February 9, 2021

Romney’s Child Payments Plan

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“Sen. Mitt Romney, R-Utah, [last] Thursday unveiled a plan to give households up to $4,200 annually for each young child… Romney’s plan would provide monthly cash payments of $350 for each child under 6 and $250 per month — $3,000 per year — for each child age 6 to 18.” CNBC

Sidebar: A “proposal released Monday evening by congressional Democrats would expand the child tax credit to up to $3,600 for children up to 6 years old, or $3,000 for children up to age 17. The credit would be split up into monthly payments to families from the federal government.” USA Today

Many on both sides praise Romney’s plan:

Romney’s plan “has the simplicity all too often missing from efforts of the kind. Instead of a complicated tax credit, most of the benefit will be administered through a direct monthly payment. Long shunned by Republicans, direct payments help families budget and make the benefit tangible. Better still, the FSA is fiscally sound: By consolidating existing benefits and moving them under the monthly payment banner, Romney’s proposal would remain deficit neutral, covering the $250 billion in annual expenditure through elimination of other deductions (such as for state and local taxes), which perversely benefit the upper crust.”
Gladden Pappin, New York Post

“According to an analysis from the centrist Niskanen Center think tank, which has backed child allowance proposals from both parties, the deficit-neutral Romney plan would be highly progressive. They estimate that poverty as they measure it would fall by nearly 14 percent across the board (lifting 5.1 million people out), and by one-third for children. The effects would be even more pronounced for extreme poverty, defined as living under half the poverty line… if the Biden administration embraces it and tweaks it, it could hit on a rare achievement: a truly bipartisan expansion of the social safety net that permanently reduces poverty in America.”
Dylan Matthews, Vox

Other opinions below.

See past issues

From the Left

“Crucially, unlike every other child-welfare policy that the United States has entertained in the past quarter century, Romney’s plan would not give less help to the very poorest children in America, so as to punish their parents for not working. And unlike the refundable child tax credit, the benefits in Romney’s plan aren’t delivered in a lump-sum rebate to the subset of low-income families who properly file for it, but rather, to all non-affluent parents…

“This mode of administration enhances the policy’s utility to families who can’t wait until the end of the year to make ends meet, while also ensuring damn-near 100 percent participation in the program. That last bit is crucial: As is, roughly 22 percent of those eligible for the child tax credit do not receive it…

“Wherever the child allowance debate goes from here, it’s worth taking a moment to reflect on how far it’s already moved. Twenty-five years ago, a Democratic president effectively made slashing aid to poor families a cornerstone of his domestic agenda. Today, a Republican from one of the reddest states in the country is fighting to give tens of thousands of dollars to every poor family, dispensed in monthly increments for the full length of their kids’ childhoods.”
Eric Levitz, New York Magazine

“Counting all family benefits, Germany publicly provides the average single-parent family with two children roughly 29 percent of the salary of an average full-time worker. The U.S. provides just 0.6 percent of an average full-time worker’s salary to such a family. Germany’s funding puts a floor beneath which no child falls when their parents lack resources. In the U.S. system, when a U.S. parent hits hard times like today, children simply don’t get what they need…

“Inaction on children comes from lawmakers’ long-held dogma about the virtues of a free-market economy. Of course, this free-market dogma supposedly applied to businesses as well. Yet when it became clear how deeply main street was hurting from the pandemic, Congress quickly passed more than a trillion dollar measure to shore up private businesses. Yet lawmakers have still held children to this dogma…

The end goal of the economy should be to ensure that Americans, and particularly children, get the resources they need. Ensuring sound businesses is one means to that end, but it isn’t the end itself… It’s time that U.S. policymakers joined other advanced democracies in recognizing that public funding plays a critically important role in children’s flourishing.”
Maxine Eichner, The Hill

“[Romney] would get rid of various child tax credits, which is fine because he's replacing them with something better. He would get rid of the federal contribution to TANF (traditional cash welfare), but that also means little since the program is almost dead already — just $3.5 billion in federal money actually went out in the form of cash welfare in 2019. However, he would cut the Earned Income Tax Credit in a way that would be a net loss for a small handful of families, and phase out the benefit when he should just raise taxes on the rich instead…

