Romney Comes Up With His Own Monthly Payment For Families

This is my update for Thursday, February 4th. As I mentioned yesterday, the Senate voted 50-49 for the budget resolution that kicked off the reconciliation process, which means we’ll see amendments proposed by both sides and a series of votes on various provisions that may or may not make it into the final stimulus package.

One of the first proposals came from Mitt Romney, one of the most moderate Republicans in the Senate, his proposal is called the Family Security Act, in it Romney is pushing a plan to give families $4,200 per year for each child age five or younger, so three hundred and fifty dollars a month, and $3,000 per year for each child from six to seventeen, so two hundred and fifty dollars per month.

This benefit would be paid out monthly, with an overall cap of $1,250 per family per month. Just like the stimulus checks, these would be phased out above an income limit, although Romney’s plan provides the full payment to single filers with incomes up to the current Child Tax Credit limits of $200,000 for single filers and $400,000 for joint filers.  The benefit would be reduced by fifty dollars for every one thousand dollars above these limits. 

This benefit would be administered through the Social Security Administration and would be available to all children with a Social Security Number, and parents could apply to receive the benefit four months prior to their child’s due date, mid-pregnancy. 

So this is a little different than the Democrats’ similar plan, which itself sounds like more of a prepayment of the Child Tax Credit.  And Romney’s plan actually even more than the Democrats are proposing, with their current plan covering just $3,600 per year for children five and younger and $3,000 per year for children ages six through seventeen, that amount is the same as Romney’s plan. So I’ve been talking a lot about bipartisanship in recent updates, whether both sides will reach an agreement or whether the stimulus will mostly be passed by Democrats, but this is one provision that may get support from enough Republicans if there is to be some kind of bipartisan stimulus legislation. 

Now this is a very robust plan for child poverty, and it’s not limited to COVID or anything like that. And in fact Romney is claiming that his plan is also deficit-neutral, which means it only adds costs that it subtracts in other ways, and Romney wants to room for these direct payments by cutting some other aid programs and tax breaks including the child and dependent tax credit, the head of household filing status, the state and local tax deduction, and temporary assistance for needy families.

So instead of navigating those tax programs to get some money back, if you have a child, you’ll just get these monthly checks in the mail until they turn 18.  On the other hand, the American Family Act, which has the support of most Democrats in Congress, pays out slightly less than Romney’s plan for children under six.

But it also doesn’t come with the same cuts to other tax credits and benefits, which could end up being an obstacle for Democrats who want to keep temporary assistance for needy families and other forms of government aid. With that being said, some of the other provisions that Romney wants to cut effectively benefit the rich over other groups, which could go a long way toward getting more Democrats onboard.

The state and local tax deduction, for example, mostly helps the 20 percent of richest Americans, and it does almost nothing for the bottom 60 percent which includes most of the people who would be paid under Romney’s proposal. 

As I said, we’re going to see a lot of these proposals over the next few weeks as the Senate works on what will become the next stimulus bill, and there will be a series of votes to determine which ones make it into the final version. In fact, Democratic Senator Brian Schatz from Hawaii called this “vote-a-rama” process “the worst part of the United States Senate” and said that “everybody should ignore it if they can.”

Everyone in the Senate can propose any amendment they want, and Republicans reportedly have hundreds of amendments ready with no relation to the stimulus itself. Unsurprisingly Mitch McConnell has a different view, he is looking forward to this process, he said “Senate Republicans will be ready and waiting with a host of amendments to improve the rushed procedural step that’s being jammed through.

We’ll be getting senators on the record about whether taxpayers should fund checks for illegal immigrants, whether Democrats should raise taxes on small businesses in the midst of this historic crisis, and whether generous federal funding should pour into school districts where the unions refuse to let schools open.

And this is just a small taste.” So Democrats want to use budget reconciliation to pass a stimulus bill without any bipartisan negotiation, and the drawback there is that they’re going to be hit with a wave of votes from Republicans that could put them in tough political positions. 

One key issue for the stimulus has been who should be eligible for direct payments. The first two rounds of checks went out in full to single filers earning up to $75,000 and joint filers earning up to $150,000 before gradually phasing out at higher incomes.

Republicans and some moderate Democrats have voiced their support for decreasing those limits in order to reduce the overall price tag and create a more targeted relief plan, and sixteen of them proposed an amendment to “ensure that upper-income taxpayers are not eligible.”

The amendment doesn’t come out and say what the income limits should be, but there are reports that Democrats are considering reducing the limits to $50,000 for single filers and $100,000 for joint filers, while a Republican proposal included a $1,000 payment that would go out in full to single filers earning up to $40,000 and joint filers earning up to $80,000. Now Biden came in a little above those numbers, he wants eligibility for married couples who earn $120,000 per year, which is slightly higher than the Democrats’ proposal but still in the same ballpark.

So given the tone of the conversation so far, it wouldn’t be surprising if the third set of checks ended up being limited to something in that range instead of going out in full to people with higher incomes that were included in the first two rounds. And it would be one thing if the amendment was exclusively proposed by Republicans, but it already has support from seven Democratic senators, plus Angus King, an independent who caucuses with the Democrats.

So these measures need a simple majority to pass, that means they can’t afford to lose even a single Democrat, and it doesn’t look like the higher income limits have that kind of unanimous support at this point.  Senators Chuck Schumer and Elizabeth Warren also re-introduced a resolution calling on Biden to cancel up to $50,000 in federal student loan debt for each borrower, I say re-introduced because something similar was brought up during the last Congress. Now unlike Romney’s proposal this isn’t a binding amendment, it’s closer to an endorsement, so even if it passes it would only put political pressure on Biden, who has supported canceling $10,000 in debt in the past but hasn’t come out in favor of canceling $50,000.

Schumer and Warren were joined at the press conference by Representatives Alma Adams, Ilhan Omar, Ayanna Pressley, and Mondaire Jones, and they said that they had support from more than 50 lawmakers. At this point, there is a lot of support for the $10,000 plan, almost three-quarters of Americans are behind that, but it’s tough to see Congress passing $50,000 in student loan forgiveness, especially with how much money is already being spent on other areas of the stimulus. 

OK, last story for today, Senator Dick Durbin and Representative Cindy Axne, both Democrats, introduced legislation that would waive federal income taxes on up to $10,200 in 2020 unemployment benefits. That figure covers both traditional state unemployment along with the programs that were introduced by the federal government last year, so it wouldn’t matter whether you filed for regular unemployment or Pandemic Unemployment Assistance.

In other words, let’s say you received $15,000 in unemployment, taxes would be forgiven on the first $10,200, so you would owe them on the remaining $4,800. And again this is only for federal income taxes, it doesn’t cover state taxes, so you may or may not owe taxes at the state level depending on your income and where you live.

This mirrors a similar bill which offered up to $2,400 in tax relief for unemployment after the 2008 recession.  Alright, everybody, that is my update for today, the so-called vote-a-rama will be picking up this week, so we’ll see a lot of proposals in the next few days and weeks.

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