ICYMI: Romney Discusses the State of Family Policy and the Child Tax Credit with AEI

WASHINGTON—Yesterday, U.S. Senator Mitt Romney (R-UT) joined Michael R. Strain, Director of Economic Policy Studies at the American Enterprise Institute (AEI), for a discussion on family policy ranging from Romney’s Family Security Act to the child tax credit. The discussion was part of a larger event hosted by AEI and the Brookings Institution to mark the release of their working group’s report on U.S. childhood policy.

A partial transcript of the interview can be found below and the full video can be found here.

Michael Strain: There seems to be greater interest on both the political left and the political right in offering more support for families with children. Why do you think that is?

Senator Romney: Well, we probably come at this issue from different points of view initially and there may be a meeting towards the middle. I think for those on the left, they come from the standpoint of poverty, and trying to help people that are poor, and helping kids have good meals, and clothing, and shelter, and healthcare, and so forth. A certainly laudable objective. Many on the right—in addition to having those concerns—are drawn to the fact that people aren’t having as many kids as they used to…and as you ask people why they’re not having as many kids they often say, “Well I’d like to have more children, but we just can’t afford it.”…I think there’s a recognition that there’s probably something we should do here. And I’d note one more thing, and that is that the way the programs work today to help families are really not having the kind of impact that they ought to have, given the amount that we spend. And the money is not being able to improve the lives of our kids the way we’d like it to. And there’s a marriage penalty associated with it, and kids are not getting the benefit of the funding in some cases. So there’s a sense that we might want to restructure the way we have the programs to make them more effective.

Strain: I think that there are many people who would like to do more for children, but they’re concerned about the effects of doing more for children on the parents of those children. There’s concern that if we were to offer a more generous child tax credit, more generous food stamp benefits, that might lead to less employment for the parents of those kids. How do you balance those two competing concerns when you think about appropriate policy and program design?

Romney: Well, as you know, that’s one of the considerations that is being held by those of us that are working in this area, which ishow do we encourage work, and at the same time, provide funding so that people feel they can have kids? Clearly, the kind of refundable tax credit we’re talking about is small enough that moms and dads are not going to retire on these payments, or come anywhere near to retiring on these payments. They are small, but nonetheless they are helpful to people that are planning on having children, and ultimately having those kids. And of course one of the questions is, should there be some requirement that people are working? And in the case of a couple, you may have a husband and wife that are today both working, and if you provided some support for the child or children of that home, it’s possible that one or the other of those individuals might decide to stop working. I’m not sure that’s a bad thing. I think as a society—I’ll let the sociologists weigh in—if you have a husband and wife, or a partnership between two people that are raising children, that one of them deciding, “Hey I’m going to stay in the workforce at least for the first four, five, or maybe six years of the child’s life,” it may be a good thing. And instead of government saying, “No, no, no, we do not want you to stay home, we want you to go into the workforce.” I’m not sure that’s the right thing. So the plan that I proposed does not panelize a couple if one of them decides to stay home and have a child-rearing responsibility, and another one decides to work. But I very much am open to the need that many have expressed to say, “Look, there’s got to be some connection with work.” The couple or a single parent has to have at least worked before the child came into their life, and show that they’ve been paying taxes and going to work, so that you don’t create a pathway to a sort of permanent life-on-the-government largesse, and incentive to have more and more kids so that you get more and more support.

Strain: A year ago, you released a plan called The Family Security Act. This plan would have reformed existing federal tax provisions and programs into a monthly benefit for families. It received wide praise on both the left and the right, and it received wide criticism on both the left and the right. Let me ask you where things stand with the plan now.

Romney: Well, I think all the cards went up in the air when the President introduced his own plan, the Build Back Better plan, and he basically shared my point of view that that monthly support for families with children made more sense to get help to kids than just giving [parents] a tax credit at the end of the year, but there were some big differences. One is he didn’t reform the current programs, his [plan] was just an additional amount of money that went on top of programs that already existed, and therefore became substantially more expensive… My view is if you find a way to economize and spend the money you’re already using and make it more effective, that’s a better way to go… Now that Build Back Better is in limbo or worse, there’s a growing series of discussions going on—among members of the Senate, at least, but also members of the House—to say, “Okay let’s go back and look once again at family security and children and think about a way that we might pass something on a bipartisan basis.”

