Economics

The Trouble With Mitt Romney's Family Security Act

The plan would redistribute wealth, create distortions, and grow government.

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Sen. Mitt Romney (R–Utah) recently introduced a universal child allowance in an effort to reform federal welfare programs. That goal is worthy, but his means would be counterproductive.

For all intents and purposes, he's proposing a kid-centric version of entrepreneur and aspiring politician Andrew Yang's "basic income." According to Romney's summary of his own plan, "The Family Security Act would provide a monthly cash benefit for families, amounting to $350 a month for each young child, and $250 a month for each school-aged child."

To his credit, the senator's new proposed entitlement wouldn't be unfunded. Romney would "pay for" the new child allowance plan by eliminating the state and local tax deduction, a tax break that mostly benefits higher-income taxpayers. He would also get rid of the head-of-household filing status and eliminate the Dependent Care Tax Credit, along with the Temporary Assistance for Needy Families program. Additionally, Romney's plan would reform the Earned Income Tax Credit and reduce that program's spending from $71 billion to $24.5 billion. The EITC has mixed incentives on work, suffers from large improper payments, and is mainly a spending program, thus financed by taxes on other people.

These offsets explain why the plan is advertised as "deficit neutral." However, it would grow the size of government by increasing both spending and taxes. It increases spending by $66 billion and increases taxes by $46.4 billion, since most of the plan's offsets are actually tax hikes. My objection isn't with these specific tax hikes. It would be better to find additional welfare spending cuts.

Proponents rightfully argue that its universal feature, which pays child allowances regardless of employment status, would limit the high implicit marginal tax rates on work and hence some disincentives to work that exist in the current system. For instance, the EITC creates disincentives for workers who are in the phaseout part of the benefit, meaning that more income from work reduces the size of the benefit. Many welfare programs suffer from this issue.

However, this universality creates other work disincentives. For example, experiments with the universal basic income provide evidence that unconditional cash payments can be detrimental to beneficiaries' employment. This undermines the importance of work as a pathway out of poverty for some low-income Americans and their children. In fact, Scott Winship at the American Enterprise Institute has made a powerful case that the work requirements included in welfare reform of the 1990s played an important role in reducing child poverty.

Some say that these disincentives are worth it, if it means that single moms can stay with their kids more. I believe it is a plus for these moms. It is also likely to remove the marriage penalty built in the current system. Yet these facts don't mean that it's necessarily worth it on net, once you include all of the present and future costs and distortions of the plan.

These distortions include the reduction of federalism resulting from a plan that gives an even bigger role to Washington. In addition to more federal spending added to many other and often duplicative welfare programs, one of the plan's offsets, TANF, allowed variation and experimentation in the states, as opposed to the one-size-fits-all approach with federal spending. As fiscal policy expert Dan Mitchell notes: "The right approach is to get Washington out of the business of income redistribution. We're far more likely to get good outcomes if we let states decide (and learn from each other on) how best to reduce poverty."

Finally, my Republican and Democrat friends who support this plan believe that it's the role of the federal government to redistribute money toward families and subsidize children, but I don't share this view. It is low on the list of things I would cut, but I'd always prefer a system where government doesn't favor one activity over another, such as having children as opposed to not having them. This is a difference of opinion we may never bridge, I'm afraid.

That said, at the very least, we should all agree that anti-poverty programs shouldn't benefit higher-income households, which Romney's allowance does. As AEI's Angela Rachidi notes, "It is a rare thing to see proposals that benefit high-income families nearly as much as low-income families marketed as poverty-reduction plans."

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  1. The Family Security Act would provide a monthly cash benefit for families, amounting to $350 a month for each young child, and $250 a month for each school-aged child.

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  3. But I thought Mitt Romney was the Savior of Our Democracy because of his Courage to Stand Up To His Own Party. Now you’re telling me that he’s just a garden variety leftist with an (R) after his name?

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  4. Brave, brave, brave, brave Sen Romney

    1. Now Mitt and Jeb! will get to fight over who has the better UBI plan in the next primary, as predicted by more cynical critics of what the republicans are becoming.

      At least it was cynical mere months ago. Very unsettling how quickly the entire country is loosing it’s fucking mind.

