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What the Coronacrisis Tells Us about Family Policy

As the economy continues to reel and some industries may take time to come back, now is not the time to think small
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The coronavirus and the accompanying lockdown have exposed the fragility of the American economy, heightening the contrast between the “laptop class” and those either furloughed by the virus or forced to continue working. Those comfortable with an extended lockdown seem to think that some combination of free money, online delivery services and streaming video are key to the good life. Yes, these measures are portrayed as only temporary, but they have emerged out of a policy matrix rife with universal basic income (UBI) proposals rather than detailed considerations of how to restore Main Street.

However we begin to emerge from this crisis, it is clear that the state will play a far larger role in buoying and shaping the American economy than in the past. In a matter of weeks, it has become a state decision which among nail salons, marijuana dispensaries or churches are “essential services.” A cynic might be forgiven for thinking that, in the eyes of many in the laptop class, the purpose of American life is to glory in a shallow consumer culture populated by compliant subjects who watch movies at home while using marijuana for palliative care. Rather than bewailing the situation or recycling Reagan-era anti-government bromides, conservatives will have to make a case for how state power is to be used. When we emerge from this crisis, it will be high time to ask about our social and economic priorities as a nation—and whether those in charge have our best interests at heart. 

In the past year, we have been laying out an alternative vision. We accept that vast fiscal and economic efforts are the future in American politics. Last fall, we wrote that, “When the next recession or financial crisis hits, the United States will undergo another major expansion in federal spending. When that crisis comes, free-market arguments about shrinking the size of government will once again be exposed as a fantasy.” Accordingly, we advised the right to have a proposal ready to go when the next crisis hits—advice that well-oiled think tanks ignored, but many younger conservatives embraced. When the coronacrisis arrived this spring, many Republicans went along with the CARES Act only under duress, holding their noses in the face of a massive expansion of fiscal expenditure that they theoretically would oppose.

The economic dislocation now unfolding will heighten the need for intelligent proposals about how to shore up the American economy, and how best to bolster American families during a time of deepened economic gloom. Both aspects of this approach are crucial: as others have pointed out, American supply chains must be restored out of strategic economic necessity; and—what we focus on here—we need to support Americans whose livelihoods are now threatened. The only question is whether the policies will be written by those who promote “free money” and an economics of stupefaction, or by those who believe that fiscal policy is best applied toward clear goals like that of nurturing American families. In the coming debates, the Right’s usual strategy—have no plan at all before going along with slapdash rescue packages—will need to be replaced by the conscious use of the state, including its fiscal resources, in pursuit of the common good.

The problems American families will face in the coming years are real. Already, according to an April 29 report by the National Center for Health Statistics, “a record number of current youth and young adults are projected to forego marriage altogether.” As of 2018, the rate of family formation stood at 6.5 new marriages for every thousand people—the lowest rate in the 1900–2018 period. A 2014 study from the University of New Hampshire pointed out the additional damage caused during economic recessions, particularly that which followed the 2008 financial crisis. The existing long-term trend will only be accelerated by a further cyclical decline during the impending recession or even depression. The incentives set up in late capitalist economies already militate against family formation, making it expensive and portraying it as secondary to careerism and consumption. We believe that the state can be used to channel more societal resources into family formation and away from outlets that encourage vice and atomization. 

Some of these issues have arisen in discussions around the Family and Medical Leave Act (FMLA), whose application has been temporarily expanded by President Trump’s signing of the Families First Coronavirus Response Act (FFCRA) on March 18. These expansions point to the need for a more broadly flexible, family-supportive policy such as our FamilyPay proposal. Normally the FMLA allows employees who qualify to take twelve weeks unpaid, job-protected leave for specified medical and family leave. The FFCRA has expanded these provisions to provide for two weeks’ paid sick leave for those with COVID-19, and between two and twelve weeks of partially paid sick leave for those caring for those with COVID-19 or caring for children who lack access to school. (Some small businesses are exempt from the provisions of FFCRA, which is separate from stimulus money provided under the CARES Act.) More generally, the acts explicitly side with family commitments over an employee’s obligations to his or her employer.

The question of how to respond to COVID-19 has placed front and center the trade-offs between economic production, consumption and family life that we have raised in our policy advocacy. Consider the implications for everyone involved if an employee takes FMLA leave. First, the employer is short one worker. Second, the employee normally does not get their wages or salary, and under current relief measures receives them only for a very limited duration. While the act is admirable in that it gives legal protections to family duties as against economic activity, it does so in such a way that everyone loses. The FMLA applies a sort of microeconomic shock to the system. An employer may be reliant on their employee and then suddenly the latter takes leave. Meanwhile, the employee may be reliant on their income but that too evaporates if there is a medical or family emergency, particularly if family obligations during the COVID-19 crisis outlast the provisions of the FFCRA.

The flexibility added by FFCRA suggests a broader regime, like the one we have proposed, will be necessary in the coming years. Conflicts between family and work life have always been inevitable, and gearing policies to that fact is the sensible path. Finding ways to support American families will be a crucial task.