Strain: What specific changes do you think need to happen to your proposal to the Family Security Act in order to get it through the Senate?

Romney: You know, I think I should make it really clear, I’m pretty flexible. And, so if people are concerned that the monthly checks stay on too many years, that instead of kids just getting the first five or six years it goes on until through their teen years, should we reduce that? I’m flexible on that front. Doing so, reducing the number of years would of course save money. There are some who feel like there needs to be some kind of a work association with those who are receiving these checks. And it’s like, yeah, okay, my plan didn’t require any work association, perhaps we could say, prior to receiving checks of this nature, a single mom or a couple had to have at least earned, I don’t know, $5,000, the prior year or $10,000, showing there’s a connection to work. At the same time, we might decide that the income level for people who are receiving checks would be lower than that which I originally anticipated. We kept things pretty much using the President’s $400,000 figure, and keeping the current program that has a child tax credit up to $400,000, we kept that level. Why, you could bring it down to a lower level. So there are a number of adjustments you can make. The biggest challenge I think for Republicans or Democrats will be how you’re going to pay for it. And my own view is that one, by economizing on how large the program is. But number two, finding ways to use funding from current programs, like the Earned Income Tax Credit, which has a child portion of that—taking these dollars which are already being used—perhaps TANF as well, using some of these dollars and repurposing them to this effort is a way to make this paid for. As you know, in my original plan, I said look, “Let’s get rid of the SALT deduction.” The $10,000 deduction of SALT that is overwhelmingly a benefit which goes to higher income people, let’s get rid of that. But as you know, Democrats are wedded to the SALT deduction. They’d like to make it even larger because of course, it’s something which benefits people in California in New York and high-income people, and that’s where their donors are, and a lot of voters are… But what I’ve noticed, when you work in a bipartisan basis, there’s got to be give and take. And if it’s all a Republican plan, it’s not going to pass. And likewise, if it’s all a Democrat plan, it’s not going to pass. So I’m flexible. I recognize the concerns of people on the other side of the aisle… But the need to reform our current programs, and to get help to people who want to have children, I think is real. And by the way, I built this as well, which is in my plan, I think this is really important. In my plan, a woman who is pregnant, I think it’s when she becomes four or five months pregnant, she starts getting checks. And that’s to help prepare for having the child, to get the kind of equipment that you need at home and clothing, and so forth. So it really also encourages people to decide to have a child if they become pregnant.

Strain: You’re taking great pains to stay neutral for families with two working parents versus with a stay at home parent. And you’ve mentioned a couple of times now about the importance of giving families that freedom—not putting a thumb on the scale. Why do you think that’s so important?

Romney: Well, I think we want to give parents a recognition that they will be able to do what’s right for their child, and what they think is right for their child. And some parents will feel, you know, “I want to get my child to child care, I want to get him into pre-k, I want to get him or her into school as quickly as I can. I think that’s the best for them.” And, the husband and wife both have careers or jobs and they want to keep doing that. That’s just fine. On the other hand, if a couple or an individual feels, “I really want to raise this child myself—it’s something that’s important to me,” I want to give them the ability to make that choice. We’re a nation of free men and women and, structuring our programs, not to compel people to choose a life which is not in their interest as they understand it, I think is a mistake… I am a believer in the market and people being able to make the choices which they feel are best. And I believe that if you allow that to happen, you’ll end up with stronger families, stronger values, stronger culture, and a stronger economy. So pushing people back into the workforce, when they would rather raise a child is not something I want to do. And by the way, keeping them from the workforce—if they want to go into the workforce—is also not something I want to do.

Background:

Romney’s Family Security Act would provide greater financial security for American families by streamlining existing family policies to create one universal child benefit. The Family Security Act would create a new national commitment to American families by modernizing antiquated federal policies into a monthly cash benefit amounting to $350 a month for each young child, and $250 a month for each school-aged child. A summary of the framework can be found here.