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Politics and Government

How Michael Bennet plans to ensure the Child Tax Credit expansion lasts longer than a year

The policy, which essentially provides guaranteed income for the vast majority of Americans with children, was included in the $1.9 trillion coronavirus aid bill. There’s no guarantee it won’t go away in 2022.

U.S. Sen. Michael Bennet answers questions during a press meeting at New Hampshire's State Capitol Building on Nov. 6, 2019. (Moe Clark, The Colorado Sun)
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Michael Bennet on Wednesday floated the idea of bypassing the U.S. Senate’s filibuster rule to extend the Child Tax Credit expansion beyond its 2022 expiration date through a parliamentary process known as budget reconciliation. 

The process requires only a simple majority to advance some legislation, as opposed to conventional measures that must secure the support of 60 senators to advance.  

Budget reconciliation was how Bennet and other Democrats in the U.S. Senate passed the $1.9 trillion coronavirus aid bill last week without any Republican votes. That bill is the vehicle through which the Child Tax Credit was dramatically broadened for one year to essentially provide guaranteed income for most Americans with children.

Now the challenge for Bennet — who has been working on the policy for years and made it central to his unsuccessful 2020 presidential campaign — and other Democratic supporters of the expansion is how to continue it in 2022 and going forward. 

“It may even be in this next reconciliation package that we’re able to get it done there,” Bennet said during a Colorado Sun virtual event. “It’s certainly eligible for that.”

Bennet said he would prefer to secure bipartisan support to make the Child Tax Credit expansion permanent. But the reconciliation process provides an alternate, partisan path forward for what has been hailed as one of the most progressive social policies to pass in decades. Bennet’s office expects the next reconciliation package to be negotiated during the Senate’s next work period, which begins April 12.

“I think we’ll find a way,” Bennet said. 

MORE: How the $1.9 trillion federal coronavirus aid bill will affect Colorado and Coloradans

Here’s how the tax-credit expansion works: 

Currently, taxpayers can claim a child tax credit of up to $2,000 for each child under age 17 who is a citizen. If the credit exceeds taxes owed, families can receive up to $1,400 per child as a refund. Other dependents (such as children ages 17-18 and full-time college students up to age 24) can get a nonrefundable credit of up to $500 each.

Under the expansion passed under the American Rescue Plan, families can receive up to $3,600 for each child ages 5 and under and up to $3,000 for other children up to age 17. Though it’s a tax credit, the money is slated to be sent out in installments before people would traditionally begin to receive refunds and people can get paid even if they have no tax bill. 

To be eligible for the full benefit, a married couple must have an adjusted gross income of $150,000 or less. A head of household with an adjusted gross income of up to $112,500 and single filers who make up to $75,000 are fully eligible. 

The credit, which is in effect only for the 2021 tax year, diminishes for people making more money. Married couples with an adjusted gross income of $400,000 or higher, and single people who make $200,000 or more, are not eligible.

The payments could begin as soon as the summer, Bennet said. But because the money is available in monthly installments, it may take time for the IRS to work through the logistics. 

It’s estimated that more than 90% of American families with children will be eligible for aid. The policy change is expected to cut childhood poverty in half, according to studies.

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Critics of the proposal, namely conservatives, have criticized the Child Tax Credit in the same way they’ve criticized the expansion of other social safety net programs, arguing that it could disincentivize people to work and expand the federal deficit.

Bennet acknowledges there is the potential for the American Rescue Plan to contribute to further inflation, but he pointed to a number of other culprits driving national debt, such as wars in the Middle East and a health care system “that’s twice as expensive as any other health care system in the world.”

“I think this was the right thing to do right now for our economy because we still got more unemployed people than we did in the Great Recession,” Bennet said. 

Bennet also pointed to a proposal by Utah’s Republican U.S. Sen. Mitt Romney as a sign of potential bipartisan interest. Romney has proposed a much smaller benefit that is funded by cutting other programs benefiting the poor. He also cited a CNN poll showing 95% of Democrats and 73% of Republicans in support of Biden’s COVID relief plan. 

“I think now that people understand the implications of it, for our country, and for the 10 million children in America who will now be lifted out of poverty, I think it’s going to be very hard to go back,” Bennet said. 

This news first appeared in The Unaffiliated. Subscribe here to get the twice-weekly political newsletter from The Colorado Sun.

Bennet offered a glimpse of how the tax credit would play into Democrats’ political offense against Senate Republicans in 2022, drawing a contrast between Trump-era tax cuts benefiting wealthy Americans against expanding the Child Tax Credit for families in poverty. He also argued that eliminating the tax credit expansion when it ends next year would effectively be a tax hike.

Still, while Bennet said President Joe Biden’s chief of staff, Ron Klain, and Senate Majority Leader Chuck Schumer, D-New York, support continuing the expanded tax credit, there are signs that it’s not a done deal. 

U.S. Sen. Michael Bennet at a “car rally” at Denver’s East High School on Thursday, Oct. 8, 2020. (Jesse Paul, The Colorado Sun)

“I’m not pollyannish about this,” he said. “My friend, (U.S. Sen.) Rob Portman is a Republican from Ohio, cannot run for reelection, because you might get knocked off by some Trump Republican. And it does make it very hard to reach bipartisan agreement, even under these circumstances.”

Vice President Kamala Harris, whom Bennet cited as one of his earliest supporters in the Senate for the tax credit expansion, would not commit to extending the policy’s expansion during a trip to Denver Wednesday. 

“Let’s take it one step at a time,” Harris told CBS4.  

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