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    2. When UBI reared its ugly head
      He bent right over to be bred
      (No!)
      Yes, brave Sen Romney turned about
      (I didn’t!)
      And gallantly colluded out

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  5. Paying people to produce babies … no way that can possibly go wrong.

    1. But they also want government paid abortions.

      1. THIS is why we need a MUCH better understanding of quantum mechanics! Like Schrödinger’s cat, if the babies could be both alive, AND dead (aborted), at the same time, we could REALLY generate some financial stimulus!

        (You’re welcome for my brilliant idea! Write your Congress-Slimes letters and emails about this idea NOW!)

        1. Flag, refresh.

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        2. When do we get to see Schrödinger’s Squirrel?

          1. Capture a squirrel (excluding me; I am NOT volunteering!) and feed it some Schrödinger’s nuts, and we’ll see! They say “you are what you eat”, right?

            PLEASE get back to us after you conduct this experiment! (Be careful, squirrels can bite!)

    2. Great Moments in Unintended Consequences

      Sounds like a great idea!
      With the best of intentions.
      What could possibly go wrong?

    3. What about paying somebody to try to make babies? Asking for a friend.

      1. Prostitution is illegal.

  6. I was a fan of UBI, the problem is that all these keep most of the welfare system in place and doesn’t significantly reduce the chronically unemployed or underemployed. Norway did a test of UBI hoping that it would encourage people to work. It didn’t and failed miserably.

    I believe that you will always have a chronically unemployed or underemployed segment of the population. I grew up with a bunch of kids who had no interest in acquiring skills to help them improve. And it was always some one else’s fault that they didn’t make a million dollars a year. It will always be that way. It is a part of human nature. Unfortunately they only vote for people who tell them it is not their fault. It is always some greedy rich person who is at fault. It is why utopian systems like socialism ultimately fail. Even Bernie was kicked out of a commune because he didn’t want to work.

    1. But did you NOT know THIS: “There is no such thing as an undeserving poor person”.

      (/sarc)

    2. “…Norway did a test of UBI hoping that it would encourage people to work. It didn’t and failed.”

      True, but one of the problems with Norway’s program is that is only dealt with unemployment payments. From what I understand, all they did was eliminate some paperwork for certain folks. Assuming their structure of such benefits is remotely similar to ours, that isn’t really a test of anything. Canada has launched two programs, years apart, and both were ended (for political reasons) before they had much of a chance to prove anything — and, given that it only dealt with a small subset of a population, there is some doubt if the results would be meaningful.

      What we need, to do, in all honesty, is to have a few States here in the US adopt versions of a GMI or UBI – but ones which will replace current benefits, not just enhance them, let them operate for few years, and see what works and what doesn’t. And if they all fail, so be it. But one-size-fits-all-programs, coming out of DC, aren’t likely to fix anything, no matter what we call them.

      1. No, what we need to do is read the history of the 20th century.
        Handing out ‘free’ money DOES NOT WORK.
        End of story.

        1. Welfare programs date back, in European civilization, over a thousand years. And governments have been involved for over 400 years, so I would check back on your “history” just a little bit. The first “work training program” in the US was started, by the feds, in 1796.

          Note, I am not a fan of welfare, especially as practiced here in the US and in many other countries, but, no matter what you and I think, it’s not going anywhere anytime soon.

          1. The 20th century is all that’s required.
            End of story.

          2. Does anyone know where the phrase “bread and circus” came from. Think it was Rome but I could be wrong.

          3. And as Quickdraw McGraw always said on the Oprah Mountain Network, “How’s that workin’ out for ya?”

    3. “I was a fan of UBI,..”

      Vox is over there on your left.

      1. C’mon man, don’t be so harsh on the guy, I was once a fan of UBI, too. When I was 7 and explaining to my Mom why I needed a bigger allowance.

        1. Yeah.
          Some whiny loser was on the M/W thread griping that employers didn’t ‘care about him!’.
          He’s right; he should only work for his mommy.

    4. While its good someone actually tried to test this – what the hell did anyone expect.

      There are people, *right now*, perfectly content to collect a welfare check and smoke pot all day even with a cursory ‘you have to look for work’ requirement.

      Now you take that requirement away?

