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Romney’s Child Allowance Would Give Families 15K — Here’s the Catch

The plan looks great until you read the fine print.


Should parents get a monthly allowance to parent? Senator Mitt Romney thinks so! But his plan to do just that has more going on with it than at first glance.

Senator Mitt Romney has long been known for his interest in giving parents money for parenting, and his new plan, titled the Family Security Act, which dropped on February 4, 2021, looks a lot like President Joe Biden’s plan to expand, and transform, the child tax credit to be fully refundable to give parents monthly payments of up to $3,600 a year for the costs of raising their children due to COVID-19. But some say it might even be more generous.

And because the plan on its face gives families more money and isn’t limited to existing for just the duration of COVID-19, it may seem even more generous than Biden’s plan. But there are issues in the fine print. So, let’s get into it.

What is the Family Security Act? 

Mitt Romney’s plan is an expansion of a similar plan he proposed in 2019 when he endorsed a child allowance/universal basic income for low and middle-income parents with Democratic Senator Michael Bennet. 

This plan would actually be more generous than the current CTC in terms of who will get the credit and how much they will get. Romney’s plan to transform the Child Tax Credit (which currently is limited at $2,000 per child and is not fully refundable, meaning only parents of a certain income level can access the payment) would give parents of nearly all income levels money. Parents of kids under 5 would get $350 per month and parents of kids from 6 to 17 would get $250 per month, per the plan, amounting to $4,200 and $3,000 a year, respectively, if they just have one kid. The plan would tap out for parents of multiple kids, capping the monthly credit at $1,250 a month — up to $15,000 a year in assistance for families of children. That’s a lot of money!

The plan starts to phase out for wealthy parents. For single filers, they can access the full credit at $200,000 a year and for joint filers, or dual-income households, the credit would diminish starting at $400,000. The way it diminishes, though, is interesting — per the Romney document, wealthy parents would still be able to access the full cash allowance monthly but would return all of the money to the IRS on tax filing by April 15. For wealthy parents, it would be like a loan that helps them out with monthly expenses that they then repay. For parents who make less than $400,000 or, for single parents, $200,000 a year, it’s just money.

How Would the Plan Work?

The plan operates much like President Joe Biden’s plan — by radically changing the child tax credit to transform it into monthly payments, rather than an end-of-year bonus for tax filers. 

The current Child Tax Credit operates as a once-a-year credit that only allows families of certain incomes — of over $2,500 a year — to be eligible. That means that the very poor are not helped by the CTC, which are arguably the families that would benefit most from a monthly cash parenting payment. For families that do receive the benefit, it’s not even fully refundable, meaning that even for families that fully qualify they don’t get “full” access to the $2,000 credit.

Romney would eliminate that lower-level income constraint and make the whole program fully refundable so all parents could access it in some form or another in monthly payments — making it genuinely helpful for low and middle-income families who can’t wait until the end of the year to receive money.

How Much Would It Help Families and Kids?

Like all plans that offer to give money directly to families, the plan would drastically cut child poverty, a problem that is uniquely horrific in the United States compared to other nations. A 2019 study, well before the pandemic made poverty worse, found that 10.5 American million children live in poverty — and that was considered a record low. This plan would lift up to a third of American kids out of poverty, which is less than the Biden plan (which would lift over 50 percent of children out of poverty) because it is funded by cutting other welfare programs.

What’s the Catch With The Plan? 

Unsurprisingly, the plan has plenty of catches that will likely not be kosher with liberals and Democrats. Namely, the plan is budget-neutral, which is a nice little euphemism for the fact that the plan operates by cutting existing essential welfare and tax credit programs entirely — ones that help families survive.

The programs that the plan would cut in order to be funded would include the head-of-household filing status, a tax filing designation that gives single parents some tax advantages, the child and dependent care tax credit, a tax break program for parents who use child care services that enjoys near-universal support, TANF, the Temporary Assistance for Needy Families program that helps low-income families, and SALT, the state and local tax deduction. 

Critics of the plan suggest that it could simply be funded by increasing taxes on the wealthy, rather than cutting programs that do help working-class families and families with children. Other critics, like Jamelle Bouie from The New York Times, note that the bill is designed to go through the budget reconciliation process — rather than get passed by a simple majority if the Democrats were simply to eliminate the filibuster, which is why it will cut those programs.

Budget reconciliation is only allowed to apply to bills that change spending or revenues can be included — it looks like Romney could not pay for the program by creating new tax law, but only by eliminating other sources of revenue/spending and moving things around. But if the Senate did eliminate the filibuster, many of the concerns with the bill (and the fact that it’s so-called “budget neutral”) could be eliminated if TANF, etc, were allowed to stay.