Skirmishing over families.

NOW IS THE time when planks are hammered into platforms, and this year the Republicans would like to nail down some home truths about families: Intact ones are crucial to economic growth, indeed to economic health; low-income families in particular have been hurt by the inflation-eroded value of the personal income-tax exemption ($600 in 1948, $1,000 today); and large families and a growing population, far from being a drain on an economy, are its salvation.

There will be a politico-media skirmish over any attempt to help families by lowering their tax burdens, with the following line-up: Some Republicans (representatives Trent Lott and Jack Kemp and Senator Bob Kasten, all members of the GOP Platform Committee) will try to foce into the Republican platform a plank calling for an increased exemption for dependents. Democrats, expressing "concern" about the deficit, will advocate higher taxes on upper-income groups (which lower-income earners one day hope to join, of course). But they will avoid all reference to families. Homosexuals will receive more attention.

Policy-affecting media such as the New York Times and the Washington Post will oppose helping families on ostensibly "pragmatic" grounds: Raising the personal exemption will only re-ignite the deficit, thereby causing interest rates to rise. These media will wage a counter-campaign for a tax increase, trying to enlist the President's support by presenting it as a fait accompli. Indeed, such a campaign has already begun in the Washington Post. "Big Federal Tax Increase Is Deemed Likely in '85 No Matter Who's Elected" was the headline atop a David Hoffman article on June 24. (This no doubt came as a surprise to President Reagan, although perhaps not to some of his senior advisors.)

As for the "pragmatic" White House aides (read: James Baker and Richard Darman), they will hope that no specific tax proposals are included in the GOP platform. A "senior official" in the Administration was quoted in that Washington Post story as saying: "The argument is that being specific hurts you more than it helps you--and I buy that." Why so, if a politically popular idea like helping lower-income families is the specific proposal? Because it is the essence of pragmatism to subordinate ideas to power, and the Leslie Stahl-Times-Post combo is seen by the pragmatists as having more power than the electorate. Thus, if no specific ideas are included in the platform, then the editorial writers won't fire any guided missives at the White House, and the Reagan team will be free to hunker down on the fifty-yard line and hang onto its lead until the clock rungs our in November. (Then, maybe, there should be a few judicious tax increases to keep the missile-writers happy a while longer.)

As for President Reagan, he said in a radio talk on Father's Day: "If that [exemption] had been indexed to keep pace with inflation, today you would be deducting more than $3,000 for every one of your children . . . Things are getting better for American families, but much remains to be done. That's why the Treasury Department is making greater tax fairness and greater tax incentives for families a central consideration in the tax-reform proposals they are developing." This Treasury study is due to be completed in December.

Family as Energizer

A SPECIFIC DEFENSE of the family's role in successful economies was a long time in coming. Indeed, political economists denigrated the institution before anyone thought to defend it. (The same seems to have been true of the institution of private property itself.) Both Adam Smith and David Ricardo seem to have taken both property rights and the "nuclear" family for granted. In The Wealth of Nations Smith pre-echoes Ricardo's coeval Thomas Malthus with some anecdotal observations about the effects of poverty on family size (deleterious), without considering the effect of family structure on poverty, or on the creation of wealth.

By the mid-nineteenth century we find both family and property coming under fierce attack from Marx and Engels, who jeered in the Communist Manifesto at "bourgeois claptrap about the family." It would "vanish as a matter of course once its complement [i.e., private property] vanishes."

In the papal encyclical Rerum Novarum (1891), Pope Leo XIII explicitly defended both family and property against the socialist assault. "Setting aside the parent and introducing the providence of the state," Leo wrote, would "open the door to envy," and in the long run "the sources of wealth would themselves run dry, for no one would have any interest in exercising his talents or his industry."

The Austrian economists and their libertarian offspring have not paid much attention to the family, an institution that of course imposes considerable constraints on individual liberty. Friedrich Hayek in The Constitution of Liberty does recognize that the family is a key mechanism for the transmission and continued dispersal of property (keeping it out of state hands), and Ludwig von Mises in Socialism correctly saw in the early 1920s that the assault on the family waged in the name of feminism was the "spiritual child of socialism." But neither saw the family as energizing the husband by linking his children's fate to his efforts.

Most modern textbooks fail to mention the family. It is not listed, for example, in the index to Paul Samuel-son's Economics. The paternal sense of responsibility is an unquantifiable thing, and as such of no interest to present-day academic economists. No one knows how to draw a "responsibility curve," and so economists pretend that responsibility is not a relevant economic variable. For Maynard Keynes economic actors were as interchangeable as are atoms to the physicist. Hence he showed no interest in the family. In 1973 J. K. Galbraith undoubtedly spoke for much of his profession when he wrote that the family, while it "retains other purposes," is "no longer an economic necessity." His position was thereby congruent with that of socialists through the ages.