      1. And add an incentive to fuck, besides.

    5. UBI is basically paying people just to exist and take up space. Do that and that’s all you’ll get. Mitt Romney’s plan also includes paying people who just exist and take up space to create other people who just exist and take up space. The wheels on the bus go ’round and ’round…

  7. “The plan would redistribute wealth”

    As someone who was born in the 1990s, it’s hard for me to believe that several decades ago the Democrats were the pro-wealth-redistribution party. Now, of course, Democrats exist to serve the interests of Wall Street, billionaires, and multinational corporations — which explains why Biden got so many Reason staff endorsements.

    1. No you have that wrong. The problem isn’t that the Ds and Rs have traded places on wealth redistribution. The problem is that both parties are pro wealth redistribution and all they are fighting over is how much and who will be the recipients.

  8. I’m still ok because while everything is wrong, it’s still coming in within normal parameters.

  9. Give Romney credit. He represents Utah, where each upstanding man has at least 32 kids, distributed among 5 or 6 wives. His plan will shift wealth from the coastal elites to the Land of Zion.

    1. See?!!? Magic underwear really DOES work magic!

      1. flag, refresh

  10. Supporters of the Green New Deal want fewer children, not more.

    The Green New Deal
    The Green New Deal presents an opportunity. It represents an attempt to address the intersecting issues of environmental crisis and inequality with an ambitious, centralized plan for massive public infrastructure investments and new jobs, all themed around sustainability. Here’s the problem. It does not address family planning.

    What’s Missing
    How can we address things like climate change and inequality without addressing their underlying driver, and most effective solutions? The Green New Deal also needs to reform our family planning system, and change the focus to ensure smaller families that work together – yes, transfer significant resources – in order to give every child a fair start in life. The Green New Deal needs to include a transition from parent-focused to child-focused family planning, using something like the Fair Start model. That will mean more effective outcomes, avoiding the inefficiency of centralization and big government, and address a variety of other problems we face today.

    We can find a better way, but not without change at the most fundamental level

    1. No, they want *you* to have fewer children.

      *Their* large family is ok.

      ‘Milk and apples (this has been proved by Science, comrades) contain substances absolutely necessary to the well-being of a pig

      1. Well, yeah… all central planners want stuff for you. For themselves? It’s a different matrix of needs.

  11. Romney is a Bush/Trump style Big Government Republican.

    Tom Coburn (RIP) was the last small government Republican.

    1. Who’s your favorite small government democrat?

      1. I saw one the other day… Sad to say, I didn’t get a really close-up look, so I don’t know who he was. I can tell you, though, that he was riding a unicorn! He was followed by some flying pigs!

        1. You’re having an acid flashback to a Pink Floyd concert.

          1. Yes, this!

            Now that I’ve found somewhere safe
            To bury my bone.
            And any fool knows a dog needs a home,
            A shelter from pigs on the wing.

        2. It must have been cold in hell that day.

      2. Who’s your favorite small government democrat?

        There are none.

    2. Fuck off and die, turd.

    3. “Romney is a… Trump style”

      Lol, Mittens and Trump? You’re not even trying. No fifty cents for you.

  12. To his credit, the senator’s new proposed entitlement wouldn’t be unfunded. Romney would “pay for” the new child allowance plan by eliminating the state and local tax deduction, a tax break that mostly benefits higher-income taxpayers.

    And, conveniently, also ensuring that ever larger percentages of your money go to the Federal government (not state and local ones) so that the Feds can control the other governments by threatening to choke off transfer payments.

    Its a win-win-lose!

    1. Not only that, but a larger percentage of GDP and job creation will go under the guise of Obamacare (taken from Romneycare). The additional crony focus will be institutions for the intellectually disabled and dysfunctional. Cash transfers to the dysfunctional to breed more dysfunction represent jerbs for humanity, sociology, psychology and intersectional, women’s, chicano and LGBTQ studies majors.

  13. Proponents rightfully argue that its universal feature, which pays child allowances regardless of employment status,

    It doesn’t have any ‘universal’ features – it only pays to those with children.

    That’s not universal and you should not buy into their framing, let alone pass it on.

  14. The right approach is to get Washington out of the business of income redistribution.

    And I’m sure Washington will get right on that.

