U.S. Markets closed
  • S&P 500

    4,158.24
    +100.40 (+2.47%)
     
  • Dow 30

    33,212.96
    +575.77 (+1.76%)
     
  • Nasdaq

    12,131.13
    +390.48 (+3.33%)
     
  • Russell 2000

    1,887.90
    +49.66 (+2.70%)
     
  • Crude Oil

    115.07
    +0.98 (+0.86%)
     
  • Gold

    1,857.30
    +3.40 (+0.18%)
     
  • Silver

    22.14
    +0.17 (+0.77%)
     
  • EUR/USD

    1.0739
    +0.0006 (+0.0537%)
     
  • 10-Yr Bond

    2.7430
    -0.0130 (-0.47%)
     
  • Vix

    25.72
    -1.78 (-6.47%)
     
  • GBP/USD

    1.2631
    +0.0025 (+0.2021%)
     
  • USD/JPY

    127.0850
    -0.0170 (-0.0134%)
     
  • BTC-USD

    29,019.73
    +164.44 (+0.57%)
     
  • CMC Crypto 200

    625.79
    -3.71 (-0.59%)
     
  • FTSE 100

    7,585.46
    +20.54 (+0.27%)
     
  • Nikkei 225

    26,781.68
    +176.84 (+0.66%)
     

Biden aide calls child tax credit expansion a ‘basic benefit’ as Democrats begin push to make it permanent

·Senior Producer and Writer
·5 min read

With $1.9 trillion relief package now law, Americans will be eagerly awaiting their $1,400 checks expected to begin rolling out as soon as this weekend.

But White House officials have made it clear this week they are just as focused on another provision in the massive bill which – they hope – may prove to be a more durable expansion of the government’s social safety net.

The child tax credit is set to more than double, with families starting to get checks in July. It is “a way of getting at that basic benefit for every family in America that has children” to fulfill primary needs, presidential aide Heather Boushey said Wednesday in an interview with Yahoo Finance.

The new rules mean that, for 2021, families with children ages 6-17 will get $3,000 per child annually and $3,600 annually for children under 6, up from $2,000 annually.

Boushey is a member of President Biden’s Council of Economic Advisers “charged with providing the president objective economic advice.”

‘A fundamental shift in child tax policy’

Another key change coming in the new law is that the tax credit would now be distributed monthly, providing a guaranteed income stream for families at least through the end of the year. Democrats are hoping that as Americans begin seeing the checks each month, the political pressure grows for it to become permanent.

President Biden has reportedly told House Democrats that he supports permanently increasing the credit. On Capitol Hill, advocates like Rep. Rosa DeLauro (D., CT.) say that “we can forever alter the way our nation addresses children in poverty.”

NEW YORK, NEW YORK - MARCH 10: Volunteers prepare food at a food distribution for the poor inside of a church in the South Bronx on March 10, 2021 in New York City. The South Bronx, which had one of the highest Covid-19 infection rates in New York City, is also home to an estimated 60% of New York City's very low income residents.  (Photo by Spencer Platt/Getty Images)
Volunteers prepare food at a food distribution for the poor inside of a church in the South Bronx on March 10, 2021 in New York City. The South Bronx, which had one of the highest Covid-19 infection rates in New York City, is also home to an estimated 60% of New York City's very low income residents. (Photo by Spencer Platt/Getty Images)

“This is how the tax code is supposed to work,” added Rep. Richard E. Neal (D., Mass.), chair of the House Ways and Means Committee when the provision was unveiled last month.

Outside analysts have noted that making this permanent would mean a "fundamental shift in child tax policy." The new legislation does away with income thresholds to receive the credit. “I think that in and of itself is a huge shift,” Erica York, an economist at the Tax Foundation, told Yahoo Finance in a separate interview. “It's going to mean that millions of people who didn't have access to the child tax credit before now have access to it.”

'It will cut child poverty in half this year'

Boushey and other Democrats have been critical of the past response to economic upheaval saying they didn’t do enough to support people for the long term. This American Recovery Plan, which received final approval on Capitol Hill on Wednesday, is aimed at “reducing the kinds of scarring that you see on families, businesses, and communities that we saw in previous recessions,” she said.

“This whole package together is estimated that it will cut child poverty in half this year,” said Boushey, and that’s “in no small part due to this expansion of the child tax credit.” Democrats have often cited research from Columbia University that found that the overall plan would could cut child poverty in half in 2021 because of a combination of the child credit and tax credits and expansions of unemployment and food assistance benefits.

Another analysis found similar results saying the provisions in the bill “would result in historic reductions of child poverty.”

House Speaker Nancy Pelosi of Calif., and Senate Majority Leader Chuck Schumer of N.Y., pose after signing the $1.9 trillion COVID-19 relief bill during an enrollment ceremony on Capitol Hill, Wednesday, March 10, 2021, in Washington. (AP Photo/Alex Brandon)
House Speaker Nancy Pelosi of Calif., and Senate Majority Leader Chuck Schumer of N.Y., pose after signing the $1.9 trillion COVID-19 relief bill during an enrollment ceremony on Capitol Hill, Wednesday, March 10, 2021, in Washington. (AP Photo/Alex Brandon)

The child tax credit could provide an opportunity for some bipartisan support. Since its creation in the 1990s, the main prior expansions of the credit occurred under Republican presidents. President George W. Bush signed two expansions into law as part of his larger tax cut packages. President Donald Trump did the same as part of the Tax Cut and Jobs Act of 2017, but low-income households often weren’t eligible for the full benefit.

This year, Sen. Mitt Romney (R., Utah) introduced his own child tax credit expansion that would also send monthly checks to families. Romney would pay for his proposal by eliminating other government safety net spending. Sen. Mike Lee (R., Utah) and Sen. Marco Rubio (R., Fla.) have also pushed a plan to expand the credit tied to work; in a recent op-ed, Rubio came out against the Biden plan.

Rubio criticized the “no strings attached” nature of the benefit, writing “there was a bipartisan consensus that work, marriage, and community were critical pieces of poverty reduction.”

But for Boushey and many Democrats, the universality of the benefit is a big part of the point. The overall package, she said, is “an incredible step forward to addressing the ways that inequality created fragilities across our society and our economy in 2020.”

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

Read more:

'One of my goals is to make paid leave permanent': Sen. Gillibrand

$1,400 stimulus payments plus $300 monthly checks for parents in relief plan is 'critical': professor

House passes Biden's amended $1.9 trillion relief package including $1,400 stimulus checks

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit.