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 discontinued 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 year-long advantage is a political move. The Biden plan has found no Republican support in the tightly-divided Senate, so Democrats can only lead it through what is known as the process of reconciliation, which allows some fiscal measures to be passed by a simple majority under strict cost limits. Democrats hope that a taste of the new utility will spark public support for an ongoing program.
Better to check out a couple of pages from an alternate plan presented by Senator Mitt Romney, the Republican from Utah.
Mr. Romney suggests a permanent benefit along with a package of tax increases and spending cuts to pay for them. Analysts estimate that the cuts in existing spending programs for some families would exceed the value of the new benefits, but it would be straightforward to replace other sources of income. The bottom line is that Democrats can now adopt permanent change by doing the hard but necessary work of figuring out how to pay for it.
Mr. Romney’s plan has another benefit that Democrats should also take into account.
The federal government currently allows parents to cut their federal income tax payments by up to $ 2,000 per child. In some cases, lower-income households that owe less than $ 2,000 in taxes may instead receive part of the benefit in the form of a direct payment.
The Biden government has proposed increasing the benefit to a minimum of $ 3,000 per child and making it fully refundable, meaning lower-income families will be able to cash any portion of the benefit that they did not use to reduce their income tax liability would receive.
It is crucial that the government distribute the money in monthly chunks according to the plan approved by the House Ways and Means Committee earlier this month.