In the same year, however, George Gilder published Sexual Suicide, setting forth the argument that the family extends the time horizon of the provider (male) away from the "moving present" and out into the future, enabling him to endure daily labor and forgone consumption for the benefit of his children. Gilder gives credit in Sexual Suicide to the British demographer E. A. Wrigley, who argued that the nuclear family made the Industrial Revolution possible--not vice versa. (In turn it was undoubtedly Christian doctrine that laid the groundwork for botht he traditional family and the creation of property rights. The latter, occurring only in the seventeenth century, was clearly the indispensable fore-runner of the Industrial Revolution in the eighteenth.)

More recently Michael Novak, Thomas Sowell (partially), and Christopher Lasch (backhandedly) have stressed the economic importance of families, but to Gilder should perhaps go the principal credit. "I think it's fair to say I did set forth the mechanisms explaining how families motivate men to work," says Gilder. "I worked that out in detail." (Incidentally, Sexual Suicide is now out of print as a direct result of feminist pressure on New York publishers. But a samizdat version is soon to be published in New Orleans.)

From Gilder it is but a short step to his friend and onetime co-author Bruce Chapman, recently director of the Census Bureau, and thence another short step to the Oval Office: Today Chapman is a deputy assistant to the President. He has played an important role in advancing pro-family ideas within the Reagan Administration. In an interview with Family Protection Report, edited by Connie Marshner, Chapman says that he first brought up the family within the Administration as a "fairness issue"--the polemical rubric under which Reagan has been accused of hurting blacks, women, and the poor.

"When you consider what is happening in society," Chapman said, "each of those groups is getting better off in many respects, but when you look at families that does not pertain." The Federal Government has in fact subsidized family breakup, in particular by providing welfare benefits for "teenage girls who want to leave their own homes," Chapman said. "Almost unique among nations, the U.S. Government will provide them with a ticket out of their unhappy home life into a subsidized existence somewhere else."

Chapman and aides to Jack Kemp stress that any increase in the exemption for dependents should be considered in conjunction with a reduction in the top income-tax rate. This in turn would reduce the effectiveness, hence the attraction, of loopholes. The Kemp-Kasten proposal would lower the top rate to 25 per cent (a flat rate), which would divert an enormous amount of money that had flowed out through loopholes into tax-sheltered pools and eddies back into the productive (and taxable) income stream. And with such a tax code the underground economy would virtually cease to exist. The revenue forgone by raising the exemption (to $2,000 per dependent, in the Kemp-Kasten proposal) would be far smaller than will surely be projected by the static estimates of David Stockman of OMB and Rudy Penner of the Congressional Budget Office.

"Under this simple tax proposal," a recent Kemp memo notes, "a family of four pays no tax on its first $14,375 of income, compared to less than $9,000 under present law." In fact, present law is so counterproductive that a family with income $2,500 below the poverty level is taxed at 10 per cent of that income.

Hit the Decks

ONE OF THE first shots in the Family Skirmish was fired on June 22. It was one of those dreaded Washington Post editorials, droning its way purposefully like a paper cruise missile to the West Wing. It expressed a clever concern for the political well-being of those who would propose such deficit-widening changes as increased family exemptions in an election year. Such reformers "will now have to figure out . . . whose taxes to increase to pay for it," the newspaper cautioned. And this, in turn (a little threat here), "will generate protest." Concluding appeal to all men of moderation: "These are not the kinds of issues that politicians deal with very usefully right before an election." (Decoded message: It's urgent to stop the Republicans getting this idea onto the agenda before the whole country gets behind the Gipper.)

In any event, you can be sure that air-raid warden Baker, Stationed alertly on the White House roof (he was wearing one of those World War II warden helmets, and he had a little swagger stick under his arm), spotted the ominous missive heated in his direction, and that he had enough time to reach for the copper voice pipe. "Hunker in the bunker!" he shouted. "Editorial missile approaching from Washington Post building!" Down below all hands promptly hid beneath their desks, and for a period there was a deathly silence.

Finally it became clear that there would be no explosion, and the dangerous moment passed. Someone--possibly it was Petty Officer Darman--said in a nervous voice: "Only four more months, and the clock runs out . . ." For Warden Baker on watch, it would be a scary time. There would inevitably be more missiles coming in from New York, in addition to the bombardment from Kay Grahamland, and goodness knows what the conservatives would be up to.