Romney’s family plan isn’t great, but may be better than the alternatives

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According to Sen. Mitt Romney (R-Utah), current US welfare policies have two major flaws: they penalize recipients who marry by reducing the benefits to which they are entitled, and they do not do enough to help couples to afford to have more children.

“There is a growing gap between the number of children people say they want to have and the number they actually decide to have,” he said at an event yesterday at the American Enterprise Institute. (AEI) in Washington, D.C. “Just to be clear here, I don’t think the goal of policy should be to try to create incentives for people to have more children than they want, but rather to find a way to bridge the gap between what people would like to add to their families and what they can afford to pay.”

In an attempt to address these issues, Romney released in June the Family Safety Act 2.0, a proposal to send parents monthly checks between $250 and $700 per child, starting in the middle of a pregnancy. A household would need to have earned at least $10,000 in the previous year to qualify for the full benefit, a provision intended to prevent families from dropping out of the labor force altogether. The program would be “paid for” by reducing or eliminating various existing tax breaks.

It’s hard to fault efforts to address distortions introduced by previous federal policy, including the whoopsie daisy, for encouraging low-income couples to stay single. The idea that it’s the government’s job to help people have more children rests on a more questionable assumption, namely that parents shouldn’t have to bear the full cost of educating future members. of the society.

Whether or not you accept the “positive externalities” argument, the federal government spends billions each year on family programs. Given that these efforts aren’t likely to go away (although libertarian purists might wish otherwise), it’s worth asking whether Romney’s proposal represents at least an incremental improvement over the status quo.

Scott Winship, director of poverty studies at AEI, and Robert Rector, senior fellow at the Heritage Foundation who studies health and welfare policy, say Family Security 2.0 is indeed a step in the right direction. . Each independently pointed to aspects of the program that are less than ideal from their perspective – for example, do we want middle-class families to get used to receiving monthly checks from the federal government? But if the choice is between the existing merger of tax breaks or the new consolidated benefit Romney wants to replace them, they will take the latter.

This calculation only works if existing programs are truly zeroed out to cover the costs of new controls, of course. It’s something Democrats are likely to resist, although Romney said at the AEI event that “pay-fors” are non-negotiable for him and his Republican co-sponsors. But from a libertarian perspective, such negotiations always carry the risk that the parties will agree to a compromise that adds rather than replaces the expense.

The tax breaks that would be eliminated, according to an information sheet from Romney’s office, include state and local tax deduction and head of household status. In addition, the plan would reduce the family portion of the earned income tax credit. These changes would simplify some commonly maligned aspects of the income code, replacing them with direct cash transfers, which some libertarian economists consider preferable to other types of benefits.

Part of what makes the Romney plan a good idea, according to Winship and Rector, is the addition of a work requirement – the condition that a household must have earned $10,000 in the previous year to qualify for the amount. total. The provision, which was missing from version 1.0 of Romney’s bill, is consistent with Bill Clinton-era welfare reform, passed in response to concerns that unconditional checks sever people’s ties. with the labor force, push births out of wedlock and generally worsen outcomes for children.

Eliminating these bad incentives from the new version of the plan is not without drawbacks. In the short term, this means that some of the poorest children in America, those whose parents do not work, will not benefit from the program at all. (Adding a work requirement also makes it more complex to administer, progressive blogger Matt Bruenig underlinesince the government must now track previous year’s income levels and adjust each household’s monthly payment accordingly.)

Romney sidesteps this objection by insisting that Family Security 2.0 is not an anti-poverty measure, it’s family support. There are dozens of other programs to help poor Americans, he told AEI, from food stamps to Medicaid. His plan seeks to solve a different problem: Americans are choosing, for economic reasons, to have fewer children than they would otherwise like.

I wonder if this is a good use of government money. But Romney’s plan may still be better than what we have now.

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