Last week, Sen. Mitt Romney (R-Utah) caused a stir by introducing the Family Security Act, an ambitious proposal that would create a universal child allowance. For all parents, excluding the wealthiest families, the government would send $250 a month per child for youngsters ages 6 to 17, up to five children, and $350 for newborns to 5-year-olds.
The plan would replace several other benefits and tax breaks, including the Child Tax Credit, part of the Earned Income Tax Credit, Temporary Assistance for Needy Families, and the state and local tax deduction, and so would not increase the deficit. The allowance would cut child poverty by a third, according to the center-right Niskanen Center. Some conservatives have publicly supported it as a pro-family and pro-work alternative to welfare; that includes one of us, who has briefed Romney, Sen. Marco Rubio (R-Fla.) and Senate staffers on child benefits.
But Rubio, one potential ally, immediately criticized Romney’s proposal as “not tax relief for working parents” but “welfare assistance.” This might seem surprising, since Rubio has been among the strongest advocates of expanding the Child Tax Credit so that it would reach more working-class families. Why did Rubio object to a deficit-neutral plan from another Republican, which seemed to resemble policies he has championed in the past?
The answer has to do with how conservatives think about welfare.
U.S. conservatives are skeptical of “welfare” for children for historical reasons
We’ve written elsewhere about historical fights over how to reduce child poverty in the U.S. Unlike peer countries such as Canada, the United Kingdom, Australia, and New Zealand, the United States didn’t create a child allowance in the 1940s — a decision that for decades to come would shape debate over how it might help families.
By the 1970s, all the countries above found themselves struggling to address child poverty within their budget constraints. Countries that had already introduced child allowances turned them into income-tested refundable child tax credits, which effectively reduced child poverty while controlling spending. Since these credits were refundable — meaning that if a family made too little to gain anything from a tax credit, it received a government payment — poor and working-class families received the full benefit.
This seemed appropriate to both liberal and conservative politicians, having long provided child allowances to families. Neither group stigmatized it as “welfare.”
The United States faced similar problems, but things went very differently. Proposals for a refundable child tax credit foundered because there wasn’t any legacy of child allowance. It meant that skeptical conservatives saw proposals that gave families tax credits above and beyond what they were paying in federal taxes as “welfare.”
U.S. politicians were only able to pass a $500 child tax credit in 1997 by framing it as “tax relief” and making it nonrefundable, effectively excluding the lowest-income families. The decades that followed saw various technical tweaks that increased the credit’s size and expanded eligibility somewhat. But all these changes — made in the name of tax relief — continued to exclude the poorest families.
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Romney’s proposal breaks from this orthodoxy
Romney’s proposal breaks with this history by rejecting the strict logic of child benefits as tax relief. Instead, his child allowance is framed as a fiscally responsible, pro-family benefit. Because it would send checks directly to families rather than providing a tax credit, it sidesteps the question of whether those who don’t earn enough to pay federal income tax should get it.
Or at least it did, until Rubio declared that the child allowance was “welfare assistance.” That pulled the debate back to the 1990s: Families with children deserve tax relief, but anything more is an undesirable form of welfare.
The debate is changing
In the past, such labels have been enough to kill similar proposals. But two recent changes suggest that the old politics may be shifting.
One is the gradual decrease in the percentage of Americans paying federal income tax. Romney was right on the numbers when he said, back in 2012, that 47 percent of Americans paid no federal income tax. In particular, as fewer households with children pay federal income tax — which is a deliberate consequence of the Earned Income Tax Credit and Child Tax Credit — it becomes harder to help lower-income families without moving toward full refundability or a direct payment.
Rubio has tried to thread this needle by proposing that the tax credit count against both income and payroll taxes, but his proposal had only limited success. Pro-family conservatives are finding it harder to help children within the tax relief framework, which may open the door to other policy measures.
The other shock to the system that may have changed things is the coronavirus. The pandemic emergency led Republicans as well as Democrats to support sending government checks directly to American households. This unprecedented step may have naturalized a type of action that was previously unthinkable: direct income supplements. If this move makes it seem less inappropriate to send families checks, the politics may change around child allowances, too.
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Romney’s proposal may get bogged down in traditional debates about tax relief and welfare. The policies of the past cast long shadows. But it is also possible that we are at a critical juncture, where policy debates are moving onto a new, and different, path. We will soon find out.
Update: An earlier version of this article stated that Rubio’s plan failed. It has been updated to note that that the plan had some limited success.
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Joshua McCabe is an assistant professor of sociology and the assistant dean for social sciences at Endicott College. He is also a Niskanen Center senior fellow and author of “The Fiscalization of Social Policy: How Taxpayers Trumped Children in the Fight Against Child Poverty”” (Oxford University Press, 2018).
Elizabeth Popp Berman is an associate professor of organizational studies at the University of Michigan, and author of the forthcoming Thinking Like an Economist: How Economics Became the Language of Public Policy” (Princeton University Press).