Romney has a plan; Biden should borrow from it
The United States allows more than 10 million American children to live in poverty, bereft of resources and opportunity. The wealthiest nation on earth does less than almost every other developed nation to help children who grow up in low-income families.
These millions of individual tragedies are particularly heartbreaking because there is an obvious solution that has proved its value in other developed nations. The corrective for child poverty is for the government to give money to people who have children.
The Biden administration is working with congressional Democrats on a plan to significantly increase federal aid for families with children as part of the $1.9 trillion bill that also includes money to confront the coronavirus pandemic and to ameliorate its economic consequences.
At a cost of $110 billion for one year, the proposed benefit would cut the number of children living in poverty by 45%, according to the Center on Poverty and Social Policy at Columbia University.
The money is an investment. Children raised in conditions of deprivation develop more health problems and complete fewer years of school.
The old conservative line that government handouts inculcate dependence gets things backward. Deprivation produces dependence. Resources can help people to escape.
Teaching people to fish is a good idea, but it is important to feed them while they are learning.
A 2016 study examined the lives of children whose families received federal aid as part of an early 20th century federal program called Mothers’ Pension. The study concluded that these children stayed in school longer
than their peers and found higher-paying jobs after graduating.
The new benefit could also help adults realize their dreams. American women have fewer children than they say they want, a gap that does not exist in Europe. One obvious explanation is that Americans, unlike Europeans, can’t afford to have as many children as they want.
The Biden plan gets a bunch of big things right. It would provide the same amount of annual aid to most American families — $3,600 for each child under the age of 6; $3,000 for each child between the ages of 6 and 17. This is good policy because the need for help extends well above the poverty line. It is also good politics: Broad programs have proved effective in reducing poverty because they retain broad political support.
There’s another good reason to tie benefits to the number of children rather than the level of income. The federal program commonly known as welfare, which provided money to lower-income mothers until it was effectively shut down in the 1990s, was criticized for discouraging work by tying benefits to income. Earn more, get less. The Biden plan
avoids this trap.
The main problem with the Biden plan is that it would last for only one year.
The one-year benefit is a political gambit. The Biden plan has not attracted any Republican support in the narrowly divided Senate, so Democrats can pass it only through the process known as reconciliation, which allows some fiscal measures to pass by a simple majority, subject to strict cost limits. Democrats hope that a taste of the new benefit will rouse public support for a permanent program.
It would be better to borrow a few pages from an alternative plan introduced by Sen. Mitt Romney, the Utah Republican.
Mr. Romney is proposing a permanent benefit along with a package of tax increases and spending cuts to pay for it. Analysts estimate that the cuts in existing spending programs would exceed the value of the new benefits for some families, but it would be straightforward to substitute other sources of revenue. The key point is that Democrats can pass a permanent change now by doing the hard but necessary work of figuring out how to pay for it.
Mr. Romney’s plan has another advantage that Democrats ought to incorporate, too.
The federal government currently allows parents to reduce their federal income tax payments by up to $2,000 per child. In some cases, lower-income households that owe less than $2,000 in taxes can instead receive a portion of the benefit in the form of a direct payment.
The Biden administration has proposed to increase the benefit to a minimum of $3,000 per child, and to make it fully refundable, meaning that lower-income families would receive in cash any portion of the benefit that they did not use to reduce their income tax obligation.
Crucially, under the version of the plan passed by the House Ways and Means Committee this month, the government would distribute the money in monthly chunks.
The problem is that parents would need to file tax returns to claim payments from the IRS, even if they did not owe any taxes. The evidence suggests that many will fail to do so. Only about four in five eligible workers, for example, claim the similarly structured earned-income tax credit.
The Romney plan, by contrast, would rely on the Social Security Administration to distribute monthly payments.
The average developed nation provides single parents with direct aid equal to about 14% of median income, and two-parent households with aid equal to about 5% of median income, according to the Organization for Economic Cooperation and Development.
The United States sits at the bottom of that table. Only Turkey provides less aid to families.
Other kinds of aid, including requiring companies to provide paid family leave, and ensuring the availability of affordable child care, also are more common in the rest of the developed world.
When it comes to child poverty, it’s time to make the United States less exceptional.