January 31, 2023

As Congress nears the end of its lame duck session, one of Democratic US Senator Michael Bennet’s top priorities is seeking support for yet another expansion of the child tax credit.

An expanded child tax credit was passed in early 2021 under the American Rescue Plan Act, with half of the payments going to families monthly from July through December and the other half included when families filed their taxes earlier this year. The program expired after a year, but Bennet wants it made permanent because it has significantly improved the country’s child poverty rate.

According to the US Census Bureau, the expanded tax credit has nearly halved child poverty, with the rate falling from 9.7% in 2020 to a record low of 5.2% last year.

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While a permanent expansion is what Bennet ideally desires, another temporary expansion is also a possibility if he can pull it off. During these final weeks of the 117th Congress, Bennet will be negotiating with colleagues on both sides of the aisle to see if he can gain support for yet another expansion of the tax credit.

“We should have renewed it from the start, we should never have let it lapse,” Bennet said in an interview with Newsline. “It has achieved what we promised, which is to nearly halve child poverty in America and reduce hunger by a quarter.”

First enacted in 1997, the federal child tax credit offers claimants a relief of up to $2,000 per child. The temporary expansion, modeled on legislation introduced by Bennet in 2017, increased the amount of the loan to $3,600 per child and made it fully reimbursable, allowing the poorest families to receive direct payments even if they don’t owe federal income taxes.

The expanded version of the tax credit expired after Democratic US Senator Joe Manchin of West Virginia on the Republican side to vote against a further extension of one year because it would cost the government a lot of money and how it benefits higher-income families who don’t necessarily need the loan, CNN reported.

(U.S. Census Bureau)

Bennet and a group of other Democratic lawmakers issued a statement in September saying they did not want to end the year by extending corporate tax breaks without also expanding the child tax credit. Proponents of the expanded CTC hope to use one such tax break under consideration in the Senate, known as the research and development payback fix, as leverage to extend the child tax credit again.

“In the end, we’re going to need 60 votes to pass legislation that includes both the child tax break and things like the research and development tax break — something I support but don’t think we should extend without to extend the child tax credit,” Bennet said.

Bennet said he feels good about getting the 60 votes to pass the extension if it can be included in the omnibus bill, one of the few potential means of getting the child tax credit through. But a new extension would likely look different than the one passed with America’s bailout plan, he said, because of the need to garner bipartisan support.

With Republicans taking over the House of Representatives in early 2023, lawmakers pushing for an expansion of the child tax credit believe it’s more likely to be passed before that switch is made.

We should have extended it in the first place, we should never have let it lapse. It achieved what we promised, which was to nearly halve child poverty in America.

Sarah Barnes, director of family economic prosperity initiatives at the nonprofit Colorado Children’s Campaign, said her organization is always thinking about ways to improve the economic stability of families and address the challenges they face and the Child Tax Credit is an instrument that the campaign has always supported because of its impact on child poverty.

“It’s one of the best tools we have for lifting children out of poverty, so we’ve been very supportive of it and we support the Expanded Child Tax Credit that was introduced in 2021,” Barnes said. “It kind of reinforces the evidence base on the impact of direct cash assistance for families with children, which is something we know is really important for families with children, especially when they’re young.”

Barnes said the family’s economic hardship appeared to have increased following the end of the extended child tax credit in 2021. She cited the Census Bureau’s Household Pulse Survey, which found that an increased percentage of households with children struggled to pay for usual expenses after the expansion ended, but noted that that was just one possible indicator of its impact.

A June 2021 letter from President Joe Biden announcing the start of direct payments under the Expanded Child Tax Credit. (Colorado Newsline)

Some of the key benefits Barnes said came from the expanded tax credit were that all families could access the credit regardless of income, and the predictable monthly payments.

“That really allowed families to meet their most pressing needs month-to-month, and we could see that in Colorado the most commonly reported uses of those monthly payments were things like groceries and rent, and utilities and clothing,” Barnes said. “So there is evidence that this expanded credit and payments that reached families only enabled them to meet these basic needs. We know the positive impact this has on child welfare, child development, family economic stability and all of those things.”

Speaking to families about the expanded child tax credit across Colorado, Bennet said he’s heard how much stress it relieves for them by helping them pay for everything from rent to childcare. He said the US economy has worked well for the top 10% of Americans, but not for everyone else – it’s one of the richest countries in the world but also has one of the highest rates of child poverty. The child tax credit is an opportunity to change that.

“What we’ve learned is that we don’t have to accept this tragedy as an enduring feature of our democracy or an enduring feature of our economy,” Bennet said. “It is within our power to do something about it and we have done something about it.

“It did what we promised, so it’s all the more tragic that it wasn’t renewed before then,” he added. “So I’m hoping there will be real energy to try and get it done by the end of the year.”

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