Skip to main content

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

Biden maintains hope that Congress will give families a break. 

Image source: Getty Images

President Joe Biden is big on “pocketbook issues.” These are the financial concerns that hinder financial success for everyday families. For example, Biden is concerned about the amount of money Americans pay in junk fees each year. Another is how many children fell back into poverty when Congress refused to extend the expanded Child Tax Credit at the end of 2021. To that end, the president is urging members of Congress to reinstate the expanded Child Tax Credit. Here, we look at why a push for an expanded Child Tax Credit remains and what the proposal is up against.

The rationale

While political pundits focused on the president’s suggestion that the U.S. raise taxes on billionaires, there was another — less discussed — issue raised in the State of the Union Address, and it involved the expanded Child Tax Credit.

Most financial policies take years to bear fruit, but within weeks of the first expanded Child Tax Credit check hitting bank accounts, child poverty fell dramatically. Families in the midst of the pandemic could take a break from worrying about where they were going to get their next meal.

Further, despite concern from conservatives in Congress, researchers found no evidence that expanded Child Tax Credit payments discouraged work among parents.

When Congress failed to carry the expanded Child Tax Credit into 2022, millions of children fell back below the poverty line, almost immediately.

The Center on Budget and Policy Priorities writes: “The success of the 2021 expansion showed us that high child poverty rates are a policy choice, not an inevitability.”

The pushback

As with most things in life, there are two sides to every issue. Here are three thorny issues currently slowing progress.

Work requirement

One thing the expanded Child Tax Credit did was make the credit fully refundable. Even if a parent could not or did not work, their child was covered under the extended Child Tax Credit. Once the credit reverted back to its pre-pandemic form, the children of very low-income parents were once again out in the cold with no access to those expanded Child Tax Credit funds.

One of the major sticking points with the expanded Child Tax Credit is that many Republicans believe there must be a work requirement attached. If a parent can’t or will not work, their children should not have the benefit of the Child Tax Credit. Most Democrats say that the credit should become fully refundable so money finds its way to the nation’s poorest children, whether their parents hold a job or not.

An unpopular study

As mentioned, a Columbia University study found no evidence that expanding the Child Tax Credit discouraged parents from working. Still, conservatives disagree, insisting the study is flawed. In return, Democrats question the legitimacy of a University of Chicago study estimating that an expanded credit would cause 1.5 million parents to quit working. Instead, they point to studies from the National Bureau of Economic Research and Rutgers University that disagree with the University of Chicago findings.

In other words, everyone has an expert witness.

Trade offs?

In December, before the swearing in of the 118th Congress, it looked like there might be hope for an expanded Child Tax Credit. Republicans asked for two things:

A work requirement be imposed on any household receiving Child Tax Credit funds.A cut in the corporate tax rate before the end of the year.

While it didn’t work out in 2022, there’s a chance that both demands will be back on the table when the Child Tax Credit is once again debated.

While politicians may view an expanded Child Tax Credit through red or blue lenses, the American people appear to be less confused. A recent poll by the family policy group Humanity Forward surveyed Trump voters living in red states. The poll found that 70% of those GOP votes felt that President Biden’s expanded Child Tax Credit had a positive impact on their financial situation. More than 50% also viewed Child Tax Credit payments as tax relief rather than “welfare.”

No one knows for sure whether Congress will make the expanded Child Tax Credit permanent, but we do know that millions of Americans are in favor of the move. They’re not looking for cash to invest in the stock market, but a little extra to cover basic necessities.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

Leave a Reply