Two alternate stating of the facts:
You chose to pay off your house despite that not being the optimal economic strategy. Between low mortgage rates, tax deductions, and the (average) high return of the market, you should have gotten the largest mortgage you could, and invested the money over the minimum payments in the market. You instead made a choice to sacrifice return on investment for peace of mind. This is the same choice I'm making, but it is a choice. The homeowner tax deduction theoretically improves social stability, which or elected officials think is in our best interest. Is it? I Don't know, but stop whining about the choice you made given the rules of the game we are currently playing.
With kids I felt the same way for a long time, but again, you're not seeing it from a 'neutral' point of view. There is no deduction for children, and you aren't subsidizing anything. Every PERSON gets a roughly $4000 exemption, and taxpayers (adults) can claim a standard or itemized deduction that has nothing to do with children. You can argue about the child tax credits, but that is a separate issue attempting to ameliorate poverty, where income limits apply. In general we have a progressive tax system to account for the diminishing incremental usefulness of money. The Y intercept of that progression starts around $4000 per person.