February 10, 2021
Sen. Mitt Romney’s new child welfare reform legislation – the Family Security Act – has generated both support and criticism. That new ideas for federal welfare policy and family policy are driving substantive and healthy debate and disagreement is a good thing.
But in an era of declining American trust in civic institutions – public and private – it is important to examine whether legislation like Family Security Act is likely to improve or worsen the standing of three such institutions: family, work/employment, and government. Evidence suggests that it will likely strengthen at least one civic institution: the family. The impact on work and government seems less certain, offering areas for potential amendment and likely requiring experience with the policy for answers to become clear.
Family Security Act: The basics
The Family Security Act offers families a benefit of $350 per month ($4,200 per year) for every child they have between ages 0 and 5 years old (starting at 4 months before a baby’s due date) and $250 per month ($3,000 per year) for every child between 6 and 17. The benefit would have a limit for each family of $1,250 per month ($15,000 per year) and benefits would phase out for higher-income families, similar to income guidelines used for the current federal child tax credit.
The legislation would fund this program by consolidating various tax programs and welfare policies into the new family benefit. The tax programs that would be consolidated include the child and dependent care credit, the head-of-household filing status, the child tax credit, the state and local tax deduction, and part of the earned income tax credit (EITC). The welfare programs that would be consolidated into the new family benefit include the Temporary Assistance for Needy Families Program (cash welfare with work requirements) and part of the Supplemental Nutrition Assistance Program (food stamps).
The Family Security Act seems grounded in a pro-family principle: trust families and give them the financial freedom to solve their own problems in the ways they know best. In substance, the child benefit in the legislation is a block grant to families to help with their financial needs. The benefit could help families afford a home in a better neighborhood, child care so a parent can work, a better education for their child, or even to allow a parent to be home to better raise their young children. Additionally, the Family Security Act would fix some of the federal tax penalties on marriage.
The current slew of federal programs for families, on the other hand, attaches strings to benefits that end up financially harming families by misleading them into poor financial and life decisions. For instance, marriage has been found to be associated with lower levels of poverty. But research finds that the EITC creates financial penalties for marriage among low-income couples with children, leading to fewer marriages among EITC recipients. Programs such as TANF create “benefit cliffs” that employers report as a cause of employees turning down better pay and better jobs because they would reduce quality of life overall from a loss of eligibility for welfare programs.
By eliminating marriage penalties and benefit cliffs for low-income Americans – trusting these families to know their own needs better than politicians and bureaucrats – the Family Security Act would strengthen the civic institution of the family.
At a practical level, the legislation would undoubtedly strengthen the finances of American families with children, offering both families and the nation tools to help mitigate the grim economic picture painted by falling birthrates. For one illustration of the need for such financial assistance today, consider that the ratio of home price to annual income has gone from 2.6 in 1990 to 3.6 in 2017. When having another child might require a bigger apartment or larger home, it presents a real financial burden to families that could be lessened by an extra $250 – $1,250 per month from the Family Security Act.
Some have expressed concern that the benefit envisioned by the Family Security Act will undermine the principle of self-reliance and the civic institution of work. The worry is that the Family Security Act would discourage some Americans from working, leaving these families worse off even with the extra income, since employment is a sustainable and reliable way to stay out of poverty.
The evidence on this score is mixed. America’s past experience with a welfare system that lacked work requirements included the issue wherein some families chose not to work. In contrast, evidence from Canada’s experience implementing a child benefit showed increased employment rates among mothers after the benefit was put in place. Americans also overwhelmingly prioritize meaningful employment over income alone, suggesting that financial aid to families would not lead parents to exit the workforce en masse.
Concern about the institution of work is reasonable. However, the evidence seems to at least suggest that the worst fears of those concerned about work are unlikely to materialize.
Another concern voiced about the Family Security Act is that it looks and feels like a new entitlement program, which would increase the size and reach of the federal government into the lives of families. Certainly, the Family Security Act would increase government spending, and that spending would be explicitly directed toward families. However, it would also streamline the administration of various family and child welfare programs, making its impact on government an unsettled question.
The Family Security Act would consolidate and simplify various tax and poverty programs in ways that will improve their administration. Complicated and confusing elements of the EITC, child tax credit, SNAP and TANF, for example, would be simplified into one monthly benefit payment that families could understand and plan on in both the short term and long term. Additionally, the block grant aspects of the child benefit would make it easier to administer than these other programs. In other words, the reforms in the Family Security Act seem likely to mean more transparent benefits for families and better government administration, even with higher federal spending.
Undoubtedly the new child benefit would become relied upon and expected by families, like entitlement programs such as Medicare are now. However, that arguably already exists with current programs like the child tax credit. Additionally, there are significant differences between the child benefit in the Family Security Act and entitlement programs like Medicare: The child benefit phases out for upper income families and ends when children leave the home, while programs like Medicare do neither.
On balance, would the Family Security Act in its current form strengthen or weaken the institution of government? The answer could go either way, and this may be an area where only experience with the policy would offer clear answers.
The criticism of the Family Security Act offers areas for potential amendment of the legislation. It seems likely that the child benefit could be amended to help it better promote work – perhaps adding an additional cap on a family’s benefit tied in some fashion to work.
Some may also have reasonable concern that the income limits on the child benefit are too high. Lowering them is a possible option, but that could prove as detrimental as it is beneficial. For instance, a single parent with three children making $120,000 in New York City is arguably in greater financial need than a married couple with one child making $80,000 in Dallas, but reducing income limits on the child benefit could end up excluding the former while continuing to benefit the latter. Additionally, in a society that faces deep divisions in politics and policy, programs that treat low-income and middle-income families equally promote both unity and human dignity.
The principle of trust in families that the Family Security Act seems to rely upon, combined with the elimination of marriage penalties and benefit cliffs, seems to make it clear that this new legislation would strengthen the institution of the family. The impacts on the institutions of work and government are less certain – perhaps an area to consider amendments to the legislation – but the potential to impact them positively seems to be there.
Whatever the trajectory of the bill, it contains policy that ought to be considered and debated by Congress. America desperately needs policy to shore up civic institutions, and the Family Security Act represents reform that is fit for the times and worthy of consideration by those who support strong families, a healthy work ethic and good government.
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