President Joe Biden's $1.9 trillion stimulus plan has cleared both chambers of Congress and with his signature could come a seachange for how Americans get government support, especially children.
The American Rescue Plan expands the Child Tax Credit for 2021. Families with children ages 6-17 will get $3,000 per child annually and $3,600 annually for children younger than 6. The legislation makes the benefit fully refundable, low-income families will be eligible for the full credit, and, for the first time, it shifts a portion of the credit to cash payments, giving families a direct line of relief. Under the American Rescue Plan, single parents making up to $75,000 per year and married couples who file jointly with a combined income up to $150,000 per year are eligible to receive the full amount.
Congresswoman Rosa DeLauro called the effort "transformative." The Connecticut Democrat has pushed to expand the Child Tax Credit for nearly two decades. "I have likened it to what Franklin Roosevelt did when he introduced and passed Social Security. When we did that, we lifted 90% of seniors out of poverty and now millions of children will be lifted out of poverty."
But some critics say the plan discourages Americans from working. Now questions are being raised on what comes next in the fight to make the temporary change permanent.
According to the latest U.S. Census Bureau report, 10.5 million people under the age of 18 were living in poverty in 2019, or 14.4% the lowest child poverty rate since 1973. But then the pandemic hit, pushing the poverty rate for those younger than 17 to 20.4% by September, according to an estimate from Columbia University.
"Kids living in poverty have consistently been the poorest age group out of any age group, especially in the last couple of years, more so than seniors, more than adults, and that's a failure," said Emma Mehrabi, director of poverty policy at the Children's Defense Fund.
The Child Tax Credit expansion would lift 4.1 million children out of poverty, according to the Center on Budget and Policy Priorities, and cut the remaining number of children in poverty by more than 40%.
The 2017 Tax Cuts and Jobs Act signed into law by former President Donald Trump expanded the Child Tax Credit, but low-income households did not see the full benefit. According to a 2019 study from Columbia University's Center on Poverty & Social Policy, some households were excluded from receiving the full benefit because they earned too little.
The CBPP found 27 million more children will be eligible for the full amount including roughly half of all Black and Latino children, as well as a similar share of children in rural areas.
"Imagine a single mom who makes $10,000, who works part time as a home health aide and has two kids. Currently she only receives about $600 per child from the Child Tax Credit because her earnings are so low, but with this expansion, she'll receive $3,600 for her toddler and $3,000 for her other child, which amounts to $550 a month and that provides substantial help to buy diapers, clothes, food and invest in her children's future," said Kris Cox, deputy director of federal tax policy for the Center on Budget and Policy Priorities.
The earliest checks could go out in July and would continue through the end of the year. Policy experts say they are watching to make sure payments reach the people they're supposed to help, especially those whose income is too low to have to file taxes.
The infusion of cash is a rapid shift from previous economic recovery efforts.
"Ten years ago when Congress was working on a relief package during the Great Recession, cutting direct checks to people as harm relief but also stimulus was not really a thing," said Zach Tilly of the Children's Defense Fund. He said thinking has changed since, and "direct cash is something that's seen as good, and I think that's similar to what's going on with this big change to the [Child Tax Credit]."
According to the Joint Committee on Taxation, a nonpartisan committee involved in the legislative process for tax-related issues, including the temporary expansion as part of the American Rescue Plan would cost $109 billion. If the provision is not extended, millions of families could see the recurring aid end after the holidays.
The White House and some congressional Democrats have acknowledged their goal to make the expansion permanent as part of the Build Back Better agenda, signaling they consider an investment in children an investment in a stronger economy overall.
"If you're going to provide youngsters with a better environment and circumstance in which they can grow up, they can get an education, there are less health issues, there are less [of] some of the issues associated with poverty, finishing school and being able to go off to higher education, that all reverts back to the strength of our economy," DeLauro said.
Making the expanded credit permanent could gain bipartisan support. But while Republican Senator Mitt Romney of Utah has proposed giving families a monthly cash benefit, which the government would pay for by eliminating programs such as Temporary Assistance for Needy Families, his Republican colleagues Mike Lee of Utah and Marco Rubio of Florida have criticized his plan.
"An essential part of being pro-family is being pro-work," they said in a joint statement in February. They're calling on Congress to expand the Child Tax Credit "without undercutting the responsibility of parents to work to provide for their families."
The concern is the policies will reduce employment among people who are low skilled, low educated and already marginally attached to the labor market in the long run, said Angela Rachidi, a scholar of poverty studies at the American Enterprise Institute. "Even if it's not harmful in the long run, it doesn't really offer families a path towards economic mobility if they're not connected to employment."
But other policy experts pushed back on tying the tax credit to work.
Elaine Maag, a researcher at the Tax Policy Center, said that research shows people tend to spend smaller amounts than larger sums, and payments could become part of a family's monthly budget. But Maag rejected the notion that expanding the Child Tax Credit would encourage people to not enter the workforce.
"Raising a child costs much more than $3,000 or $3,600 per year," she said. "So I don't think there will be a large flee from the labor market, or people not wanting to acquire work."
Democratic Senator Michael Bennet of Colorado, a longtime advocate of improving the Child Tax Credit, told CBS News that the expanded relief will ensure parents can move up the economic ladder.
"It gives parents the ability to have a little bit more income that they can spend to stay at work, so that an unexpected expense doesn't mean you lose your job where you can't go to work," Bennet said. "So that if your car breaks down, you can fix it and go back to work. So if a kid needs babysitting in the afternoon, you can pay for a babysitter so that you can go to work and stay at work, and be able to accrue experience and accrued income gains and increases over time."
Despite opposition, Democrats are hopeful the move will receive bipartisan support. A recent CNN poll showed that 85% of Americans, including 73% of Republicans, support the policies in Biden's relief package that would provide larger tax credits and make them more accessible for low-income families.
"There's certainly the chance for us to have a thoughtful discussion about the possibility of getting to a bipartisan result," Bennett said. "That would be great."
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