Mitt Romney Paved the Way for Obamacare — Be Wary of His Latest Welfare Scheme

The Romney proposal is dead for now. Conservatives should make sure it stays that way.

W hen President Biden’s Build Back Better plan didn’t pass last year, it meant that his policy of sending monthly payments to families of up to $300 per child could not be extended. The expiration of the program has brought some renewed attention to a similar proposal by Senator Mitt Romney. While the Romney plan has won plaudits among some analysts on the right (including at National Review) who believe that Republicans should adopt policies that do more to promote family formation, any effort to advance it should be met with suspicion by those who believe in a limited role for the federal government.

It wasn’t too long ago that Romney, as governor of Massachusetts, signed a law that he promoted as a Republican alternative to a “Clinton-style government takeover” of health care. Then, as now, Romney claimed that the bill would be fully paid for using existing funds. In reality, the law was a significant expansion of government that required subsequent tax increases and established the model for what would become Obamacare at the federal level.

Romney then spent two presidential campaigns deceiving voters about what Romneycare actually did and did not do. This should not engender much confidence in his current promises about his child-subsidy plan.

To review some recent history, as part of the 2017 tax law, Republicans increased the per-child tax credit and expanded its eligibility. When Biden came into office, Democrats used the $1.9 trillion “Covid-relief” package as a vehicle to create a further expansion, delivering monthly payments to eligible families of $300 for children under six and $250 per month for those between ages six and 17. Significantly, the Biden version converted the tax credit, which reduces the tax bill of families, into something closer to a universal basic income by allowing families with lower incomes to collect the full payout — even when it exceeded their tax burden. A provision in the Build Back Better plan would have extended this policy for an additional year, but it has expired for now.

Romney used the failure of Build Back Better as an opportunity to try and revive his own similar plan, first released last February, as one that could garner bipartisan support. While, for now, Democrats are still trying to focus on negotiating amongst themselves to renew the Biden plan, should that effort fail, there is always the possibility they will look to the Romney plan as a fallback. Roll Call recently observed that House Ways and Means chairman Richard Neal referenced the Romney plan in discussing the possible opportunity for bipartisan negotiations. The report also quoted Democratic senator Michael Bennet as saying that the Romney plan was “as generous as the one that we’ve proposed” while noting there would be disagreements as to how to finance the plan should there be any negotiations. Meanwhile, Republican House Ways and Means member Jackie Walorski predicted that the issue would come up one way or another if Republicans retake the majority.

So, while the Romney plan is not actively being pursued, there are enough paths for it to reemerge that it merits closer examination.

Unfortunately, on its face, the Romney plan is very difficult to differentiate from a big-government welfare program and is actually even more generous than the Biden plan. Romney’s program would send payments of $350 per month to families for every child under six and $250 per month for children between six and 17. The payments would be sent beginning four months before a child’s due date and administered through the Social Security Administration rather than the IRS. Because the benefits would not begin to phase out until income levels of $200,000 for individuals and $400,000 for married couples, upper-middle-class families with four children could be receiving monthly payments of $1,250 from the federal government. (The payments would be capped at $15,000 per year.)

Romney’s pitch to conservatives is that the program would be fully paid for by scaling back or eliminating existing benefits. It would replace the existing child-care tax credit, eliminate the state and local tax deduction, get rid of head-of-household status, eliminate block grants to states administering the Temporary Assistance for Needy Families (TANF) program, and limit the Earned Income Tax Credit.

However, as I have previously detailed in my criticisms of Biden’s fiscal proposals, conservatives should oppose more spending, whether or not it’s “paid for.” The reason is that any combination of tax increases or spending cuts that would be used to fund new spending could otherwise be applied to reduce current deficits. As Veronique de Rugy, senior research fellow at the Mercatus Center (and contributor to National Review), has commented on the plan, “It increases spending by $66 billion and increases taxes by $46.4 billion, since most of the plan’s offsets are actually tax hikes.” To be clear, these are annual numbers, meaning under the Romney plan we’d actually be talking about hundreds of billions of dollars in new spending under the standard ten-year budget window.

For decades, 1990s welfare reform has been touted as one of the great success stories of conservatives. “No longer was the federal government a source of unconditional cash payments that replaced the need to work,” AEI senior fellow Angela Rachidi wrote in her critique of the Romney proposal. “Instead, cash benefits were time-limited and tied to employment, and the employment rates of single mothers increased as a result.” The Romney plan, in contrast, would send recurring cash payments to Americans regardless of employment status. It would also replace a block grant that shifted responsibility to states to implement programs with a one-size-fits-all Washington program.

It also isn’t clear that the proposal would have the effects that its conservative proponents hope for in terms of family formation. Scott Winship, AEI’s director of poverty studies, has noted that by making single-parenthood more financially affordable, it could actually provide a disincentive to marriage.

Even if we were being completely charitable to the current iteration of the Romney plan, it’s important to keep in mind that any bipartisan plan would involve concessions to Democrats that would make it less conservative. More importantly, passing such a plan would give future Democratic administrations something to build on. Creating a permanent program providing thousands of dollars a year in cash payments to families would do a significant amount of heavy lifting for the Left. There’s a reason why progressive policy analyst Matt Bruenig prefers the Romney plan to Biden’s.

This is where the Romneycare example is particularly illuminating. After the law passed in 2006, Romney took to the Wall Street Journal to sell conservatives on the idea that his plan involved “no new taxes, no employer mandate and no government takeover.” He boasted that “all Massachusetts citizens will have health insurance. It’s a goal Democrats and Republicans share, and it has been achieved by a bipartisan effort, through market reforms.”

In reality, what Romneycare did was expand Medicaid eligibility, require all individuals to purchase government-designed insurance policies under the threat of a penalty, and offer subsidies to individuals to purchase coverage on a government-run exchange.

The claim that it didn’t raise taxes depends in part on whether one considers the individual mandate penalties to be the equivalent of a tax. But for the purposes of our current discussion, it’s beside the point. The reason is that when Romney left office, his successor had to raise taxes to fill a health-care spending gap after Romneycare failed to deliver the promised savings. In other words, were Romney’s proposal to pass, it’s quite likely that when Democrats have the power to do so, they could introduce different “pay fors.”

Romney defended the law’s individual mandate as a matter of personal responsibility that would address the problem of free riders showing up at the emergency room demanding care. But when the law was implemented, the costs of subsidizing coverage for new beneficiaries drastically exceeded savings generated by reducing the “free rider” problem.

Romney tried to deflect criticism of his plan on the right by citing changes made by Democrats. While true that Romney issued some line-item vetos on the health-care law, these were mostly symbolic, because it was obvious that the overwhelmingly Democratic legislature would override them. The reality is he fought for and signed the bill into law (with a grinning Ted Kennedy at his side) and took a victory lap in hopes that he would be able to tout the accomplishment in his presidential run.

When Democrats gained sufficient power in Washington, they took the Massachusetts model and turned it into Obamacare, which not only shares the same basic structure as Romneycare, but the same architect in Jonathan Gruber (who has said that the Massachusetts plan “gave birth” to Obamacare).

It is not hard to see a similar set of circumstances occurring here. Romney touts a massive new welfare program as some sort of conservative reform. In negotiations, the plan gets worse from a conservative perspective. He still rolls with it, because he’s eager to tout a huge bipartisan accomplishment. It gets implemented and, over time, becomes the basis for future liberal expansions of government.

The good news is that for now, the Romney proposal is dead. Conservatives should make sure it stays that way.