Under our program, families receive a fixed amount of income every year depending on the number of children they have. This adds up to $6,500 a year for a married couple with one child, $11,500 for two children and $17,000 for three children. If families had this sort of stipend, they would be less reliant on their employer for income. This would likely incentivize businesses to build in “shock absorbers” that consider natural fluctuations in family circumstances.

When we first launched our policy program, a common objection was to its cost. We readily admitted that the program cost would be massive. One of our main points was that well-meaning but weak “reformocon” programs that tried to incentivize family formation—like the Earned Income Tax Credit (EITC)—were far too small and hence did not have any impact on incentives. We argued that if policymakers were not willing to go big, they should go home.

We estimated that, when first introduced, the FamilyPay program would cost around 6.5 percent of GDP. If FamilyPay succeeded in enabling more families to raise children, the program cost could expand to 8.7 percent of GDP when supporting three children per family. We estimated that the program would require initial borrowing of 5 percent of GDP. In a subsequent piece in January at the Harvard Law Review blog, we discussed the macroeconomic implications of the program in a quantitative way. While we showed that the program was sensible and even beneficial in configuring the economy to support families, it would require raising the target rate of inflation from around 2 percent to around 4.5 percent, at least for the first three or four years. We argued that the present inflation target of 2 percent is arbitrary anyway and most economists now agree that a slightly higher rate might be productive in bringing down public and private debt burdens, particularly as the nation recovers from the coronavirus lockdowns.

When we first introduced FamilyPay, we were quite aware that we were proposing something on a financial scale not attempted in the United States outside of wartime. With the recent coronavirus crisis, however, our policy is starting to look modest by comparison. In a matter of weeks, many of the same Republicans who balked at large family support measures lined up to back federal interventions that were thrown together with lightning speed and urgency. As the initial panic subsides, though, much deeper problems will come to the surface—and likely much quicker, and with greater force, than anyone expects. Indeed, in the face of a possible depression or, at a minimum, a severe recession, the economy will require continued expansionary measures of at least the amount that we propose. The question will simply be over what those policies are geared to support.

First, consider what has been done in this recent lockdown. On the basis of continually fluctuating and opaque epidemiological models, many businesses have been shuttered; almost the entire service and transportation sectors, which accounts for around 15–20 percent of employment, have been closed and the employees furloughed or fired. The health care industry, surprisingly given the stated goal of protecting hospitals, has suffered a severe setback. The federal government has stepped in to provide some of this lost income to workers. Overall, it looks like the current program will cost the federal government $1.8 trillion or 8.6 percent of GDP—nearly what our proposal would cost when supporting three children per family.

Even at first glance the borrowing that this will require is substantially higher than our program’s opening phases. But now consider that this borrowing will take place against the backdrop of a recession and a collapse in tax revenues. Our program is designed to be implemented in good times, and so would normally generate a much lower budget deficit.

In addition to this, the new spending is being brought online with less “stuff” in the economy for sale. A portion of the economy remains simply shut down. Since inflation is caused by too much money chasing too few goods, the new spending program increases the amount of money being spent while the lockdown restricts the amount of goods being sold. The result could be a macroeconomic devil’s brew.

As the first phase of economic support measures expire, it will be necessary to design policies that support beleaguered families and tailor state benefits to still-functioning sectors of the economy. In the FamilyPay proposal, we tied an increasing percentage of benefits to expenditures on products, services and activities related to child-rearing. With children at home during school closures, and with typical summer work opportunities likely to remain limited for adolescents of working age, family-based forms of financial support will become crucially important as household incomes fall. Tying FamilyPay expenditures directly to family-related purchases will also help to direct spending and production toward that essential area of economic life.

While some initially accused us of being reckless with our policy and encouraging too much economic experimentation too quickly, our program pales in comparison to what is currently being undertaken. The only recklessness was on the part of conservatives who imagined that a ritual invocation of limited government nostrums would suffice for making a contribution to American public life. At the very least this should give those critical of our program pause for thought. The jury is still out on whether the lockdown was a sensible response to the coronavirus, yet many were quick to rally around the measures taken. For the right going forward, a blunderbuss approach will not suffice.

In the coming months and years, American society will reflect on the response we took to the coronavirus, considering both the gravity of the crisis and the probably even graver consequences of our response. Americans entered this crisis already apprehensive about forming successful families. At the moment, planning for the future seems all but impossible. The spending that has come online has naturally been targeted at buoying the businesses that were impacted in the early days of the lockdown. When unemployment benefits run out and we face the possibility of a new depression, the political argument will be over how to continue support for American families using all the fiscal tools that the state can muster. Financial support for existing families will be crucial, as many families will suffer the loss of a significant portion of their income and possibly one or, in some cases, even two parents’ jobs. Robust family policies offer a natural option for conservatives to advocate, and should appeal to voters on both sides of the political divide.

Gladden Pappin is an assistant professor of politics at the University of Dallas and the cofounder and deputy editor of American Affairs. Maria Molla is an economist at a global consulting firm.

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