|Congress isn't holding any major votes today, and President Joe Biden isn't slated to deliver a landmark address. |
But this is a significant day for the Biden presidency nonetheless, as a key policy initiative of his administration begins to be enacted and a longtime dream of many anti-poverty crusaders is finally realized.
Today is when the first installments of Biden's enhanced Child Tax Credit will be sent to families across the country. The U.S. has had a Child Tax Credit (CTC) in some form since 1997, but the American Rescue Plan Act of 2021 — the $1.9 trillion stimulus package signed into law by Biden in March — expanded the benefit substantially.
For one thing, the tax credit was increased to $3,600 a year per child under 6 years old and $3,000 a year per child 6 to 17 years old, from the previous $2,000 a year per child up to 16 years old.
Secondly, the credit was made fully refundable (meaning that taxpayers can benefit even if they don't have any earned income and don't owe income taxes) and the previous $2,500 income floor was removed — meaning that poor families without an income will receive the benefit, unlike in past years.
And finally, the benefit will be available this year for the first time as a monthly payment rather than a lump sum at the end of the year.
That means that most American families will receive $300-a-month per child 6 years old and younger and $250-a-month per child 17 years old and younger.
Those first monthly payments are being sent by the Internal Revenue Service (IRS) today — by direct deposit if the agency has bank account information for a family, or by check otherwise. (Families can use this IRS portal to provide or update their bank account information or to unenroll from receiving the payments monthly.)
According to the Treasury Department, a total of almost $15 billion will be paid today to about 39 million families, covering nearly 60 million children. Per an estimate by the non-partisan Tax Policy Center, 92% of families with children will receive an average of $4,380 through the expanded CTC this year; previously, 89% of families received an average of $2,310 annually through the tax credit.
(While there is no income floor for the new CTC, there remains a ceiling, which is why not all families will receive it: the tax credit begins to phase out for jointly filing couples making more than $150,000, single filing individuals making more than $75,000, or single parents making more than $112,500. Families can check their eligibility here.)
Experts project that the new benefit will cut child poverty nearly in half. According to an analysis by Columbia University's Center on Poverty and Social Policy, the expanded CTC will slash the child poverty rate to 7.5% from its current rate of 13.6%, a 44.9% reduction.
The same analysis projects that the poverty rate will be reduced by 45.4% for Hispanic children, by 52.4% for Black children, and by 61.5% for Native American children.
This change is more than just a tweak in tax law: it marks a momentous shift in U.S. efforts to combat poverty. The enhanced tax credit is essentially the nation's first experiment with a monthly national child allowance, a policy already adopted by Great Britain, Germany, and a litany of other countries.
"For the first time in our nation's history, American working families are receiving monthly tax relief payments to help pay for essentials like doctor's visits, school supplies, and groceries," Treasury Secretary Janet Yellen said in a statement. "This major middle-class tax relief and step in reducing child poverty is a remarkable economic victory for America — and also a moral one."
However, the expanded tax credit also has its critics: Republican lawmakers, who voted unanimously against the March stimulus package, have decried the elimination of the income requirements for the benefit, saying it removes an incentive for Americans to find work.
"Not only does Biden's plan abandon incentives for marriage and requirements for work, but it will also destroy the child-support enforcement system as we know it by sending cash payments to single parents without ensuring child-support orders are established," said Sen. Marco Rubio (R-FL), who was a chief advocate for the most recent expansion of the CTC, as part of the Trump-era tax cuts in 2017.
"The Biden Child Allowance is anti-work, and it certainly isn't pro-family. No one should be fooled."
Democrats are preparing to launch a full-court press to showcase their new benefit to the public. President Biden and Vice President Kamala Harris will deliver remarks on the tax credit today, as will House Speaker Nancy Pelosi (D-CA), Senate Majority Leader Chuck Schumer (D-NY), and other Democratic lawmakers.
The Democratic National Committee (DNC) and other party groups also released a new digital ad this morning about the tax credit, previewing how the party is expected to trumpet the new payments while campaigning in the 2022 midterms.
Their efforts take on particular import after recent findings by a pro-Biden super PAC that voters were largely unaware of the provisions in the American Rescue Plan and the president's other policies, a dynamic Biden is hoping to change as he strives to keep his party in control of Congress next year.
At the same time, a legislative fight over the future of the Child Tax Credit is brewing. The American Rescue Plan Act only made changes to the CTC for one year: after December, the tax credit will revert to its previous form. (Because the monthly payments are only starting now, that means families are scheduled to receive six monthly payments this year. The other half of their tax credit will be dolled out at the end of the year.)
However, Democrats are hoping to use the upcoming budget reconciliation process to extend the enhanced version of the tax credit. President Biden has proposed extending the expanded tax credit through 2025; according to the Wall Street Journal, the $3.5 trillion budget framework announced on Tuesday is likely to extend the credit through 2024.
From there, Democrats hope that the tax credit becomes such an integral part of the American social safety net that it will be impossible to undo and eventually made permanent.
"This is a day worth celebrating," said Rep. Rosa DeLauro (D-CT), who has been pushing to expand the Child Tax Credit for decades, "but let it be just the beginning."
Gabe Fleisher, Wake Up to Politics, July 15, 2021.
July 15, 2021
Voices4America Post Script. Today the Biden Administration helps our children. Today, the Biden Administration lifts half of America's children out of poverty. Now we must make these payments permanent - as we help families get their financial footings, post Pandemic. #ILoveJoe
Here is CNN's analysis.
This is what the President said. https://twitter.com/potus/status/1415711617715691529?s=21