    Look, goddammit, when you’re trying to sell somebody something, you don’t tell them what’s in it for you, you gotta tell them what’s in it for them. Why the hell is any politician going to support this thing just because it makes sense, it’s cheaper, it’s less intrusive, it works better and it’s the right thing to do? They don’t give a shit about any of that, all they want to know is “what’s in it for me?” Unless and until we can say “what’s in it for you is that we won’t hang your ass from that tree right over there”, we’re going to keep getting the same old shit.

    1. Its not cheaper, its not less intrusive, it doesn’t work better, and its not the right thing to do.

      1. You mean you support Washington being in the business of income redistribution?

  15. if it means that single moms can stay with their kids more. I believe it is a plus for these moms. It is also likely to remove the marriage penalty built in the current system.

    Is it worth it to have a single-mother who doesn’t work as a role model for these children?

    And it might remove the marriage penalty – that doesn’t mean more marriages though. Because we’ve already been here. The whole ‘welfare mother’ thing we’ve seen since the 1980’s. This just further entrenches that. Have a gaggle of kids from multiple fathers, get paid to raise them. Rinse, repeat with the next generation.

    Finally, I am sure it is a plus for these moms. It would be a plus for me if you gave me other people’s money too. It is not a plus for those other people though.

  16. who support this plan believe that it’s the role of the federal government to redistribute money toward families and subsidize children

    “‘Provide for the general Welfare of the United States’, DUH!”
    .”

  17. Since UTAH has the 4th lowest “supplemental poverty rate” in the nation, and the most children per family in the nation, this should really fly well there….. gee… I wonder why he proposed this…

  18. We’re far more likely to get good outcomes if we let states decide (and learn from each other on) how best to reduce poverty.”

    We already know how to do that. We figured it out 200 years ago. Which is why the world has seen exponetially increasing wealth and quality of life and we defeated real poverty in the West a generation ago.

    Its simple.

    1. Government interferes only to rein in predatory businesses.

    2. Profit.

    1. Its not a secret. Its worked across the world.

  19. Finally, my Republican and Democrat friends who support this plan believe that it’s the role of the federal government to redistribute money toward families and subsidize children, but I don’t share this view.

    I think you’ll find that people who have children – no matter their social or economic class – will favor an interpretation of government that favors people with children.

    I saw it in the military, where people with children defended the special programs available to people with children as ‘fair’.

    1. I don’t. I think the child tax credit and the dependent care tax credit should be abolished (along with all other tax credits, exemptions, and deductions). This would result in a dramatic increase in our effective income tax rate, but I also favor decreases in marginal tax rates across the board.

  20. Unintended consequence:
    Addicts will do anything to score, include having multiple children for cash. Related to this, a scene in “The Wire”.: Chief of Police in a marked police van stops at a corner. Kid bangs on window to sell the cop, in uniform, drugs. Chief says “these are the fetal alcohol grandkids crack meth babies.”

    This is cash for breeding inhumane suffering. Romney should switch political parties.

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  22. Do you believe White children deserve a homeland?

    Do White children have a right to exist?

    Do you believe that tens of MILLIONS of non-Whites flooding into EVERY White country and ONLY into White countries and being force integrated/assimilated into EVERY facet of White society is White Genocide?

    If you answered “yes” to any of those questions, then you are a “RacistNazi”.

    That makes YOU part of the RACE problem. Especially if you are White.

    Anti-racist is a code word for anti-White.

    1. Storm Front’s not far to your right; you should head over there. And take Misek with you

      1. It’s Jeff LARPing what he thinks racist conservatives sound like in order to try and discredit the commentators.

    2. Piss off, Jeff.
      Your astroturfing isn’t fooling anyone.

  23. The “Trouble” with Romney’s plan is…that it is immoral.

  24. Romney should just switch parties already. Or join that new one a bunch of old neocons want to start up.

    1. https://www.newsweek.com/gop-caught-bind-third-party-threat-image-plummets-1568576

      POLITICS
      GOP Caught in a Bind Over Third Party Threat as Image Plummets
      BY JACOB JARVIS ON 2/11/21 AT 9:39 AM EST

      NO mention at ALL of the Libertarian Party! Libertarians?!?! What, is that actually a real “thing”?

