Stimulus Update: Monthly Cash Payments May Return for Children and Families -- But With a Few Big Changes

The end of the monthly Child Tax Credit had a big impact on families, but a new proposal could reduce some of the financial burdens that millions of parents are facing.

There is no question that the expanded Child Tax Credit benefits had a positive impact on millions of low- to moderate-income households in 2021. The $250 to $300-per-child payments that were issued to bank accounts and mailboxes from July to December of last year made a big difference for cash-strapped households, many of which were struggling to make ends meet due to the pandemic.

But those monthly payments -- as well as the other benefits of the enhanced tax credit -- came to an end for good late last year, despite numerous calls to extend the program for another year. While numerous Democratic lawmakers pushed hard to extend the program for another year, there were lawmakers opposed to the idea on both sides of the aisle. Without an agreement on an extension, Senate lawmakers simply opted to let the program, and the monthly payments, expire instead.

The loss of these monthly Child Tax Credit payments has resulted in millions of American families facing renewed financial hardships with no end in sight. And, while the program ended just a couple of months ago, new data shows just how badly families are struggling without the extra cash boost. This has led one prominent conservative lawmaker to propose a return of monthly payments for American families, but the program would come with a few big changes. Here's what you should know about the new proposal.

What to know about the push for new monthly payments to families

Republican Sen. Mitt Romney has recently been pushing for more monthly payments for families as part of the Family Secure Act. The goal of Romney's bill is to offer a Republican-friendly version of the enhanced Child Tax Credit that could garner support from both sides of the aisle.

But while the idea is to fill in the financial gaps left behind by the end of the enhanced tax credit program, it's important to note that Romney's bill would not be an extension of the tax credit program that ended in 2021. Rather than extending the monthly Child Tax Credit payments for another year, the bill would provide a monthly child allowance for families who qualify instead.

This allowance would give parents a maximum monthly payment of $350 for each young child. Pregnant mothers would also qualify for the $350 maximum payment for up to four months. And, parents and guardians of school-aged children would be eligible for $250 for each child under the proposal.

This program would also be expanded to be made available to a wider range of income brackets. Single filers would be eligible to qualify with incomes of up to $200,000 per year, and joint filers could qualify with incomes up to $400,000 per year. That differs significantly from the enhanced Child Tax Credit payments, which had much lower income caps.

However, the maximum allowance under Romney's proposal would be $1,250 per month per family, which means that larger families would not receive payment for every child in the household. And, the proposal includes a few other big changes compared to last year's enhanced Child Tax Credit program -- a few of which could be detrimental for families.

The significant changes worth noting in the new monthly direct payment proposal

If passed, Romney's direct monthly payments would likely benefit many families across the nation. That said, the bill could also be a hard sell for Democratic lawmakers, as it includes numerous controversial requirements or changes. These include:

A new work requirement

Romney's proposal includes a work requirement that would require parents and guardians to be employed in return for the extra monthly payments. This requirement could also require parents to show proof of employment to take advantage of the payments.

It's worth noting, though, that work requirements were not included in Romney's original proposal, but were added after the Democrats struggled to get Senator Joe Manchin on board with an extension to the Child Tax Credit without a work requirement in late 2021.

A repeal of the TANF program

Romney's version of extra monthly payments for families would also come with a repeal of the Temporary Aid for Needy Families (TANF) program, which is a federal assistance program that provides temporary cash assistance to vulnerable families. Only about 3% of families nationwide receive benefits through this program, but ending TANF could still be devastating for these households.

Other notable changes

Romney's proposal would also consolidate some tax benefits and eliminate the State and Local Tax Deduction. And, it may also have an impact on other social programs, which could further impact households across the nation. The program would also be administered by the Social Security Administration rather than the IRS.

Whether or not this proposal will garner enough bipartisan support to land on President Joe Biden's desk still remains to be seen. Work requirements like these have been a hard sell among Democratic lawmakers in the past, and would likely be a hard sell this time around, too. The other controversial components of the bill, like the end of the TANF program, may also prove too difficult to overcome. That said, it's too early to tell what will happen with the bill as it makes its way through the proper channels.