Stimulus Update: Surprising Allies Join the Fight for a Renewed Child Tax Credit
- Republican Mitt Romney is leading an effort to reinstate monthly Child Tax Credit payments.
- Romney's plan will leave 3.5% of very poor Americans with little (or no) assistance.
A small group of Republicans are now calling for monthly Child Tax Credit payments.
Several Republican senators have joined scores of Democratic lawmakers in calling for the U.S. to reinstate Child Tax Credit payments. For more than a year, Democrats like President Joe Biden, Senators Sherrod Brown, Michael Bennet, Cory Booker, Ron Wyden, Reverend Raphael Warnock, and Vice President Kamala Harris have advocated for regular Child Tax Credit payments to help families struggling to feed and clothe their children.
In May, Sen. Bernie Sanders spoke from the Senate floor, saying that the Senate has "strange priorities," for fighting so vociferously against a program that helped lift 3.7 million children out of poverty during the worst of the pandemic. Instead, Congress passed a $53 billion bill to help the microchip industry. Food insecurity was not addressed.
Today, rather than support the Child Tax Credit plan pushed for months by their Democratic colleagues, three Republicans have staked claim to a plan of their own. "The Family Security Act 2.0," is meant to "encourage work" and "support pregnancy." Under this plan, eligible parents would receive $350 per month for each child age 5 or younger, and $250 for children ages 6 to 17. The bill was introduced by Sen. Mitt Romney and is co-sponsored by Sens. Richard Burr and Steve Daines.
This new plan also proposes that pregnant mothers receive an extra $2,800 -- or $700 a month for the last four months of their pregnancy.
What made the original expanded Child Tax Credit special
The basics were quite straightforward: The existing $2,000 credit per child was raised to $3,600 for children ages 5 and younger and to $3,000 for children ages 6 through 17. If a parent opted in, half the credit was sent in monthly payments, beginning in July 2021 and ending in December. The other half of the credit was collected when 2021 tax returns were filed.
But what was exceptional about the bill is that it allowed parents who typically earned too little to file income taxes to receive the same payments. According to the Center on Budget and Policy Priorities, this helped reduce childhood poverty by more than 40%.
Payments helped so many that former Treasury Secretaries Robert Rubin and Jacob Lew, wrote an op-ed in the New York Times, calling to make the Child Tax Credit permanently available to families with little or no income. According to Rubin and Lew, even if the Child Tax Credit remained capped at $2,000 per child, child poverty would be reduced by 20%.
Fly in the ointment
In what has become his typical stance, Sen. Joe Manchin refuses to support the renewal of Child Tax Credit without a work requirement, and many Republicans agree.
And it's those Republicans (along with Democrat Manchin) who will determine whether the Child Tax Credit will find new life. To address those concerns, Romney made a change to his original proposal. His new plan dials back the amount a family earning less than $10,000 can collect, making it proportionate to their claimed income. Approximately 3.5% of American families earn less than $10,000, according to the U.S. Census Bureau.
Potential income limits
If the bill manages to get through the House and Senate, the upper income threshold for this new plan would be $200,000, or $400,000 for couples filing jointly. At that point, payments would phase out.
According to Romney, "People need to be participating in the workplace."
To fund the plan, Romney wants to "reform" the current federal earned income tax and Child Tax Credit, and eliminate the state and local tax deduction.
An uphill battle
It's a bit early to expect extra funds in your bank account just yet. Romney will need a supermajority of 60 Republican votes, giving him a steep hill to climb. On the whole, Republicans have shown no appetite for continuing any Biden-era policies. In addition, Democrats are unlikely to support a plan to cuts millions of very poor families out of the equation by attaching work requirements and income limits
Perhaps the good news is that talk of a permanent Child Tax Credit is not dead and there are still those -- on both sides of the political aisle -- concerned enough to raise the issue.
Alert: our top-rated cash back card now has 0% intro APR until 2025
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2024 The Ascent. All rights reserved.