MINNEAPOLIS — The final $300 monthly installment of the child tax credit has now been sent to families for 2021, and the future of the payments remain uncertain for 2022.
In November, democrats thought they had struck a deal to extend the tax credit as part of President Joe Biden's $1.75 trillion Build Back Better legislation. House Democrats approved a stand-alone infrastructure package, with the understanding that Senate Democrats would approve the larger social spending and climate policy package.
"They did it on trust that the Senate would go ahead and, after the infrastructure bill was signed into law, they would pass Biden's Build Back Better legislation by Christmas," said University of Minnesota political science professor Larry Jacobs. "We've now hit a logjam."
If passed as it stands now, Build Back Better would extend the expanded child tax credit, which includes $300 monthly checks for most families. But the checks are also a main sticking point for Senator Joe Manchin, the Democrat who will likely cast the pivotal vote.
"He's worried that, yes, they'll expand it for one year but that it's going to create a dynamic in which it will be passed and re-expanded year after year after year," Jacobs said. "It's expensive and [Sen. Manchin] is insisting on a work requirement. What he's talked about is, if the costs are allowed to continue and continue, it might contribute to the high inflation that we're seeing today."
Progressive Democrats argue that implementing a work requirement will exclude the families who need the $300 monthly check the most. Since expanding payments to those families this summer, research by the Columbia University Center on Poverty and Social Policy shows the child poverty rate fell by up to 28 percent and lifted nearly 3.6 million kids out of poverty.
On Wednesday, Manchin said he supports the child tax credit and is still negotiating a solution with Biden, but the future of the payments is far from certain.
"The challenge here for President Biden is if he goes along with Senator Manchin, the liberals and progressives in the house say they may not vote for it," Jacobs said. "I don't think this piece of legislation will pass by Christmas. It could pass before the end of the month though. I think there's a lot of momentum among Democrats. I do think Joe Manchin would like to see the bill passed, but he'd like to see the cost drop, and some changes in this child tax credit."
It's possible that Democrats could work out a deal to extend the child tax credit after the end of the year, but the Senate Finance Committee chairman says if a decision comes after Dec. 28, the IRS will struggle to make January payments.
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