Today, Explained - The Republican(!) plan to give parents money

Episode Date: February 11, 2021

Sen. Mitt Romney wants to throw money at parents, Andrew Yang-style. President Biden is into it, too. Vox’s Dylan Matthews explains. Transcript at vox.com/todayexplained. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Gambling problem? Call 1-866-531-2600 or visit connectsontario.ca. Dylan Matthews, senior correspondent at Vox. There's a lot of talk about impeachment in Congress right now, but there's also a little undercurrent of plans to help moms and dads across America. What's in the works? I think the big, most surprising news here is a plan that came out from Mitt Romney, who listeners will recall was the Republican nominee for president.

Binders full of women. Voted to impeach Donald Trump. Determined that what the president did was wrong, grievously wrong. The senator from Utah, and now just wants to give families with kids a whole bunch of money. What is his program? Tell me about the details. Romney's plan is that every parent would get a check in the mail based on how many kids they have every single month. So you would get $250 per kid age 6 to 17 and $350 a month for every kid from age 0 to 5. And that's capped at $1,250 a month, no matter how many kids you have. So if you have 10 kids, you're kind of out of luck.

But for basically everyone else, you're just getting a check in the mail based on how many kids you have every month from the Social Security Administration. And how is that different from, say, how parents are credited for kids right now? Right now, we have something called the child tax credit. And you get it a tax season, and it is a way to reduce your ultimate tax burden. You take it off after you calculate your taxes. But the child tax credit is very different from this in several ways. One, it's once a year. It's not a check you get in the mail every month regularly. And more importantly, it's not for everyone. So if you're a poor person who

doesn't make enough money to owe income taxes, things like tax credits and tax deductions on their own don't help you. They're reducing the tax burden that doesn't exist. There are these things called refundable credits that can give you money even if you don't have a tax burden. And the child tax credit is one of those, but it works in this very bizarre and complicated way that effectively excludes a lot of poor kids. That if your family makes less than about $10,000 a year, so if you're desperately poor, you don't get the full refundable amount from it. There are estimates that about 30% of kids are excluded from the full amount because of that provision. And the last thing I would say is that it's just a lot smaller. The child tax credit is $2,000 a year for poor people. It's even lower.

It's maxed out at $1,400 if you don't know income taxes. $1,400 is compared to $4,200 per child under six under Romney's plan. So what Romney's doing is he's making it a lot bigger. He's making it regular and monthly so that it's not just all at once. And he's making it accessible to very poor families for the first time. Yeah, how surprising was it that this is coming from Mitt Romney, Republican senator from Utah? So it was surprising that it's coming from any Republican. To my knowledge, Mitt Romney is the first senator to endorse giving money to all parents, even parents who don't work below a certain income threshold, out of the entire Republican caucus. In other ways, it's less surprising. He's a senator from Utah. Utah is a heavily Mormon state with unusually large families. Mitt has a large family himself. And I think that leads to more sympathy toward efforts to bolster families or

subsidize families through government spending. And so he's not a total lazy affair guy who doesn't believe in government programs at all. Best thing I can do to help people in the most troubled areas of the country, give the resources to the people closest to the challenges, provide education, which lifts people out of poverty, and communicate to them that the principles of America, hard work, education, family formation, these principles will help provide people with a future which is more prosperous and promising. There are times when he reminds me more of like a German politician than an American politician. And in Germany, conservatives don't have kind of the aversion to government

that conservatives in America do, but they have the sense that sort of the traditional family is a good thing and the government should be supporting it. And what I see with Romney is an attempt to sort of bring that approach to America. We have a lot of kids in Utah. People are having babies in Utah. And as I talk to people across our state, one of the things I hear time and again is how difficult it is economically to make ends meet, particularly when the child comes home from the hospital. He's looking at the kind of tax cut agenda that Republicans have been on for 40 years now and saying that well's kind of run dry. What we really should be about is protecting families and helping families be stable. And I think his vision of what that means is probably more conservative than a lot of liberals' definition and probably more restrictive about what kind of families he wants to help.

But he's rejecting a lot of received wisdom in Republican circles about not just handing out money. He's accepting that we might need to hand out money because he thinks that's important to support families. And for those who are like sitting around at home listening to this and thinking, wait, like giving parents money for their kids sounds more like a proposal Democrats would have historically, fear not, because Democrats also have a plan that came out just a few days later? That's exactly right. Democrats have actually been working on versions of this plan for years, since 2017 or thereabouts. But the Biden administration has really embraced giving kids money. And their allies in the House have put together a proposal based on what Biden has

proposed and some of these sort of earlier ideas. So their version would be a year only. It's part of their stimulus package. So they're not setting up a permanent program. It's part of their COVID response. And it's a little smaller in the total amount of money than the Romney plan. It would be 250 bucks a month for older kids, just like Romney, but 300 bucks a month rather than 350 for younger kids. What it has going for it over Romney is that Romney would pay for his plan by cutting a bunch of other programs for poor people. Democrats want to do this on top of all existing programs and also expand some of those programs that Romney wants to cut. So Democrats' argument is, yeah, the actual program we're outlining here is a little lower in the dollar amount, but overall families are going to be better off

