Patrick Semansky/AP Photo
Vice President Kamala Harris encourages Americans to take advantage of tax credits, including the expanded Child Tax Credit and Earned Income Tax Credit, February 8, 2022, in the South Court Auditorium on the White House campus.
When the Child Tax Credit lapsed in January, 3.7 million more children reverted to poverty, according to authoritative research by the Columbia University Center on Poverty and Social Policy. That’s a 41 percent increase—and a national disgrace. For Black kids, the increase was even more dramatic.
Congress enacted the nearly universal Child Tax Credit of up to $3,600 per year per child as part of the March 2021 American Rescue Plan Act (ARPA). The effect was revolutionary—a decline in the child poverty rate of almost half.
The legislation authorized these payments, in effect a universal basic income for families with kids, for only one year, to hold down the total budget impact. The political wager was that the program would prove so popular that it would be extended as part of what became the 2022 reconciliation bill, known as Build Back Better. Last summer, as that bill was taking shape, the debate between progressives and centrists was whether to make the credit permanent or just extend it for five years.
But that was before Joe Manchin and Kyrsten Sinema went rogue. Now the question is whether any form of the Child Tax Credit will survive in what remains of Build Back Better.
Manchin has spoken of supporting it, but with strict income limits. That’s not a good idea because it creates what are called “cliff effects”—as your earned income rises, you fall off the cliff and lose benefits. It also makes the program less popular with middle-class voters.
The Child Tax Credit was the most potent new anti-poverty program since Medicaid. It is also perfectly efficient—no middlemen, no application hassles—the government sends you money, just like a Social Security check. And just like Social Security, the benefits are taxable, so that takes care of the problem of “leakage” to the upper middle class.
Critics will long debate whether it was a blunder not to lock in a longer-term Child Tax Credit last March, when the recession was still raging and when Democrats had the party discipline and the votes. But if the Democrats can’t make the case for saving the credit and make its continuation good politics, the party is not worthy of the name.