“It could be better. But all told, this is an astoundingly great plan coming from a Republican. And with his pay-fors, it could be made permanent through the reconciliation process, which only requires 51 votes in the Senate. Biden has been well and truly outflanked from the left on family benefits.”
Ryan Cooper, The Week

Critics, however, posit that “Under Romney’s plan, many low-income families are likely to end up not much better off than they are now, since a large chunk of their new benefits would be offset by losses of old benefits. Some back-of-the-envelope estimates suggest that a lot of low-income single parents might be left substantially worse off. (Romney has released limited details, complicating more precise calculations.)… Collapsing and combining some overlapping anti-poverty programs into a more transparent and streamlined plan is not necessarily a bad idea. But the net effect of this consolidation matters.”
Catherine Rampell, Washington Post

From the Right

“For decades, the family size that American women say they want, on average, has been larger than what they have. By changing economic and social conditions somewhat, a child allowance could shrink the gap between what the demographers call ‘ideal’ and actual birthrates. Romney’s plan deserves praise for another reason. It breaks out of the increasingly sterile debate among Republicans that centers on former President Donald Trump…

“There are some Republicans who want to go back to a pre-Trump conservative orthodoxy that shortchanged families in its obsession with lowering marginal tax rates and other free-market goals. There are other Republicans who in practice reduce the idea of a conservatism that works for lower-income Americans to fealty to Trump’s policies or, worse, to the man himself…

“Maybe, just maybe, the party can find a productive way forward on social policy that isn’t defined either by Trump or what came right before him.”
Ramesh Ponnuru, Bloomberg

“Does the Romney version of a universal child benefit stand a chance? Probably not as currently outlined. The real reason most Democrats disliked the 2017 Republican tax bill was that it capped the so-called ‘SALT’ deduction for state and local taxes. The SALT deduction was and remains a massive wealth transfer to well-to-do residents of high-tax blue states. Romney's plan calls for its total elimination…

“If nothing else, the Romney plan is a great test for the current White House. If President Biden is as committed as he claims to be to bipartisanship, he should at the very least meet with Romney to discuss the issue and consider modifying his own administration's plan (e.g., by putting the Social Security Administration rather than the IRS in charge of distributing benefits), even if the SALT deduction and other features are retained.”
Matthew Walther, The Week

Critics, however, argue, “The welfare reforms of the 1990s were historic measures that fixed a cash welfare program that impeded upward mobility and independence. As a result of the reforms to welfare, the Earned Income Tax Credit, and other policies, work among single parents increased strongly and never returned to pre-reform levels, even after the 1990s boom ended. Poverty declined to the point where it was lower than ever before on the eve of the pandemic… The Romney proposal would take us back to the bad old days in key ways…

“Some people (including future people) who would choose single parenthood or non-work except that the current safety net makes it unaffordable would be able to afford these choices under child allowances. For them, child allowances are allowances for behavior that would be expected to hurt their own long-term prospects and, more importantly, the wellbeing of their children…

“Child allowance advocates assume that point-in-time poverty is all that matters, but if their preferred policy incentivizes more behavior that impedes intergenerational mobility, they will have won a battle while losing the long-term war on poverty that we have fought quite successfully over the past generation.”
Scott Winship, American Enterprise Institute

Others counter that “One big reason the old welfare system discouraged work was that its benefits could disappear immediately if a beneficiary found a job, because every dollar earned meant a dollar less in welfare. But the Romney subsidy phases out only at high incomes, so there’s no disincentive for a low-income parent to take a job…

“The overall birthrate has plummeted [over the past decade]… with Covid-19 delivering an extra fertility suppressant. (If the United States had just maintained its 2008 fertility rate, 5.8 million more children would exist today.) Neither political coalition is reckoning yet with the consequences of this fertility collapse, but we will all be living with its consequences — in stagnation, loneliness, alienation — for decades to come.”
Ross Douthat, New York Times

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