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How Joe Biden’s Big Child Tax Credit Bet Could Pay Off

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How Joe Biden’s Big Child Tax Credit Bet Could Pay Off

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WASHINGTON Democrats want monthly cash benefits for parents to continue forever, but their Build Back Better bill would extend the improved child tax credit for just one year.

The shorter extension made fiscal space for other priorities, and Democrats think it sets up a political fight they can win in more ways than one, as Republicans will struggle to say no to maintaining the benefits.

“They’re going to have a hard time answering that,” Senator Sherrod Brown (D-Ohio), a leading supporter of the policy, told HuffPost.

“They’re going to face a lot of parents who are going to say, ‘Are you going to stop this? Why are you going to stop this? ‘ Because it made such a difference in life, ”said Brown.

Democrats expanded the child tax credit as part of the US bailout earlier this year, asking the IRS to advance the credit through monthly repayments to 36 million households with children. Early data suggests the policy has already reduced child poverty by 25% in September.

Continuing monthly payments until next year has been a key part of the Build Back Better program, which also includes a universal preschool, child care subsidies, expanded health insurance coverage, and initiatives to support children. ‘green energy.

Democrats have rejected Senator Joe Manchin’s (DW.Va.) demands to deny family allowances to high-income households and those with no working income, but they only extend it until 2022, instead of 2025 as originally planned. That frees up about $ 300 billion to fit other programs into the $ 1.75 trillion bill. They initially chose 2025 as the expiration date because that’s when the 2017 Republican tax cuts expire, setting up easy trade – Democrats would agree to continue tax cuts and Republicans would support family allowances.

Senator Sherrod Brown (D-Ohio) interviews Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell during a hearing on the results of the CARES Act coronavirus relief program on September 28, 2021.

KEVIN DIETSCH via Getty Images

Passing another major bill to extend child benefits next year would not be an easy task, and there is a real risk that Democrats will fail to save the payments. Rep. Kevin Brady (R-Texas), the House’s top Republican on tax policy, said he would not be interested in keeping the tax credit in its current form.

“It drives workers out of the workforce, and it’s something that we just can’t have right now,” Brady told HuffPost, expressing the standard Republican belief that any government support will make workers less desperate for it. a job.

But Democrats may wish to talk about the need for another extension of the child tax credit when they campaign midway through next year, when they are generally expected to lose control of the House of Representatives. .

“We need to turn this election from a referendum into a choice,” said Ian Russell, a Democratic publicist and former political director of the Democratic Congressional Campaign Committee.

In other words, vote Democrats, or your monthly allowance will be gone. (The program pays parents $ 300 per month for each child under 6 and $ 250 per month for children under 18.)

“We have the option of saving the mid-term if we can make it a choice between Democrats who want to do ABC and Republicans who want to do XYZ,” Russell said.

When asked if Democrats would campaign to save credit, Brown said, “If their IQ is over 70, they will.”

“They’re going to face a lot of parents who are going to say, ‘Are you going to stop this? Why are you going to stop this? ‘”

– Senator Sherrod Brown (D-Ohio)

Progressive Democrats have advocated cramming as many new policies as possible into Build Back Better, even if that means reducing the length of those policies, assuming people will like the new stuff so much that they will ask for more.

Moderates prefer to do less political news for longer. “I have little confidence that a future Republican-controlled House or Senate would expand the enhanced child tax credit or other democratic priorities without significant erosion,” Representative Suzan DelBene (D-Wash.) Said earlier, President of the New Democrat Coalition. this month.

Fighting for expiring benefits will make people pay more attention to politics, said Lee Drutman, political scientist and senior researcher at New America. Drutman criticized Democrats for calling monthly cash payments a “tax credit” or “tax cut” instead of a bonus or child allowance because taxes are confusing and confusing. people generally think of tax cuts as a Republican thing.

But if the tax credit becomes a political fight, and the Democrats pose as the ones who want to save the credit even though they are also the ones setting the deadline – then they would have a winning case.

“People value the things they already have more than the things they don’t have,” Drutman said.

Senator John Thune (RS.D.) said he was unsure whether Democrats were really capable of such a budgetary and electoral ploy. “They haven’t done much here that seem very organized or aware of what they’re doing,” Thune said.

There is no guarantee that Democrats could bully Republicans into supporting the continuation of the child tax credit. After all, last month Democrats gathered just 10 Republican votes in the Senate for a measure to allow the federal government to pay its bills, even if a default could trigger a financial crisis.

Perhaps this is the reason Democrats included an apparent back-up plan in the latest Build Back Better draft. The full credit extension from $ 2,000 to $ 3,600 per year per child, with early monthly distribution, expires after one year – but “full refundability” would be permanent under the legislation. This means that even if Congress let advance payments and an additional $ 1,600 expire, low-income parents could still receive lump sum checks worth $ 2,000 per child after they file their taxes.

Merely maintaining full repayment, on its own, would reduce child poverty by 19% on an annual basis, according to an analysis by the Jain Family Institute. Full repayment plus extra money reduces poverty by 40%.

Sen. Mitt Romney (R-Utah), who came up with his own version of a child allowance last year, called the one-year extension a “gimmick that is really not appropriate for families who s ‘question their future’. But he suggested Congress would not leave families on hold.

“There’s going to be help for families with kids, there’s no question,” Romney said.

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