TAX CREDIT HOLDING UP LEGISLATION
Manchin gives Biden his own outline for domestic policy plan
Amid the swirl of recriminations and second-guessing that followed the announcement by Sen. Joe Manchin, DW.Va., that he would not support President Joe Biden’s signature domestic policy plan, one point of contention stood out: their differences over an expansion of the child tax credit.
The legislation would extend a program under which most families have been receiving monthly payments of up to $300 per child. The program had long been seen by most Democrats as a cornerstone of their social welfare plan, hoisting millions of children out of poverty while giving new support to the middle class. And they had hoped to make it a central plank of their midterm campaigns, evidence that Democrats could deliver real help to struggling families.
But in opposing the sprawling climate, social spending and tax bill as written, Manchin has been clear about his deep qualms with the cost and structure of the current credit, vacillating between rejecting an extension outright or demanding new limits such as work requirements for parents.
Without passage of any legislation before the end of the year, families will have received their last payment under the current plan on Dec. 15, losing a stream of money that has helped parents cobble together healthier meals, facilitate car repairs and cover utility bills. It could
be particularly devastating for families in West Virginia, where an estimated 50,000 children could slip deeper into poverty.
“Having this be a cash benefit that can go to food if it’s needed, or clothing if it’s needed, or build savings — that flexibility is really important,” said Kelly Allen, executive director of the West Virginia Center on Budget & Policy. “Families know what they need.”
Resolving the differences between the administration and Manchin over the proposal,
all while retaining the support of nearly every congressional Democrat — Republicans are opposed — will be crucial for party leaders as they seek to revive the package next month, when Congress is scheduled to return from its winter recess.
On Tuesday, Manchin went to the White House and put forward his own outline for the domestic policy plan, which included money for universal prekindergarten, child care and some environmental provisions, but did not include
the one-year extension of the child tax credit, according to people familiar with the offer.
Biden, pressed Tuesday about whether a deal could be salvaged, sought to downplay his administration’s frustrations with Manchin and insisted that he believed there remained a chance for the package, known as the Build Back Better Act, to become law. He named the child tax credit as a crucial element that would help parents across the country.
“Sen. Manchin and I (are) going to get something done,” he concluded.
Senate Democrats were set to convene a rare evening caucus call Tuesday to discuss their path forward, with both the domestic policy package and voting rights legislation in limbo without Manchin’s support.
Congress expanded the scope of the child tax credit through the end of the year as part of the $1.9 trillion pandemic relief law, which cleared Congress with just Democratic
votes, including Manchin’s. Democrats hope to extend it and ultimately make it permanent.
The credit, first established in the late 1990s, was increased to cover more families and restructured to allow direct monthly payments this year of up to $250 a child, or $300 for a child younger than 6. It also became fully refundable, meaning families did not need to provide proof of income or owe federal income tax to receive the payment.
Of the country’s 74 million children, nearly 9 in 10 qualified. In an October Census Bureau report that tracked how about 300,000 recipients spent their first three payments this summer, researchers found that about half of families spent part of the money on food. Others said they used the money to help pay their rent, mortgage, utilities, child care and school expenses.
As Democrats hailed the payments hitting their constituents’ bank accounts this year, Manchin balked at the cost of the one-year extension, arguing that it was misleading given that there were ambitions to make it permanent, a step that would cost about an additional $1.5 trillion over a decade, according to the Congressional Budget Office.
It remains unclear whether Biden and other Democrats in Congress would give in to Manchin and curtail or remove the tax credit, after months of vowing to make it permanent. Without Manchin’s support, Democrats have little chance of passing the broader legislation or pushing the child tax credit extension as a standalone bill.