking at including four years of no tax on tips, social security, and overtime to keep the overall score down. Time-limited expansions of the CTC or support for new parents may not be particularly ideal, but could pass political muster a little easier.

Life would be easier for any — heck, all — of these ideas if the GOP were willing to forgo other campaign-season tax promises. The SALT deduction was a salutary reform of the 2017 bill, and introducing new tax breaks for wealthy homeowners in high-tax blue states is an odd area for a populist coalition to spend political capital and fiscal space on. “No tax on tips” is largely a gimmick that favors certain working-class professions over others, and “no tax on overtime” would mostly just encourage gamesmanship in reporting hours. But the real campaign promise that should gall is the idea of curbing or eliminating tax on social security benefits. As is, many low and moderate-income seniors already pay virtually no tax, making it a windfall for the elderly rich, and it would increase the ultimate tax burden on families with children to pay for additional benefits for retirees — the opposite direction our fiscal plans should be taking us. And all that would be new spending on top of the $4.6 trillion (over ten years) cost of simply extending the full suite of Tax Cuts and Jobs Act cuts passed in 2017.

Which means that any of the ideas on this kids menu would have been made easier by the plan to allow tax cuts for the wealthiest to expire as scheduled at the end of this year, an idea reportedly being pushed by Vice-President J.D. Vance, per the Washington Post’s

Jeff Stein

, as well as OMB Director Russ Vought and political strategist Steve Bannon. That idea had cold water thrown on it by President Trump, via an X post from former Speaker of the House Newt Gingrich. But do notice how conditional the President’s language was: “While I love the idea of a small increase…if you can do without it, you're probably better off trying to do so.” So perhaps that particular pay-for, just like some of the other pro-family spending ideas that should be on the table, aren’t quite fully dead yet.

Adiós, Francisco

Pope Francis was a complicated figure for many American Catholics. Never as progressive as his glowing media portrayals would suggest, nor as effective in changing the church as some of his more vocal critics feared, he leaves behind a legacy marked by powerful gestures of inclusion and true Christian charity with, too often, a self-referential focus on progressive theological buzzwords (four years on, does anyone feel like they have a real handle on what a ‘synod on synodality’ was supposed to actually accomplish?)

My EPPC colleagues George Weigel (Washington Post), Francis X. Maier (Wall Street Journal), and Carl Trueman (First Things) have offered their thoughts, as has a trio of writers at Public Discourse: Notre Dame’s Jeff Pojanowksi, St. Louis University’s Greg Beabout, and the Morningside Institute’s Nathaniel Peters. My own assessment would be less dyspeptic than some, but it’s hard to deny he leaves the Church more buffeted by self-doubt than when he first stepped onto the balcony of St. Peter’s twelve years ago. An effective charismatic leader can channel his mass appeal to strengthen, rather than sap, confidence in the institution he heads, something the late Pope never seemed quite able (or, his critics would say, willing) to do. More pointedly, his watchword of mercy seemed too often to get tripped up in internal politics, applied liberally to perceived allies (even those those whose actions caused innocents to suffer and brought shame on the Church), even as Rome’s hammer was brought down on disfavored factions within the Catholic community.

But for all the sturm und drang, Francis helped untold thousands of people who had written off faith to see another side of what institutional religion has to offer the world. He could also be enjoyably feisty on the right things. An early version of Family Matters featured me comparing the late Holy Father’s enthusiastic pro-natalism to that on display from Elon Musk (a comparison which, over the past two years, has become even more stark). Speaking to a population conference in May 2023, Pope Francis said:

“I went to greet people, and I arrived in front of a woman, about fifty years old; I greeted the woman, and she opened a bag and said: “Will you bless him, my baby”: a dog! I did not have any patience there and I yelled to the woman, “Madam, many children are hungry, and you are here with a dog!” Brothers and sisters, these are scenes from the present, but if things continue like this, it will be the custom of the future: beware…

“The challenge of the birth rate is a question of hope. But beware, hope is not, as is often thought, optimism: it is not a vague positive feeling about the future…Brothers and sisters, let us not resign ourselves to greyness and barren pessimism, to the smile of compromise, no. Let us not believe that history is already marked, that nothing can be done to invert the trend. Because – allow me to say this in the language I prefer, that of the Bible – it is precisely in the most arid deserts that God opens up new roads".”

That kind of parrhesia (the Greek word for candid speech that was one of the late Pope’s favorites) was Pope Francis at his best.³ May his successor, whoever he is, inherit Pope Francis’ witness on behalf of the marginalized, and continue his genuine commitment to seeking the face of Christ in all peoples, while strengthening the institution that continues to stand on behalf of life and the family worldwide.

It’s Me, Hi

For the Washington Examiner, Tim Carney examines the debates over child care regulation, and cites my recent Family Matters post on Idaho.

For the New York Times, Ross Douthat links to my recent COMPACT magazine on red-state pro-family populism in his “Breviary.”

Parting Shots

• As mentioned, in her debut reported piece for the Times, Caroline Kitchener interviewed voices looking for higher birthrates like Lyman Stone, Emma Waters, Simone Collins, and Jay Richards (New York Times)

• In Arkansas, Gov. Sarah Huckabee Sanders signed the RESTORE Act, based on model legislation by my EPPC colleague Natalie Dodson, that aims to increase awareness and availability of restorative reproductive medicine.

• U.S. birth rates increased by 1 percent in 2024, new CDC data shows, driven by increases in births to women in their late 30s and early 40s

• Building off of that data, Tim Henderson, demographics reporter for the States Newsroom, points out that states with higher levels of building permits saw relatively higher numbers of births last year.

• Dee-Ann Durbin covers how the tariffs on imported products will raise costs for new parents; 90% of “core baby products” come from Asia, a trade group says (Associated Press). Jon Emont covers similar territory for the Wall Street Journal, pointing out that even if the Trump administration lowers tarrifs to around 50 or 60 percent, it will still hit strollers, cribs, and other baby gear especially hard.

• An excellent white paper from the University of Utah’s Gardner Policy Institute has an admirably straightforward walkthrough of what marriage penalties are (and aren’t), and highlights the ones that most affect Utah households

• Ruth Reader reports that Meta is behind a big push in D.C. to pass legislation that would require app stores to verify user's ages before downloading an app — and their goals for doing so don’t always mesh with parents’ groups who want the same outcome (Politico)

• My EPPC colleague Jennifer S. Bryson recommends that the Trump administration act to depoliticize U.S. Olympic sports (Tom Klingenstein)

Comments and criticism both welcome, albeit not quite equally; send me a postcard, drop me a line, and then sign up for more content and analysis from EPPC scholars.

1. This isn’t hyperbole. The Senate reconciliation instructions would permit $5.8 trillion of deficit increases – more than the borrowing from the 2017 Tax Cuts and Jobs Act, the Biden administration’s American Rescue Plan, and Biden’s ‘bipartisan infrastructure law’…all put together.

2. Recall that, per the Tax Policy Center, 17.1 million children received less than $2,000 in child tax credit because their families' earnings/tax liability was too low. That’s one in four children nationwide.

3. Another classic Pope Francis-ism came during impromptu remarks on the Benjamin Franklin Parkway during his 2015 visit to Philadelphia: “In families sometimes we throw dishes. In families children cause headaches. I’m not going to say anything about mothers-in-law! Families always, always, have crosses. Always. Because the love of God, the Son of God, also asked us to follow him along this way. But in families also, the cross is followed by resurrection, because there too the Son of God leads us. So the family is – if you excuse the word – a workshop of hope, of the hope of life and resurrection, since God was the one who opened this path.”