under our plan than Romney's plan. So Romney wants to do this in a more like balance the budget kind of way, and Democrats just want to sort of add to the deficit, dare I say? Democrats definitely want to add to the deficit. The simple truth is, if we make these investments now with interest rates at historic lows, we'll generate more growth, higher incomes, a stronger economy, and our nation's finances will be in a stronger position as well. Mitt Romney, I think he's, yes, a balance-the-budget type guy. I think another thing he's doing

that I'm a little more sympathetic to and excited by is he just wants to make the system simpler. The downside with just adding programs to the existing infrastructure is there are tons of programs. If you're a poor family, some programs you have to work through

include EITC, CTC, SNAP, WIC, LIHEAP, Section 8. There are probably five more I'm forgetting. It's just an alphabet soup of different programs that you have to know all the details of and know how to apply for. And it's really complicated and aggravating. And I think something that Romney does is consolidate some of these programs in a way that maybe leaves less aid overall to poor people than Democrats or I might like. But he also makes it a lot simpler. He consolidates a lot of that into a check that you get every month and you don't even have to apply for. And I think there's a lot of benefit to that. So Romney's plan is just a lot And I think there's a lot of benefit to that.

So Romney's plan is just a lot more streamlined. It's a lot more streamlined, yeah. There's a very technical term in political science called a kludge. Kludge? K-L-U-D-G, yeah. Oh, kludge. Kludge is a policy that's just sort of taped together with duct tape and superglue rather than being like well-designed from the outset. And our programs for poor people are really kludgy. And I think Romney's goal is to

de-kludgify it and replace the sort of broken pipe that you've been supporting with plumber's tape and like ties and glue and just like getting a new pipe. Let's just pretend that one of these plans actually makes it to the floor for a vote, makes it to Biden's desk. What kind of impact would this money, be it 300 a month or 350 a month, have on parents and kids? So I think the most important effect

is that it would really dramatically reduce child poverty in America. So compared to a lot of our peer nations, Canada, Australia, a lot of continental European nations, we have really high child poverty. We don't have as many supports for families as other countries do. And in particular, we have a lot of programs that are tied to work. And if you're a parent who's disabled or can't find work or otherwise out of the workforce, it can be hard to access benefits. So the estimates I've seen are that a plan like this could reduce child poverty in America by anywhere between a third and half. So there's a real world where we pass a plan like this and half as many kids are

in poverty at the end of it as we're at the beginning. The millions and millions of kids are lifted above the poverty line and millions more, while still below the poverty line, are further from zero and are doing a lot better. That's the main reason I'm interested in it. And I think that could have a really transformative impact because child poverty is really expensive in ways that we don't account for. It means more disease and more hardship. It means increased homelessness, which is really costly to society, not to mention the homeless person. It means increased crime. And so there's a lot of benefits that we'd be getting as a society in addition to

for the kids themselves out of investing in something like this. And how are the plans being received? Do they have a chance of actually getting passed? So I think there's a very good chance that one of these plans will pass. Democrats control Congress. They can pass this with their 50 votes in the Senate. I think Romney has not been very successful in getting other Republicans to like his idea. But Biden has said this is a priority and he put it in his rescue plan. And his aides have been really talking up this as a historic moment when they can make a real dent in child poverty. And I think they're serious about that. And I mean, a lot of things can happen. But if I had to guess, I would guess that one of these plans will make it into law by the spring.

More with Dylan in a minute. Thank you. Ramp says they give finance teams unprecedented control and insight into company spend. With Ramp, you're able to issue cards to every employee with limits and restrictions and automate expense reporting so you can stop wasting time at the end of every month. And now you can get $250 when you join Ramp. You can go to ramp.com slash explained, ramp.com slash explained, R-A-M-P.com slash explained. Cards issued by Sutton Bank, member FDIC, terms and conditions apply. Obviously, it was a big part of Andrew Yang's bid for the Democratic presidential nomination. But now you've got a pretty prominent Republican who wants in on the action, too. How big a deal is this?

And then how did we get here? So I think it's a huge deal. And I think it's a huge deal in the context of American history. I think Andrew Yang gets credit. I think UBI activists get credit. But I think the big inflection point was last March when Congress passed a law sending $1,200 checks to every adult. President Trump supported it. President Trump signed it. The single biggest economic relief package in American history, and I must say, or any other package,

by the way. Mitch McConnell supported it in the Senate. It was a big deal and it had never happened before. There had been things that looked kind of like that in 2001 and in 2008. There were these like tax rebates that people got. Bush administration officials are hoping their soon to be mailed tax rebates will jolt the economy back to life, with many Americans getting the maximum rebate of a cool $300. But if you didn't owe taxes, which something like 40% of Americans don't, because the income tax exempts people at the bottom, you didn't get anything from that. And so this was the first time that everyone below a certain dollar amount, that sort of everyone who wasn't super wealthy, got a check from the government,

no strings attached. And that was a huge deal. And it was a huge deal that it was really popular. People really liked their stimulus checks. And promising more stimulus checks was a big part of why Democrats won in Georgia. We will be able to pass $2,000 stimulus checks for the people next week when we win these races in Georgia and get economic relief directly into the bank accounts of the American people who are suffering right now. Democrats and to a lesser extent Republicans have learned that just promising to support people during a time of crisis with cash can be really, really politically popular and durable.

