Mitt Romney Wants Your Child to Have a $4,200 Yearly Allowance

(Bloomberg Opinion) -- Mitt Romney is putting forward a wildly ambitious proposal to re-orient the American welfare state toward children. The federal government transfers a hefty chunk of national income from younger people to the elderly. The Utah Republican senator wants more money to go to the parents of minor children.

His plan would create a child allowance. Nearly all U.S. children — excluding only those from the highest-earning households — would be allotted a monthly benefit worth $4,200 a year up to age 5 and $3,000 a year up to age 17.

The plan is expensive: It would cost $66 billion a year more than the existing tax credit for children. Romney would pay for it in two principal ways: by folding several government benefits designed to help children, including that tax credit, into the new child allowance; and by wholly eliminating the deduction that lets people write off their state and local taxes against their federal ones.

Just describing the plan should make obvious what some of the objections to it will be. Some progressives won’t want to eliminate existing programs such as Temporary Assistance for Needy Families, the main program that used to be called “welfare,” or the tax credit for day care. President Joe Biden wants to expand that last credit as part of his Covid relief bill. Democrats want a bigger state-and-local deduction, too, not a smaller one.

The proposal is raising concerns even among those conservatives who have been open to expanding the tax credit for children. Republican Senators Marco Rubio of Florida and Mike Lee of Utah have been advocating tax relief for parents for years. Romney’s plan, however, gives benefits to some households in excess of any federal taxes they pay. That’s too generous for the senators.

Other Republicans are sure to attack the plan as a net tax increase. Anti-tax conservatives have supported efforts to eliminate tax breaks, including the state and local deduction, but only in return for tax cuts that are at least as big. The trade-off for higher average tax rates in this plan is more federal benefits.

Conservative welfare-policy analysts, finally, will be concerned about the impact of the plan on workforce participation and marriage. TANF, which Romney would nix, requires many of its beneficiaries to work. The child allowance would not have that condition. Giving parents larger benefits could make it easier for them to avoid paid employment.

Supporters of the Romney plan counter, however, that it would not punish people for making a paycheck or marrying someone who does. The child allowance would remain at the same level for families with no income, low income or middling income, phasing out only for the highest-earning households. (The allowance would start to shrink for single filers making more than $200,000 and joint filers making more than $400,000, just like the current child credit.) It differs in that way from the old welfare program that TANF replaced, and from many other government programs and tax breaks as well, which punish people for moving up the lowest rungs on the income ladder.

The net effect of the plan on work and marriage will require further study. But the plan has some very considerable virtues, starting with the one that Romney highlights: It would substantially reduce poverty and drastically reduce extreme poverty, especially among children.

It would simplify government programs and probably make them easier to administer. The earned-income tax credit, for example, has a high rate of improper payments that is largely a result of the way it currently tries to help parents; Romney would incorporate its pro-family features into the new allowance and leave a stripped-down EITC that aimed only to reward work.

It would also make it easier for people to start and expand their families. A lot of people, understandably, get nervous when people start talking about a role for government in countering the decline in U.S. birthrates. But a plan like Romney’s is best considered not as a way of bribing people to change their preferences about how many children to have, but as a way of helping them to live out what they already want.

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.

Romney is the least Trumpy Republican imaginable, but he is not pushing all and only the same ideas he did when he ran for president in 2012. 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.

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

Ramesh Ponnuru is a Bloomberg Opinion columnist. He is a senior editor at National Review, visiting fellow at the American Enterprise Institute and contributor to CBS News.

©2021 Bloomberg L.P.