Biden Admits That Boosted Child Tax Credit May Not Be Possible for 2022

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  • President Biden's spending bill, which includes an extension of the expanded Child Tax Credit, is stalled in the Senate.
  • The president just acknowledged that another year of boosted payments may not be in the cards.

Unfortunately, that's not what Americans want to hear.

Though the Child Tax Credit has been around for a long time, in 2021, its value got a tremendous boost as part of a larger stimulus bill. Last year, the enhanced Child Tax Credit was raised up to $3,600 for children under the age of 6 and up to $3,000 for those aged 6 to 17. Prior to that, the credit maxed out at $2,000 per eligible child.

Another big change that took place in 2021 was that half of the enhanced Child Tax Credit was paid in the form of monthly installments. Those payments hit recipients' bank accounts from July through December and helped many families stay afloat in the wake of economic distress from the pandemic. Those payments were also a boon to households that were struggling in the face of inflation -- an issue that still persists today.

President Biden had every intention of keeping the enhanced Child Tax Credit around in 2022. In fact, he wrote that boost into his Build Back Better plan.

Unfortunately, that spending bill has been stalled in the Senate for weeks, due largely to opposition by Democratic Senator Joe Manchin, whose support is desperately needed to get it passed. And now, President Biden is conceding that he may need to remove legislation around the boosted Child Tax Credit to push his bill through, leaving countless families out in the cold.

A potentially devastating blow

The enhanced Child Tax Credit helped many families shore up their finances during the latter part of 2021 and recover from the blow the pandemic dealt them. But in the absence of those boosted payments, many households could once again fall behind on their bills and plunge deep into debt -- or, worse yet, below the poverty line.

President Biden initially wanted to keep the enhanced Child Tax Credit around on a permanent basis. That proposal was then whittled down to a one-year extension in an effort to reduce the cost of his massive spending bill. But now, Biden may be reaching the point where he pulls that provision out of the Build Back Better plan since it's a known sticking point. That way, some less-controversial measures can pass, after which Biden would then have the option to go back and find ways to fight for the enhanced credit to stick around.

If the boosted Child Tax Credit is removed from the Build Back Better plan, though, it could end up being its death knell. Families who were relying on another year of monthly payments may be left in the lurch.

The end of stimulus aid

While it's easy to make the case to keep the enhanced Child Tax Credit around for 2022, the reality is it's also easy to argue that it, along with other types of stimulus aid, are no longer needed given the state of the economy. In December, the national jobless rate fell to its lowest level since the start of the pandemic. With a strong labor market, it's easy to see why some lawmakers aren't eager to send monthly checks out to so many households.

But while those monthly payments may have served as a bonus check for relatively well-off families, for others, they've been a lifeline. Pulling that plug at a time when living costs are so much higher could have devastating results.

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