Less than a decade ago, Mitt Romney campaigned for the presidency on a promise to stop the government from giving free stuff to poor people. The 2012 Republican nominee was so adamant in his opposition to welfare spending, he told his supporters to remind their pro-Obamacare friends that if they want more stuff from government, tell them to go vote for the other guy more free stuff. But dont forget nothing is really free. Romney reiterated his contempt for government programs that help non-affluent people survive in his infamous 47 percent speech, in which he declared that a near-majority of Americans believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it and would, therefore, never vote for him.
Nine long years later, Romney is calling for the passage of the most generous cash-welfare program in modern U.S. history.
On Thursday, the Utah senator introduced the Family Security Act, a bill that would provide all non-rich households in the United States with $350 a month for every child they are raising who is younger than 5 years old, and $250 a month for every child between the ages of 6 and 17, up to a maximum of $1,250 a month. In addition to these benefits, new parents would collect a $1,400 payment just before their childs birth.
Put differently: If Romneys bill passes, then the parents of a child born next year will receive $62,600 in child support from Uncle Sam by the time that kid turns 18.
Crucially, unlike every other child-welfare policy that the United States has entertained in the past quarter century, Romneys 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 Romneys plan arent 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 in monthly installments, administered by the Social Security Administration (the allowance phases out starting with single parents whose incomes exceed $200,000, and joint filers with incomes above $400,000). This mode of administration enhances the policys utility to families who cant 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.
Generally speaking, when a conservative serves up a good-looking policy, theres a bottles worth of poison pills buried inside (see: Charles Murrays proposal to establish a universal basic income by liquidating the welfare state). And at first glance, Romneys plan appears to be no exception: The Utah senators policy is funded primarily by cuts to other programs and tax credits that aid the poor. But these pay-fors are more benign than one might fear.
Romneys bill would eliminate the Child and Dependent Care Tax Credit (CDCTC) and the Head of Household (HoH) tax-filing status, while reducing the value of the EITC to workers with children, and ending federal funding for Temporary Assistance for Needy Families (TANF).
The child allowance makes the CDCTC largely redundant. And the same can be said of the HoH, which has a deeply regressive policy design (the poor derive no tax relief from the policy, and the more a worker earns, the more tax relief he or she receives). These realities, combined with the sheer size of the child benefit in Romneys plan, means that swapping out these tax benefits for the child allowance is a good trade for just about all U.S. families.
The elimination of federal block grant for TANF would be concerning if TANF had not already been gutted. As Matt Bruenig of the Peoples Policy Project explains:
In 1997, the federal government allocated $16.5 billion to this block grant program. In 2019, it allocated the exact same amount of money, which was worth 40 percent less than in 1997 in inflation-adjusted terms. Over that same period, the share of TANF block grants that went out as cash assistance to poor families with children declined from 71 percent to 21 percent. Taken together, this means that federal spending on TANF cash assistance has fallen by 82 percent since 1997. In 2019, it was only $3.5 billion. For comparison, food stamp benefits in 2019 totaled $55 billion.
To be sure, $3.5 billion in federal support to needy families is much better than zero. But the Romney plans total benefit to such families would dwarf that sum.
The biggest problem with Romneys pay-for scheme is that its revision to the EITC would leave a very small subset of working-class families worse off. For example, a single mother of one who is eligible for the maximum EITC benefit under current law, and whose child is over 5 years old would take home $1,420 less under Romneys plan, according to the Peoples Policy Project. But the number of people in this situation, or an analogous one, would not be large.
Finally, in addition to its cuts to various forms of aid to low-income families, Romney would also eliminate the state-and-local tax (SALT) deduction, a policy that delivers the vast majority of its benefits to upper-income households. There is a plausible progressive defense of the deduction on political grounds: SALT makes it a bit easier for Democrats to advance social democratic policies at the state level by effectively enabling blue states to finance a portion of their welfare programs through deficit spending (if you raise taxes on your rich residents who then get to write some of those taxes off on their federal returns youve essentially tapped Uncle Sams sweet sweet money printer).