      1. Libertarianism is a political and social philosophy. Not an American political party.

        1. Idjit from Canuckistanistanistanistan is a know-nothing, but is VERY generous in sharing her ignorance, free of charge!

          https://www.lp.org/

          Libertarian National
          Committee, Inc. (LNC)

          1444 Duke St.
          Alexandria, VA 22314-3403
          (800) ELECT-US · (800) 353-2887
          info at lp.org (changed to avoid 2nd link in same post)

          1. They’re less libertarian than even you, Sqrls.

  25. Don’t we pay people enough to have babies?

  26. There is no constituency for limited government. If the Republicans went full libertarian, they would lose every national election 65-35 (or worse, as a splinter social conservative party sucked up some of the remainder).

    This is a politically astute move to pit American taxpayers against parasitic bureaucrats. If we are going to spend tax dollars to redistribute wealth (and we are), why let the bureaucrats take the lion’s share? Isn’t it better that this money is spent as much as possible at individual discretion rather than being frittered away through multiple levels of administration and then subject to picayune rules and bureaucratic lack of responsiveness? (Ask the people still waiting on the broken unemployment system if they would rather have state bureaucrats getting paid to do nothing, or a monthly check.)

    RomneyBux flips the usual arguments on their heads and lets Team Red pose as the party of generosity, while the D’s fight to protect their special interests.

    Best of all, it builds a constituency for further conversions of federal (and state – don’t forget that most of these programs are administered at the state level) bureaucracies into cash payments. Once people have had a taste of RomneyBux, they will want more. What’s more appealing to the average voter? The LIHEAP heating assistance program, or another $30 a month? It turns the ratchet effect in Team Red’s favor.

    1. Limited Government Policy will never fix a FRAUD-ED Election.
      Only Election authenticity will. It’s time to stop CANCELLING the evidence and putting more diversion/oversight in DNC h*llholes and just for comfort the other way around. Rural [R] FEC workers should be 1/2 Urban [D] election counters and vice versa.

      This compulsive path into ‘no voter id’, ‘no personal-presence needed’, ‘push for anonymous aliens’, etc, etc, etc, NEEDS TO BE DEALT WITH and SOON. 80% of citizens believe there was voter fraud; There needs to be an ANSWER for that concern not a CANCEL CULTURE.

  27. RINO Romney, “We’ll put everyone on National Gov-Welfare whether they signed up or not!” (i.e. National Socialism = Nazism)…

    F-OFF Romney!

  28. The article fails to acknowledge that the government already awards the act of having kids. The monthly kid payments are tob replace the EITC (that is based on earned income and number of kids), the child tax credit (based solely on number of kids), and if she is correct the child and dependent care credit which is based on how much you pay for a kid to have day care. Eliminating the dependent care credit would hurt families of disabled adults because they also use this credit but it is mostly about kids.
    So for taxes it is really just moving from a once a year payment to a throughout the year payment.
    I think the idea had merit, but analysis will need to go into making sure the change doesn’t negatively affect the kidless poor.

    1. “government already” — Is hardly an excuse for an idea of merit.

      1. Because we don’t live in a society that has any interest in being libertarian, we are unable to disqualify ideas simply because they are not pure, condensed liberty; rather, we evaluate them on whether they improve the status quo relative to liberty.

        When one complaint against a proposal is “x”, saying that the status quo already has “x” is an effective way of arguing that it should be dismissed from the evaluation of the proposal. It is not a “merit” of the proposal, but neither is it a demerit.

        1. “rather, we evaluate them on whether they improve the status quo” .. I agree certainly the underlying thinking problem.
          +10000

    2. but analysis will need to go into making sure the change doesn’t negatively affect the kidless poor.

      Heaven forbid it should negatively affect people who have zero reasons not to have a job.

      1. The kidless poor are usually the elderly. A single 65 year old still living in their long time house in a city is probably using the SALT deduction to reduce their Tax liability. They get nothing in the additional child payments but would have their taxes increased if no longer allowed that deduction.
        I am ultimately for a flat tax but since that isn’t likely to happen I’m for a more complete and honest analysis of whom changes like this really help and hurt.

  29. He seems to have strange priorities. It’s probably time to take the fight to leftists and articulate the framework for a culture of self-responsibility. Fiscally, the US is toast, so it seems like he should be focused on major spending cuts and tax reform, not in more go-along get-along stuff.

