Mitt Romney's Family Plan Isn't Great, but It May Be Better Than the Alternatives

Whether the federal government should be subsidizing families at all is another matter.

According to Sen. Mitt Romney (R–Utah), America's current welfare policies have two major flaws: They penalize recipients who get married by reducing the benefits they're eligible for, and they don't do enough to help couples afford to have more kids.

"There's a growing gap between the number of children people say they want to have and the number they actually decide to have," he said during 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 to have people have more children than they want, but instead should find a way to bridge the gap between what people would like to add to their family and what they're able to afford."

Attempting to address these issues, Romney in June released the Family Security Act 2.0, a proposal to send parents monthly checks of between $250 and $700 per child, beginning midway through a pregnancy. A household would need to have earned at least $10,000 the previous year to be eligible for the full benefit, a provision meant to keep families from dropping out of the work force entirely. The program would be "paid for" by reducing or eliminating various existing income tax breaks.

It's hard to fault efforts to resolve distortions introduced by previous federal policy, including the whoopsie-daisy of incentivizing low-income couples to remain unmarried. The idea that it's the government's job to help people have more kids rests on a more debatable assumption—namely, that parents should not have to shoulder the full cost of raising future members of society.

Regardless of whether you buy that "positive externalities" argument, the federal government does spend billions each year on family programs. Given that these efforts are not likely to go away (however much libertarian purists might wish otherwise), it's worth considering whether Romney's proposal represents at least an incremental improvement over the status quo.

Both Scott Winship, AEI's director of poverty studies, and Robert Rector, a 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 amalgamation of tax breaks or the new consolidated benefit Romney wants to replace them with, they'll take the latter.

This calculation only works if the existing programs really are zeroed out to cover the costs of the new checks, of course. That's something Democrats are likely to resist, though Romney said during the AEI event that the "pay-fors" are nonnegotiable for him and his Republican co-sponsors. But from a libertarian perspective, such negotiations always entail the risk that the parties will settle on a compromise that adds rather than substitutes spending.

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

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 needs to have earned $10,000 the year before in order to qualify for the full amount. That provision, which was absent from the 1.0 version of Romney's bill, is in keeping with Bill Clinton–era welfare reform, passed in response to concerns that no-strings checks sever people's connection to the labor force, drive up out-of-wedlock births, and generally worsen outcomes for kids.

Eliminating those bad incentives from the new version of the plan is not without downsides. In the short run, it means that some of the poorest children in America, those whose parents don't work, won't benefit from the program at all. (The addition of a work requirement also makes it more complex to administer, the progressive blogger Matt Bruenig pointed out, since the government must now track previous-year income levels and adjust each household's monthly payment accordingly.)

Romney sidesteps this objection by insisting that Family Security 2.0 isn't an anti-poverty measure—it's family assistance. There are dozens of other programs meant to help poor Americans, he said at AEI, from food stamps to Medicaid. His plan looks to solve a different problem: Americans choosing for economic reasons to have fewer kids than they otherwise would like.

I question whether that's a good use of government dollars. But Romney's plan may still be better than what we have now.