EASY MONEY: Biden's Dangerous New Entitlement

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The Biden administration has created a “temporary” new entitlement program giving parents money for having children. Now, in true Democrat fashion, they want to make it permanent. Nick Stehle explains why this entitlement is dangerous in The Wall Street Journal, writing:

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Deposits of $948 hit my bank account on July 15 and Aug. 13. The money came from the Internal Revenue Service, but it isn’t a tax refund. I shouldn’t be getting this money at all.

My family is receiving the new Advance Child Tax Credit Payments, passed by Congress and signed into law by President Biden in March. Under this policy, I’m going to make more than $11,000 by the time I file my 2021 taxes. I “earned” this extra cash by having four children between 5 and 13.

Do I need this money? Thankfully, no. I have a good job that puts my family solidly in the middle class. Should I be getting this money? Absolutely not. But will I use the money? Yes. That is why this new entitlement is so dangerous.

The federal government is conditioning families like mine to expect “free” money. When you see that cash in your account, the first thought is how to use it. It becomes a habit to see and spend extra money each month. Like many habits, it is liable to worsen.

This problem extends far beyond my home. The families of nearly 60 million children are now receiving these new monthly payments, though many received a smaller annual tax break that was tied to work under the previous child tax credit. Some are struggling to make ends meet, but only 36% of these new payments are going to families in poverty. The rest of the money is going to families like mine.

I sense ulterior motives at work. The new child tax credit is a blatant attempt to buy votes from middle-class families. Once you come to expect a monthly check, it is more difficult to vote for someone who wants to cut off the cash. The Democrats who passed this policy are using it as a political weapon against the many Republicans who want to return to the previous system, updated in 2017, which kept the credit’s decadeslong connection to work.

It is also a costly undertaking. The price tag is more than $100 billion in 2020 alone and more than $1.6 trillion over the next decade if extended. But the human cost of this policy is worse than the financial one. Since families now get the credit regardless of whether the parents work, they have one less reason to climb the ladder of opportunity.

Forget the damage to the economy. Forget the harm to our culture. The child tax credit will hold people down by keeping them reliant on government handouts. This is the opposite of how a safety net should work.

The IRS will send my next deposit on Sept. 15. I’ll probably save that $948, as I did with the first two payments. But in the back of my mind, I’ll hope that Congress lets this handout expire at the end of the year, instead of making it permanent. America can’t afford such costly free money.

Action Line: Don’t depend on government handouts. You never know when Washington’s politicians will run out of other people’s money. If you haven’t prepared yourself when it happens, it’s going to hurt. Instead, save until it hurts today.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.