You are using an outdated browser.
Please upgrade your browser
and improve your visit to our site.
Skip Navigation

Biden Has Put the Child Tax Credit Extension on the Chopping Block

The idea could be met with pushback from Democrats hoping to extend the credit permanently or through 2025.

Chip Somodevilla/Getty Images

An extension of the expanded child tax credit may seem like an obvious contender for  inclusion in the Democrats’ massive reconciliation bill that’s set to contain a host of President Joe Biden’s key priorities. Unlike several other proposed programs, the expanded credit has already been implemented and has yielded a clear and measurable impact on child poverty

The credit’s proponents have argued in favor of a permanent extension, and a House version of the Build Back Better Act followed through, extending it through 2025. However, Democrats are now looking to trim costs of the bill from an initial goal of $3.5 trillion to something closer to $1.5 trillion, the ideal top line proposed by Senator Joe Manchin, one of the biggest Democratic skeptics of government spending on social programs. With costs in mind, progressives in the House are pushing for a final package that implements a grab bag of priority programs for shorter periods of time, as opposed to just a few programs with longer timelines.

The three-year extension of the credit proposed by the House may be a casualty of this bargaining. In two separate meetings with progressives and moderate Democrats at the White House on Tuesday, the president intimated that the feasible path for the child tax credit was a one-year extension as expanded in the American Rescue Plan Act, or ARPA, passed in March. According to a source familiar with the negotiations, the president also discussed the possibility of permanent refundability, a key change made by ARPA that allows the lowest-income Americans to receive the full credit. (The other major changes made by ARPA include raising the amount to $3,600 per year for children under 6 and $3,000 for children between ages 6 and 17 for parents under a certain income threshold, and distributing installments on a monthly basis.)

Representative Jared Huffman, who was in the meeting with progressives, told reporters afterward that he did not “think any of that is written in stone, at this point.”

“He’s not jettisoning lots of elements of this thing. But he is working on the duration of some of them, and I don’t think any of it was fully resolved,” Huffman said.

But the idea of shortening the extension to one year was quickly met with criticism from several Democrats. Representative Rosa DeLauro, one of the credit’s primary champions in the House, told reporters on Tuesday that “a one-year extension is a mistake.”

The expanded child tax credit has been one of the key priorities for the New Democrat Coalition, one of the largest ideological coalitions in the House, close in size to the Congressional Progressive Caucus. The chair of that coalition, Representative Suzan DelBene, told reporters on Tuesday after the meeting with the president and moderate Democrats that she would still want to see the credit extended through 2025.

“Children don’t grow up in a year. They don’t stay out of poverty if we don’t continue the program,” DelBene said. On Wednesday, she said that she had spoken to the president about “how important it is that we have long-term policies, that we do things well.”

“Clearly the president’s focus, understandably, is getting 50 votes in the Senate and getting 218, and that’s something we’ve all got to work toward,” DelBene told reporters.

Senator Ron Wyden, the chair of the influential Finance Committee, compared the credit to other programs that “build a bond” between the federal government and the public. “Nobody would be talking about extending Social Security for one year,” Wyden told reporters on Wednesday. “I think that the child tax credit is on its way to setting up a new bond between children and families and the government.”

Senator Michael Bennet, one of the credit’s biggest proponents in the Senate, told reporters on Wednesday that he would “keep fighting to try and extend it as long as we can,” but said that he was “pleased” that permanent refundability was being discussed as an option.

Biden, for whom suburban mothers remain one of the key demographics in his electoral coalition, has emphasized his support for middle-class families during his campaign and his presidency, arguing in favor of extending the credit for longer ahead of the make-or-break midterm elections.

Although it would seem as if the credit would be popular—parents are getting $300 or $350 in their bank accounts each month, depending on the age of their child and their income—polling shows a mixed response. A Morning Consult/Politico poll released last month found that 50 percent of registered voters support the expanded child tax credit. But in bad news for Democrats’ messaging, only 47 percent believed congressional Democrats were responsible for the expanded credit, and only 38 percent believed Biden was responsible. (Speaker Nancy Pelosi has repeatedly referred to the “Biden Child Tax Credit,” a message that is clearly not being received.) Moreover, only 18 percent said that the expanded credit should “definitely” be made permanent.

A September Reuters/Ipsos poll had a more positive outlook for Biden, with 59 percent of adults supporting the credit. A survey by the conservative American Enterprise Institute found that only 45 percent of respondents supported making the credit permanent, and 53 percent said that they were concerned the credit will keep people from working. The seeming lack of enthusiasm among the public may thus translate to a lack of enthusiasm among politicians to extend it.

A September study published by the National Bureau of Economic Research found that the initial payments are associated with a 7.5 percent decline in food insufficiency. But it also reported that the lowest-income households were less likely to report receiving the credit than the highest-income households. For Americans too poor to file income taxes, the burden is on them to register to receive the credit, meaning that many people may not realize they are even eligible. As the credit is not fully reaching the people who need it the most, this could contribute to public apathy surrounding it.

Manchin had already targeted the child tax credit as a potential avenue for cost-cutting. The moderate Democrat from West Virginia has previously suggested lowering the income threshold for the credit and adding work requirements to the program. Axios reported this week that Manchin had told the White House he would support a $60,000 income threshold for families to receive the credit. Manchin’s office declined to comment to The New Republic on the report.

Senator Cory Booker, another one of the credit’s biggest supporters in the Senate, told TNR on Tuesday that a $60,000 salary in West Virginia looks very different from a similar salary in his state of New Jersey. “In high-expense states like mine, a teacher and a firefighter should qualify for it, but they would be cut off under a $60,000 threshold,” Booker said. (A new analysis by the Niskanen Center, first reported by Business Insider on Tuesday, found that a $60,000 income cap could result in 37.4 million children losing aid, including 189,000 in West Virginia.)

Booker also argued that work requirements could harm grandparents who are raising their grandchildren, or people who are unable to work outside of the home, such as for health reasons. “Anybody who’s raising kids knows that’s work and it should be valued in society. And we don’t, and that’s unfortunate,” Booker said.

There is little evidence that the child tax credit would have an effect on employment, based on studies from other countries that have offered similar benefits. The Center on Poverty and Social Policy at Columbia University released a report this month that found “very small, inconsistently signed, and statistically insignificant impacts” of the credit on employment and workforce participation. Even the AEI survey found that the credit did not affect employment for 90 percent of respondents, while 5 percent said that they would work more and 5 percent said that they would work less, resulting in a net-zero effect. A report by the Brookings Institute published last month also found that the credit would increase family social mobility in the long term.

Bennet said on Tuesday that he believed work requirements would be counterproductive and that the credit would actually help parents hold onto their jobs. “I think we’ve made it very hard for people to hold onto jobs in this country. I think the child tax credit, because it gives people the opportunity to buy a little bit of extra childcare or fix a broken car, it’s going to allow people to stay at work,” Bennet told The New Republic.