Sen. Mitt Romney (R-UT) on Thursday proposed sending American families a cash benefit of at least $3,000 a year per child as part of a plan that he says would immediately lift nearly 3 million children out of poverty.
Romney’s plan represents a Republican response to President Joe Biden’s call to provide more support to families struggling through the pandemic, signaling some bipartisan support for the idea. Romney’s plan provides more generous benefits than Biden’s, though it also proposes to eliminate some other popular benefits.
The details: Biden’s $1.9 trillion coronavirus rescue plan calls for temporarily increasing the child tax credit, which now provides $2,000 a year for children up to 16 years old, to $3,600 for children under 6 and $3,000 for older kids.
Under Romney’s Family Security Act, parents of children up to 5 years old would get $350 a month, or $4,200 a year. Parents of kids ages 6 to 17 would get $250 a month, or $3,000 a year. Families would become eligible for the payments four months before a child’s due date, and the maximum monthly payment would be $1,250, or $15,000 a year. Like the current Child Tax Credit, the benefits would begin phasing out for individuals earning $200,000 and couples making $400,000. Any overpayments or underpayments would be reconciled through annual tax filings, meaning parents would still get monthly payments and would have to pay back any overpayments when they file their taxes.
How Romney would pay for his plan: Romney says his proposal wouldn’t add a dime to the deficit — meaning that it could be made permanent under the reconciliation process rather than creating a temporary benefit, as Biden’s plan does.
To make his plan deficit neutral, Romney would eliminate what he calls “overlapping and often duplicative federal policies,” including the Child Tax Credit, now worth up to $2,000 per child for parents with income over $11,000, and the Temporary Assistance for Needy Families (TANF) welfare program. He would also revamp the Earned Income Tax Credit, cutting spending under the program by nearly $50 billion, and eliminate the State and Local Tax Deduction (SALT) and head-of-household status for tax filers.
In total, the Romney proposal represents a significant overhaul that would remake federal child support benefits, delivering monthly payments from the Social Security Administration instead of an annual tax credit and other benefits. You can find Romney’s summary of his plan here. An analysis by the right-leaning Niskanen Center think tank includes this breakdown of pay-fors:
The effects on child poverty: “The calls for upping aid to families with children come as the U.S. wrestles with a child poverty rate well above the average for wealthy countries,” CNBC’s Tucker Higgins reports. “About 17% of children in the U.S. — or 12 million kids — lived in poverty as of 2019, a number that had been slightly declining before the Covid-19 pandemic, according to the Kids Count project at the Annie E. Casey Foundation.”
Romney’s plan would bring more than 5.1 million people out of poverty, reducing the poverty rate by 14% overall and by nearly a third for children, according to the Niskanen Center analysis.
What’s next: The Romney plan garnered some praise from analysts across the political spectrum.
“The Romney plan is an improvement over the Biden plan in three ways,” Matt Bruenig, an analyst at the progressive People’s Policy Project think tank, wrote in a blog post. “First, it provides more benefits. Second, it uses the Social Security Administration, which should increase participation, among other things. Third, it likely phases out at a higher income level than Biden’s plan does, which will make the program easier to administer and more universal in its coverage.”
White House Chief of Staff Ron Klain tweeted that Romney’s proposal is “an encouraging sign that bipartisan action to reduce child poverty IS possible.”
But it’s not clear yet whether it can win the support of lawmakers in either party. The elimination of existing benefit programs and the SALT deduction may be a sticking point for Democrats.
“Take a deep breadth [SIC] folks,” tweeted Gene Sperling, who directed the National Economic Council under Presidents Bill Clinton and Barack Obama. “YES, it’s a big sign of progress for a Republican like Romney to back a child allowance. But, NO, we shouldn’t accept for a second that the way to pay for it is slashing EITC, SNAP & TANF instead of raising taxes on top .1%”
A White House spokeswoman told CNBC that the administration welcomed Romney’s focus on cutting child poverty hoped to work with Romney and others on a bipartisan plan that would provide aid on a permanent basis, and not add to the deficit.