There is another good reason to link benefits to number of children rather than income level. The federal program commonly known as welfare, which provided money to low-income mothers until it was effectively closed in the 1990s, has been criticized for discouraging work by tying benefits to income. Earn more, get less. The Biden plan avoids this trap.
The main problem with the Biden plan is that it would only last a year.
The one-year service is a political gamble. The Biden plan has not attracted any Republican support in the tightly divided Senate, so Democrats can only get it through the process known as reconciliation, which allows certain tax measures to pass by a simple majority, subject to strict cost limits. Democrats are hoping a taste of the new advantage will build public support for a permanent program.
It would be best to borrow a few pages from an alternative plan presented by Senator Mitt Romney, the Republican of Utah.
Mr. Romney is proposing a permanent benefit as well as a set of tax increases and spending cuts to pay it off. Analysts believe cuts in existing spending programs would exceed the value of new benefits for some families, but it would be straightforward to replace other sources of income. The key point is that Democrats can now embrace permanent change by doing the hard but necessary work of figuring out how to pay for it.
There is another benefit to Mr. Romney’s plan that Democrats should incorporate as well.
The federal government currently allows parents to reduce their federal tax payments up to $ 2,000 per child. In some cases, low-income households that owe less than $ 2,000 in taxes may instead receive part of the benefit as a direct payment.
The Biden administration has proposed increasing the benefit to a minimum of $ 3,000 per child and making it fully refundable, meaning low-income families would receive in cash any part of the benefit they don’t have. used to reduce their tax liability. .
More importantly, according to the version of the plan passed by the House Ways and Means Committee this month, the government would distribute the money in monthly installments.