The Expiration of the Child Tax Credit Puts Democrats Under Real Pressure

Democratic lawmakers feel a growing urgency to pass President Biden’s social spending and climate legislation quickly. This is due to the upcoming expiration of the expanded child tax credit.

Congress has not yet acted, so the IRS will pay its last child tax credit on Dec. 15 without congressional action.

In order to reduce child poverty, Democrats believe monthly payments are important as want to prevent a lapse.

Senate Democratic Leader Joe Manchin (D-West Virginia) has indicated a lack of interest in passing the social spending package this year.

Meanwhile, Key Democratic figures are insistent that the expanded child tax credit will not expire despite Manchin’s reservations.

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“We are not going to have a lapse in payments. That’s too important,” Senator Sherrod Brown said.

Biden enacted an expanded $1.9 trillion tax relief law in March to ease the impact of Coronavirus on a child’s tax credit.

As part of the expansion, increases in credit amounts and credited advance payments were heightened, more so, the full credit amounts were offered to low-income families.

As of July 1, the Treasury Department and IRS began sending out advance payments to eligible under age 6 children up to $300 and no more than $250 for children between the ages of 6 and 17.

This allows families to receive tax refunds on a monthly basis rather than in a lump sum upon filing their tax returns, of which the program will end this month.

One year of expanded credit is included in the social spending package.

Ron Wyden (D-Ore.), chairman of the Senate Finance Committee, told reporters on Thursday that the IRS had requested that Congress pass a budget package for social spending by Dec. 28. Monthly payments would then be made on Jan. 15.

“We’ve got to work very hard and move quickly because of some of the logistical challenges that the IRS has in terms of the process, and I’m committed to getting it done,” he stated.

“I’m pulling out all the stops to make sure that there is no interruption.”

Democrats view the monthly child tax credit payments as a key way to help low-and middle-income families afford household expenses.

“Our view is that the child tax credit is a really important, basic support for families and that we should extend it,” commented Brian Deese, director of the National Economic Council.

“And we should extend it because it’s doing what we hoped it would do, which is dramatically reduce child poverty in America, dramatically reduce poverty in America, and give families some breathing room in a very strong but uncertain recovery.”

Also, a delay in the monthly payments could have negative political consequences for Democrats as the midterm elections approach.

In Ethan Winter’s view, Democrats have the best chances of countering the Republican messages about cultural matters, such as critical race theory, by providing concrete benefits such as the child tax credit.

“If you allow the benefits to lapse, I do think this would present a political liability for the Democratic Party,” said Winter.

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A version of social spending legislation was passed by the House last month. Chuck Schumer has reiterated that a version of the bill should be passed by Christmas in the Senate.

To pass the spending package, Democrats are now relying on an arcane process called budget reconciliation.

Democrats used the same process earlier this year to pass a law to ease the burden on victims of the Coronavirus.

They will be able to pass the package with a simple majority in the upper chamber, bypassing a potential filibuster by Republicans.

Nevertheless, all Senate Democrats will have to support the bill for it to become law, since both parties are evenly divided in the chamber.

As party leadership works to meet competing demands from members, getting all Senate Democrats behind the plan has proven challenging this year.

“The process over there can be agonizing in terms of its pace,” Massachusetts Representative Richard Neal (D) said last week.

Senator Joe Manchin has repeatedly indicated he believes Congress must wait before passing a budget, citing inflation concerns. A work requirement and a lower income limit for expanding child tax credits have also been proposed by Manchin in the past.

Manchin stated on Wednesday that any missed payments could be made up for at a later time when asked whether he felt the urgency to pass the spending package before Jan. 15, when the IRS will pay out child tax credits.

“I’ve never seen a situation where we weren’t able to make up whatever you thought time would be lost,” he explained to reporters.

Dems may be able to pass a child tax credit extension before the end of the year with the spending package. This is because reconciliation procedures will be used. A temporary extension together with a stand-alone bill might not have enough Republican support to overcome a filibuster.

“Could you get 10 Republican votes for it? I don’t know the answer to that,” Democrat Tim Kaine said.

Republicans did not support Biden’s COVID-19 relief package with expanded benefits. Meanwhile, in their 2017 tax cut law, Republicans increased the child tax credit. They criticize Democrats’ subsequent expansion of the child tax credit, claiming that the Dems eliminated work incentives.

Additionally, Republicans have expressed concern about the possibility of a rise in improper payments and fraud due to the monthly payment structure.

There have been some Republican signals that they want to reach a bipartisan consensus on how to proceed with the tax credit. They said, however, that the expanded benefit would likely differ significantly from the plan approved earlier this year under Biden.

“Unfortunately, that went to very high-income people. It was unlinked to work, and I would prefer we went back to the original formulation,” Sen. Susan Collins said.

However, the Democrats also believe that the benefit will be extended as it currently stands.

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Some insist the party put an emphasis on passing Biden’s larger spending plan by using the expansion’s current deadline.

“Let’s use this to finally make a decision to get Build Back Better done,” Kaine said, calling the tax credit expansion “the single best deadline that might get us finally to act.”

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