    I was puzzled by his opposition to that Fed nominee who had voiced support for a gold standard. I don’t know the details of her position, and I’m not interested in having any kind of government control of something as important as money or currency – not even a government gold standard – but it seemed inappropriate to oppose someone’s nomination simply because you disagree with a specific view they hold. I didn’t know if that was normal or what – Senators voting against someone’s appointment to some government job because of mere disagreement with inside baseball stuff like monetary policy, gold standards, etc. I feel like Senators shouldn’t oppose people simply due to their differences, but rather for something much larger like criminality. I’d probably eliminate the whole Senate approval process, since it seems to have become a partisan political circus – just let Presidents hire or appoint who they want, like chief executives do in any other context.

  30. This is a really great read; thank you so much for this.

  31. The elites have been redistributing wealth from the working people for more than 40 years. It is no coincidence then that our economy grew more slowly the past 40 years than it did the previous 40. The elites did this by destroying unions, changing work rules, hiring undocumented workers (Reagan gave citizenship to 3 million) and moving jobs to other countries. 40 years ago the average CEO made 57 times what a worker made. Today it is more than 300 times. Romney knows that if we provide protection for all, our economy will be more robust and stronger. It is a lesson learned from countries like Israel, Germany and a host of other 1st nations.

    1. “protection for all” = Stealing from Peter to pay Paul?
      How about protection from Gov-Guns ROBBERY?

      The Power to Steal = Wealth; IS CRIMINAL!

  32. Mittens is a douchebag statists.

  33. TANF connects clients to zero-cost child care and retraining programs, plus job-search services and job coaches. I think that’s why it “lifts families out of poverty.” It does not lift every family out of poverty, and the quality of the TANF program varies widely by county and state. Some clients are assigned to 40 hrs per week job search with a benefit of under $200 a month; this kind of blitz may yield a job, but it will probably be the same kind of job the person just lost in order to be TANF-eligible, and then it will fail for the same reasons.
    TANF is famous for the cash, but I think the child care access and the retraining are even more important. Giving people a larger chunk of money, and eliminating the income eligibility, would vaporize entire welfare offices; there would be nothing for the workers to do if they didn’t have to wrangle over the last dollar of excess income. I basically support this. But the child care and retraining access needs to be there too even if not under the TANF umbrella.

    What does Romney see that others don’t? Rural economies are going to suffer in the future. Automation. Lack of education. Under his plan, a two-adult home with two kids could just about afford to be a one-earner home in a low-cost area (older mobile home, cut own firewood, etc.). If the one earner had access to better workforce training, that person might be able to get a decent job. And if one parent is home, they can homeschool. My observations of “affordable” areas are that there is a lot of very opportunistic people with recruiting skills who gather up the late-elementary and teen-age kids into whichever gangs are represented nearby. Frazzled parents and lack of supervision plus poor educational opportunities means the kids go where they’re wanted, right into low-level gang opportunities. Parents with at least their noses above water and enough time and brain cells to spend time with their kids – that and religious organizations – are pretty much what’s between a scrappy but decent rural future and Utah as the cartel’s North Forty. There are very big holes in society – forget the “safety net,” society. People just outside the eligibility cutoff hate welfare because they are jealous and critical of those they see as receiving it. Suburban liberal areas haven’t seen half the last generation either burnt out on drugs or working with the gangs, or both, leaving the grandparents to raised the grandkids with the fetal drug exposure, so it’s very difficult for the suburbanites to hear about the rural organized crime problem. People in rural areas all see it and don’t have to be told.

    I don’t think Romney suddenly “likes big government.” Maybe. But legit small government requires a level of non-legislated function and cooperation which the US seems to be far from. It very much is time to fix TANF and he has the bones of a good plan here. Some richer people will have to benefit in order for the poor to get something decent.

    Once AFSCME realizes that entire buildings full of HHS employees would be unemployed, though, expect them to push back. But, add broadband, expand the Workforce Investment Act and I support this. I don’t think the author did a complete cost-benefit analysis on it, including eliminating such a chunk of bureaucracy. Millions of dollars a year out of just about everywhere. Now, will those people have to retrain, yes. But.

    LDS society has plenty of issues but one thing they do very well is mutual aid. They pretty much are the social services agency for large parts of rural Idaho and Utah. They might not say all the negative things they are trying to eliminate with this plan, but at least some folks know what they’re doing with this.

  34. The Trouble With Mitt Romney’s Family Security Act

    It exists. Next article.

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