We in the news media often whack politicians for not being serious about policy. And then we ignore their policy proposals.
So here, in the spirit of orgiastic wonkishness, is my Dummy’s Guide to Democratic Policy Proposals. I write it because something fascinating is underway: After decades of incrementalism, Democrats are now proposing a litany of exciting big ideas.
Here’s my take:
• Child allowances are among the best ideas to boost America’s future. They are used very successfully abroad to reduce child poverty. One proposal would give families with children $250 to $300 per month, in the form of a refundable tax credit. Luke Shaefer, of the University of Michigan, estimates that this would reduce the number of children living in poverty by more than one-third.
This version is called the American Family Act, sponsored by Michael Bennet and Sherrod Brown in the Senate and Rosa DeLauro and Susan DelBene in the House. It is broadly backed by Democrats in the House and the Senate.
The National Academies of Sciences, Engineering and Medicine, in an important new report, calculate that child poverty costs the United States some $1.1 trillion each year. So if you think child allowances are expensive, just look at the cost of child neglect.
• Baby bonds have been proposed by Sen. Cory Booker and are an excellent way to reduce wealth gaps and help low-income families buy homes, afford college and start businesses. The idea is that every child would get a $1,000 savings account at birth, and then children in low-income households would get an additional $2,000 deposit in the account each year.
At age 18, the person would get control over the account — which at this point could be worth almost $50,000, including interest — but it could be used only for wealth-building purposes, such as education, a down payment on a home or possibly starting a business.
Such accounts have been rigorously studied since the 1990s and have been remarkably successful at helping people gain financial success, often as entrepreneurs. As Robert E. Friedman wrote in his excellent recent book on such accounts, “A Few Thousand Dollars,” the accounts increase homeownership, education and business startups (they work best when paired with financial literacy training and savings matches). A plus: Baby bonds would reduce most of the racial wealth gap in the U.S.
• Child care for at-risk kids is one of the highest-return investments we can make. Sen. Elizabeth Warren has proposed a high-quality child care program that resembles the U.S. military’s outstanding program, paid for on a sliding scale depending on the parents’ income.
The focus of Warren’s program is helping parents find child care while they work, and that’s important. The United States was a world leader in helping women get into the labor force, but we have lagged the last couple of decades. For prime-age women, we now rank 30th out of 35 advanced countries in female labor force participation — partly because of child care challenges.
But while the economic gains are potentially enormous, the even more important reason is to put at-risk low-income children on a path to success. Research suggests that investments in early childhood, especially for kids in dysfunctional homes, are perhaps the best investments this country could make.
How do we pay for all this? I like Sen. Bernie Sanders’ suggestion for raising the inheritance tax plus various wonky steps that target the wealthy, like eliminating the step-up basis and ending the gap between capital gains and earned income rates.
Warren’s proposed wealth tax is also intriguing. It has been tried in Europe and failed, but it may be more workable in a larger country like the United States that people are less likely to cut ties with.
It’s true that the wealth tax would be a challenge for paper billionaires with illiquid private companies. But we already have a wealth tax — the property tax — that hurts low-income widows. If impoverished widows can manage, so can billionaires. I suggest testing at a 1 percent rate for billionaires.
There are some bad Democratic ideas out there, too. Rent control typically backfires by reducing supply and compounding shortages. Legislation that would make companies pay a tax equivalent to the food stamps and school lunch subsidies employees receive would lead companies to avoid hiring people in low-income households, particularly those with children.
There are also many more good ideas, including vigorous antitrust enforcement to break up semi-monopolies, an expanded earned-income tax credit and other job initiatives, plus universal health insurance (though multi-payer has worked well in countries like Germany, so no need to be dogmatic about single-payer).
These policy proposals don’t have the drama of a denunciation by President Donald Trump of his rivals, but they could help reshape America. So let’s treat them as no less important than Trump’s tweets.