The Romney child allowance proposal is a move in the wrong direction

Senator Mitt Romney released a proposal today that would
provide child allowances in the amount of $350 per month for each child under
six and $250 for each child aged six to 18. Those are on par with typical
benefits in the federal government’s main cash support program for families,
the Temporary Assistance for Needy Families (TANF) program, which the Romney
proposal would eliminate. A major difference, however, is that these benefits
would be available regardless of whether or not a parent is working or married.
Under TANF and other safety net programs, if work or marriage increases income
levels, then safety net benefits fall correspondingly.

U.S. Senator Mitt Romney (R-UT) speaks to reporters on Capitol Hill in Washington, U.S. January 19, 2021. REUTERS/Erin Scott

I admire Senator Romney immensely, but I think this proposal moves in the wrong direction. The welfare reforms of the 1990s were historic measures that fixed a cash welfare program that impeded upward mobility and independence. As a result of the reforms to welfare, the Earned Income Tax Credit, and other policies, work among single parents increased strongly and never returned to pre-reform levels, even after the 1990s boom ended. Poverty declined to the point where it was lower than ever before on the eve of the pandemic. That decline was partly due to other expansions of the safety net, but the increase in work alone (with greater EITC benefits and more eligibility for unemployment benefits) would have been enough to lower poverty. Even the non-marital birth rate stopped rising, after several decades of steadily increasing.

The Romney proposal would take us back to the bad old days
in key ways, and policymakers are playing Russian roulette with low-income
families’ wellbeing. Advocates argue that child allowances incentivize work and
marriage, because someone who would lose welfare benefits if they work or marry
would not see a smaller child allowance, so we would get more work and
marriage. But if those advocates admit that incentives matter, then they must
also admit that some people (including future people) who would choose single
parenthood or non-work except that the current safety net makes it unaffordable
would be able to afford these choices under child allowances. For them, child
allowances are allowances for behavior that would be expected to hurt their own
long-term prospects and, more importantly, the wellbeing of their children.
(Those who think a $15 minimum wage would be more harmful in places with a
lower cost of living should be similarly concerned about a geographically
undifferentiated child allowance that will seem larger in poor places.)

We can’t know for sure which group is bigger — the people who would move to work and marriage or the people who would move from work and marriage — or how responsive they would be to this specific proposal. But we have a record of success over the past 25 years that built on bipartisan reforms. Those reforms were developed on the basis of patient state experimentation to learn what might work. Child allowance advocates assume that point-in-time poverty is all that matters, but if their preferred policy incentivizes more behavior that impedes intergenerational mobility, they will have won a battle while losing the long-term war on poverty that we have fought quite successfully over the past generation.

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