The Third Child Tax Credit Payment Is Out—But How Long Will it Last?
The expanded Child Tax Credit is only in place for this year. And whether it will be extended for future years is very much in question.
Yesterday was September 15, meaning that the third part of the expanded Child Tax Credit went out to eligible Americans. The payments, as part of the American Rescue Plan Act from March, will continue to be sent once a month through the end of the year.
Multiple studies this year have found that the expanded credit has made a huge difference when it comes to reducing poverty. The Center on Poverty and Social Policy at Columbia University found that just the July payment kept six million children from poverty that month. The Niskanen Center also reported in August that the expanded tax credit would “boost consumer spending by $27 billion, generate $1.9 billion in revenues from state and local sales taxes, and support over 500,000 full-time jobs at the median wage.”
However, the expanded Child Tax Credit is only in place for this year. And whether it will be extended for future years is very much in question.
President Joe Biden, throughout the year, has expressed support for extending the new Child Tax Credit further into the future, possibly by as long as five more years. Its fate will likely rest in the negotiations over the budget reconciliation package.
The proposal from Democrats for a $3.5 trillion package would likely include some form of the expanded tax credit, although no final legislative text has been released. But with Democrat Joe Manchin (D-WV) vowing to not support the $3.5 trillion number—and with that senator specifically expressing skepticism about the idea of direct payments for all families in a recent TV interview—it’s unlikely that full package would pass without further negotiation.
In the CNN interview, Manchin called for requiring for strings to be attached to the Child Tax Credit payments.
“There’s no work requirements whatsoever,” the West Virginia senator said on CNN’s State of the Union.
“There’s no education requirements whatsoever, for better skill sets,” Manchin said. “Don’t you think, if we’re going to help the children, that the people should make some effort?”
Other Democrats, including Sen. Sherrod Brown (D-OH), pushed back on Manchin’s comments, per HuffPost.
"I think that raising children is work,” Brown said.
The New Republic took an in-depth look at the negotiations over the fate of the Child Tax Credit, as well as what it means both practically and politically if the Credit doesn’t survive into 2022. The piece opened with an interview with a Colorado single mother who was herself helped significantly by the credit.
“The July tax credit and the August tax credit essentially paid for those additional two weeks of childcare that I needed to get covered in August,” the woman told the publication.
“Democrats sit atop reams of new data that show the expanded credit is working for families with children, as well as polling that suggests voters may well reward Biden and congressional Democrats for implementing it,” The New Republic said. “But using these successes as the centerpiece of a midterm election campaign will become much less viable if these benefits are not extended beyond the end of 2021. And despite the Democratic Party’s congressional majorities, the terms of the extension are very much in doubt.”
Sherrod Brown told the New Republic about his support for the expanded credit. Brown and been advocated for such a policy for years. He first introduced it in 2013, although the idea didn’t gain enough support for passage until the time of the pandemic when the government was looking for ways to help those who had suffered economically as a result of both the disease and its economic effects.
“There’s two things I really like about this Child Tax Credit,” Senator Brown told the New Republic. “One, it’s predictable, it’s coming every month. And second, we trust families to make the decision [of] how they’re going to spend the money… there’s no question that Congress’s commitment to seniors—Social Security and Medicare—was transformational in the lives of American people. We’ve not done the same commitment for children until now,” Brown said. “And this will be transformational in the way that Social Security and Medicare [were].”
The New Republic also argued that the expanded tax credit is popular, and could serve as something for the Democrats in Congress to run on in 2022’s midterm elections.
In an election where the Republicans are expected to have some advantages, as is often the case in midterms two years after the election of a new president, the Democrats could argue that they supported the tax credit while the Republicans did not, both in the American Rescue Plan Act and in the budget vote containing the potential extension.
As Democrats negotiate, almost certainly among themselves only, the question will be whether the Child Tax Credit or other priorities make it into the final bill. The piece quotes the Joint Committee on Taxation as stating that expanding the tax credit would cost $110 billion for one year and $450 billion through 2025.
“Where would you cut? Childcare? Family medical leave, paid for? Universal pre-K? Home health care?” Speaker Nancy Pelosi said in a press conference, as quoted by the New Republic. “We will have a great bill, and I hope that as people are looking at numbers, they’re weighing the values and what we can accomplish with that legislation.”
There are also possible compromises, such as extending the Child Tax Credit for less than five years, or for less money. Brown did say, however, that he was “confident the Child Tax Credit will exist in very close to its present form for the rest of my life.”
Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.