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Biden signals willingness to compromise for revival of expanded Child Tax Credit

By Sarah May on
 December 19, 2022

In a push to bring back one of the most noteworthy initiatives of his presidency to date, President Joe Biden has indicated a willingness to dramatically change course and accept work requirements in exchange for reviving the expanded Child Tax Credit as part of a year-end legislative package, as Politico reports.

The president has long opposed the imposition of such conditions on this type of anti-poverty program, and his apparent change of heart may be indicative of a sense of urgency within the administration to deliver a popular benefit to lower-income voters before Republicans take control of the House.

Continuation stalemate

As part of the 2021 Child Tax Credit expansion, the Biden administration succeeded in bolstering the ranks of Americans who were able to receive funds under the program, including – for the first time in the history of the credit – parents without jobs or income.

Census Bureau data in the aftermath of the scheme's implementation suggested that the receipt of up to $3,600 in extra benefits paid out monthly resulted in an historic decline in child poverty, reducing the number of youngsters falling into that category by almost half, as Politico noted.

However, the disbursement of those funds ceased in December of 2021, and GOP lawmakers as well as Democrat Sen. Joe Manchin (WV) declined to support a continuation of the program due to concerns about rapidly escalating inflation.

Though Manchin, for his part, suggested that his tone could change if payment of the funds became contingent on means testing and work requirements for parents, the president held firm in his belief that eligibility should not be tied to such factors, and as such, Democrats were unable to include expansion of the scheme in debate over the Inflation Reduction Act spending package passed earlier this year.

“Huge flip” observed

Soon after the expanded tax credit provisions expired, the declines in child poverty that had been touted by the White House began to evaporate, according to Politico, citing research from Columbia University's Center on Poverty and Social Poverty.

According to studies, roughly 4 million American children reverted into poverty once their parents stopped receiving the added boost to their monthly income.

Megan Curran, policy director at the Center on Poverty and Social Policy, explained the situation by noting, according to the U.K. Guardian, “Once January 2022 hit and the monthly deposit did not hit families' bank accounts, we saw an immediate sort of reversal, and there were 3.7 million more children in poverty in January 2022 compared to December 2021. And so that's a huge flip of what the circumstances were for kids.”

Urgent push

Now that there are only weeks left until control of the House of Representatives is transferred to Republicans, the administration and Democratic lawmakers are engaging in a frenzy of legislative movement, a sign of the real urgency felt on issues including the revival of the expanded Child Tax Credit.

“All of us working on this issue feel like this is it, this is it, this is the moment. The politics don't get easier next year with divided government,” stated Adam Reuben of the Economic Security Project Action advocacy group.

As the Guardian noted, Democrats are now offering a sort of trade to Republicans in hopes of fulfilling the president's goals, namely, they will agree to extend Trump-era corporate tax breaks, provided the expanded child tax credit is brought back.

Rep. Rosa DeLauro (D-CT) declared, “We should not provide any of these extensions unless it's coupled with an extension and expansion of the child tax credit. If businesses and corporations can get the benefits of this, working families, middle class families, vulnerable families, need to have a child tax credit.”

As Politico noted, however, wrangling over the specifics of a possible revival of the expanded Child Tax Credit is still in the early going, and Senate Minority Leader Mitch McConnell (R-KY) has expressed a desire to come to broad consensus on an omnibus funding measure before such ancillary matters are tackled, and the end-of-year timeline is getting extremely short.

Both sides, however, seem to acknowledge that the focus this time around will likely have to be on widening the pool of potential credit recipients at the existing $2,000 annual level, rather than increasing the amount of payments themselves, as occurred in 2021. Regardless, most agree that, as one insider involved in key discussions told Politico, “Something insane would have to happen for there to be no work requirement,” and it appears that Biden has come to terms with that.

Broader strategy afoot?

It is not surprising that the increased availability of Child Tax Credit funds – which were paid out in monthly installments for the final six months of 2021 – went a long way toward improving circumstances for poor children across the country, something that was not lost even on Americans who might not agree with the current president on much, if anything, else.

Politico cited a recent poll of Trump voters in which 70% of respondents stated that the expanded Child Tax Credit of 2021 positively impacted their household finances and that a majority of them characterized the disbursement as tax relief, not a social welfare program.

However, some critics worry that Biden and his allies are looking to do more than just bring back one of the administration's signature – and perhaps most popular – accomplishments in the name of cutting childhood poverty but are actually hoping that creating a reliance on regular government checks disguised as tax relief will put the nation on a path toward accepting – or indeed demanding – something resembling a universal basic income.