Here's looking at you, kid (and female voters).

Photographer: Andrew Burton/Getty Images

Trump's New Middle-Class Entitlement

Paula Dwyer writes editorials on economics, finance and politics for Bloomberg View. She was London bureau chief for Businessweek and Washington economics editor for the New York Times, and is a co-author of “Take on the Street: How to Fight for Your Financial Future.”
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Donald Trump is taking an entire chapter from Hillary Clinton's "I'm in it for the kids" playbook.

Hoping to improve his appeal to women voters, Trump on Tuesday proposed that the federal government guarantee six weeks of paid maternal leave. And to make good on his daughter Ivanka's promises at this summer's Republican convention, he would let families deduct some child-care expenses from their income taxes.

The details left many left-of-center think tanks, women's groups and child-care advocates cold. They complained, for example, that Trump's plan would only allow mothers paid leave from work, not fathers, possibly widening the gender-pay gap and signaling that women are solely responsible for staying home to care for newborns (read: forgoing salaries and career advancement). They also criticized Trump for not doing enough for low-income families and for failing to say how he'd pay for it all.

They're right on all scores. But the bigger picture is of a Republican presidential nominee proposing a new entitlement program for working mothers, a new tax deduction for middle-class parents and decent improvements on an existing tax credit for the working poor. As Samuel Johnson told Boswell, it's like a dog walking on his hind legs: "It is not done well; but you are surprised to find it done at all."

Yes, Trump's plan is regressive. It would allow single parents making up to $250,000 or couples earning $500,000 to deduct child-care costs for up to four children, capped at the average cost of care in their state. A Florida couple with $500,000 in combined income and paying the state average of about $20,000 for the care of two kids in their home would get almost an $8,000 tax break. 

That's a generous benefit for a wealthy family. Trump would do far less for the 45 percent of households that pay little or no federal income tax because they make so little money. For them, Trump would provide up to $1,200 a year in tax rebates through the existing earned-income tax credit. It wouldn't even the scales, but it would help.

The guaranteed maternal-leave benefit, which Trump aides said would cost about $2.5 billion a year, would be indirectly paid by employers through the unemployment-insurance program. The GOP nominee says he could cover the cost by eliminating unemployment fraud. Even though a 2012 St. Louis Fed study pegged such fraud at $3.3 billion, eliminating almost all of it to pay for maternal leave is iffy, at best. It isn't as if the federal and state governments, which jointly run the unemployment-insurance program, don't try to recover that money now.

But the real cost challenge is making up for lost revenue from the child-care deduction. Because of its generosity toward families in upper-income brackets, the plan would be expensive, and the campaign provided no cost estimate.

There are other problems. Trump's maternal-leave plan, for example, would cover only women whose employers don't offer any such leave, giving them an incentive to drop coverage, and certainly not to add it.

Still, let's give credit where it's due. Trump is the first Republican presidential nominee to guarantee paid maternity leave. He looks downright progressive by proposing new federal benefits for families.

To please conservatives, he would provide the same tax break to stay-at-home mothers (presumably by converting some portion of their free labor to wages, which could then be deducted from taxes owed). And for households caring for an elderly parent or paying for after-school enrichment programs, Trump would allow tax-free deposits into dependent-care savings accounts, which would be eligible for a government match of up to $500.

This, too, is regressive: Most low-income households would find it hard to set aside money to get the tax benefit or the government match. It could also be a back-door government subsidy for private-school tuition.      

Clinton, by contrast, would target most of her benefits to lower-income households. She would limit the amount families pay for child care to 10 percent of their income. She would also double federal funds for the Early Head Start program. And she would provide for 12 weeks of paid time off for fathers as well as mothers, financed by raising taxes on the wealthy.

Some of the details are as vague as in Trump's plan. But she does him one better by also proposing to raise the pay of child-care workers, a change aimed at improving the quality of care.

It's progress when both candidates recognize that the U.S. is way behind all other developed countries on family leave. The 1993 Family and Medical Leave Act requires companies with more than 50 employees to provide up to 12 weeks off, but they aren't required to pay the leave-takers.

The single-biggest expense most parents face today is child care; it exceeds housing costs in most of the U.S. An existing child-care tax credit is limited to $600 to $1,050 per child, depending on income.

Trump's plan is far from perfect, but it would help on all those fronts. True, he would do more for well-heeled parents, but he doesn't ignore low-income families by any stretch. What he would have to do, if he's elected president and intends to follow through, is show how he'll pay for it.

  1. As a timely reminder of what the typical U.S. household makes, the U.S. Census Bureau on Tuesday reported that median income in 2015 was $56,500. The 5.2 percent gain over 2014 was the largest jump since 1967, when the Census began releasing such numbers. But households remain about 2.4 percent below the median income level of 1999.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Paula Dwyer at pdwyer11@bloomberg.net

To contact the editor responsible for this story:
Katy Roberts at kroberts29@bloomberg.net