Just to be clear here, how popular an idea is giving people money for free in this country? So the polling I've seen on this in terms of the stimulus checks routinely shows 70% of people supporting handing out checks, including majorities of Republicans. So really popular. It's really popular. And ordinary people have not sort of internalized what politicians have said, at least on the Republican side. Reward work. Tailor benefits to people's specific needs. Demand results. Hold each other accountable.

This is how you fight poverty. It's also just like a big deal in like everyday life in a way that I haven't seen a policy be in a long time. I sometimes, as a test of how much people are talking about something, will go on Google Trends and compare it to Taylor Swift and Kim Kardashian, since everyone is talking about them a decent amount all the time. And in December, more people were talking about $2,000 checks than were talking about Taylor Swift or Kim Kardashian. Nice.

Like, that's astonishing. I have never seen a government policy like that. And to what should we attribute that popularity? Is it just the simplicity of the idea? I think the simplicity is a big part of it. I think it being nearly universal. So wealthy people didn't get them. But most people, something like 93% of Americans got checks. And so it's something everyone's experiencing and can talk about with each other, which in turn makes it feel like a bigger deal. And yeah, I think it was just, it's been a really hard year. And I think there was something about just getting some compensation for enduring a really, really tough year that really resonated with people. Is there any history to this? I mean, obviously, we've got a rich history of tax rebates and tax refunds. But is there any precedent for just directly cutting checks to the American people

with, you know, the president's signature on them as the last ones had? There are a few things you could go to. Social Security is an obvious one, but it's different in the sense that you have to pay into Social Security. You work for a lifetime, you put in your money, and then you get checks when you retire. Right. I think a big precedent and a really interesting history here is the history of welfare for mothers and particularly single mothers. And that started really after World War I for war widows. The idea was a lot of women had lost husbands in the war. The government wanted them to not have to go to work because it was the 20s and that was frowned upon. And so they just gave them money to stay at home and raise their kids. And that kept going and sort of expanded into a program called Aid for Families

with Dependent Kids, Aid for Families with Dependent Children, rather. And then in the 60s, it became really controversial, first because our norms around women working changed. And so the assumption that women had to stay home and just cash checks rather than working didn't hold anymore. And two, and maybe more importantly, a lot and the idea of subsidizing Black single mothers really rubbed a lot of politicians the wrong way for obvious and unfortunate reasons. And so there was this really big fight in the year 1971 coming out of all those controversies that was the closest we've come before now to just giving people money. Let us place a floor under the income of every family with children in America. And without those demeaning, soul-stifling affronts to human dignity that so blight the lives of welfare children today. So Richard Nixon wanted to replace the welfare system with direct cash, not just to single mothers, but to all

poor people. And he came really close. It passed the U.S. House. It failed in the Senate narrowly. And ever since, we've sort of been experimenting with other options. In the 90s, we got rid of aid to families with dependent children, in part because of all of that backlash against mothers not working. And since the early 70s, we haven't really had a conversation about what it would mean to send out cash without restrictions. And we're starting to have that conversation now. And does any of that sort of stigma remain? I mean, I remember conversations around canceling

student debt really brought out some surprising opposition saying like, you know, I had to work and pay off that debt so future generations should too. Is there some sort of lingering stigma to like just handing out money to people? I think a lot of the anti-welfare sentiment is still there. There are several conservatives, particularly at the American Enterprise Institute think tank, who came out against Romney's plan specifically because they thought it would lead to more single mothers not working. And they thought that was a really, really bad thing. And I think norms about that are changing. I think they probably would have been the majority in the 90s. I don't know if they are now. but people still have those fears and still have this image of someone who could work and doesn't because they're lazy and don't feel like it and really sort of recoil at that idea.

But I think that feeling is waning. And I think it dominated these discussions when welfare reform happened in 1996, and it doesn't dominate them now. And I think that's a really huge and important change. And do you think that change is something that will transcend this pandemic, that won't be limited to, you had a really tough year, here's some money? I hope it will, as someone who has a lot of hope for cash politics. And I'm consciously optimistic that I think it was a tough year and that played into it. It was also a proof of concept. And a lot of things that come out of big emergencies and as a response to big emergencies wind up sticking around for a

long time. The reason taxes get withheld from our paychecks every couple weeks is because the government was running out of money in World War II. And someone in the Treasury Department figured out that if you just deducted it from paychecks, that would get more money for war expenditures. We still do that today. It came out of an emergency, but it's the way the system works now. And my hope is that cash can be something kind of similar. Dylan, thank you so much. Always a pleasure. Dylan Matthews, he's the head writer of Future Perfect at Vox. It's a section of our website dedicated to thinking of ways to help people. You can find it at vox.com slash future dash perfect. It's also a podcast.

You can listen to Future Perfect wherever you listen. I'm Sean Ramos for him. This is Today Explained. Thank you.