Mitt Romney proposes giving American families an extra $3,000 a year

Senator Mitt Romney (R-Utah) unveiled a plan on Thursday that would provide American families with a bigger financial boost than what's proposed in the Biden administration's $1.9 trillion relief package. But both plans fail to completely cover child-care costs for the average American.

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Romney released the Family Security Act on Thursday — which the senator plans to propose as an amendment included with the Democrats' stimulus package — which would provide families up to $3,000 a year in financial support per child ages 6 to 17 and up to $4,200 a year for infants to age 6. Americans expecting a child would be able to start applying for the monthly benefit four months prior to their due date. 

"We have not comprehensively reformed our family support system in nearly three decades, and our changing economy has left millions of families behind," Romney said in a statement Thursday. 

Romney's proposed child credit is slightly more generous for younger children and lasts longer than the child credit proposed as part of the Biden administration's $1.9 trillion relief package. Biden's proposal would give families with school-aged children $3,000 annually, and $3,600 for children under the age of 6. The payments would be in place for a year on an emergency basis.

While any program providing roughly $3,000 per child annually would help families, it's not nearly enough to cover the cost of child care for many Americans. Prior to the pandemic, American families regularly paid over $11,000 a year on average to send their infant to a child-care center, about $10,000 for toddlers and over $9,000 for four-year-olds, according to Child Care Aware of America's 2019 report.

Yet an increased child credit may help families who are struggling to cover their basic expenses. Romney estimates that the program would lift nearly three million children out of poverty.

"The Child Tax Credit is a powerful tool that is proven to help lift families out of poverty, and we support efforts to increase this credit – particularly at a moment when so many families are struggling as a result of the Covid-19 economic crisis," Sarah Rittling, executive director of advocacy group First Five Years Fund said in a statement to CNBC Make It.

Romney's program, if passed, would be administered through the Social Security Administration and available to all children with a social security number. Under this proposal, the benefit would start to be reduced for individuals earning $200,000 ($400,000 for joint filers).

In order to fund the new child assistance, Romney's proposal would reduce the Child and Dependent Care Tax Credit (CDCTC) and eliminate Temporary Assistance for Needy Families, the State and Local Tax Deduction (SALT), the head-of-household tax filing status, as well as several other credits for children and families. The Biden proposal, meanwhile, would not eliminate any existing child or family programs, but instead add as much as $120 billion to the federal deficit to cover the cost.

"This proposal offers a path toward greater security for America's families by consolidating the many complicated programs to create a monthly cash benefit for them, without adding to the deficit," Romney said. 

Conservative think tank, the Niskanen Center released an analysis that found Romney's program would reduce U.S. child poverty by roughly one third and be fully-paid for through 2025.

But Rittling noted that any effort to leverage the tax code to support parents and families must also look at strengthening the CDCTC, not eliminating it. "Given that child care is one of families' greatest expenses each month – often higher than the cost of housing or college tuition – we believe the value of the CDCTC should be increased and made refundable to ensure families with low or no tax liability are able to benefit from it," she says. Even with the generous increase to the Child Tax Credit, Romney's plan to eliminate this tax credit may mean families will end up with less than they would have received before.

In a poll released last week, First Five Years Fund found 85% of voters, including 79% of Republicans, support providing parents with tax credit to help pay for child care.

Child advocates and parent groups, including the coalition behind the Marshall Plan for Moms and advocacy group MomsRising, have been pushing lawmakers and the Biden administration to make child-care policies a priority. The Marshall Plan for Moms, in particular, calls for the new administration to implement a "short-term monthly payment to moms depending on needs and resources" in Biden's first 100 days in office.

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