Parents will stop receiving those checks after this year if Congress doesn’t pass another bill to continue them. Democrats have said all along that they would pass another bill to keep the checks going to families and that they would use the budget reconciliation process to bypass Senate Republicans if they had to.
Democrats have been calling on Biden to include the credit and other progressive priorities in his next proposal. Reps. Suzan DelBene (Wash.), Rosa DeLauro (Conn.) and Ritchie Torres (N.Y.), along with Sens. Sherrod Brown (Ohio), Cory Booker (N.J.) and Michael Bennet (Col.), last week called the child credit expansion “the most significant policy to come out of Washington in generations, and Congress has an historic opportunity to provide a lifeline to the middle class and to cut child poverty in half on a permanent basis.”
When Democrats expanded the tax credit in the American Rescue Plan, Biden indicated he wanted to make the program permanent — or at least last past than 2021. Democrats extended for only one year in order to reduce the bill’s cost, since the checks will go to the vast majority of households with kids and will cost roughly $100 billion a year.
If extended only through 2025, the child tax credit would join a long list of individual tax cuts expiring that year. Republicans opted against permanent changes in the 2017 Tax Cuts And Jobs Act, so lower tax rates for households will all expire in four years if lawmakers don’t extend them. Congress has a long tradition of enacting tax cuts on a temporary basis and then postponing their expiration dates indefinitely.
The current cost projections for Democrats’ child tax credit expansion is off the 2017 tax law’s baseline. That year, Republicans doubled the child tax credit to $2,000 a year through 2025. In terms of budget accounting, the cost of Democrats’ proposed program will increase significantly after 2025. That could make a difference if Democrats do pursue this proposal through budget reconciliation, which limits how much lawmakers can increase the deficit.
Launching a monthly child benefit just three months after Congress passed a law is a major undertaking for the IRS. But Democrats have sought to seize on momentum from COVID-19 relief packages, which included direct payments that were so popular Congress itself received higher approval ratings as a result. The IRS has now had some practice sending checks to households, and Commissioner Charles Rettig told lawmakers this month that the child tax credit payments should start on schedule this summer.
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