WASHINGTON – Every month since July most parents in the U.S. have received payments worth as much as $300 per child, thanks to changes Democrats made to the child tax credit.
But December’s payment, which the IRS sent out last week, might be the last. Legislation that would continue the payments is all but dead on Capitol Hill after Sen. Joe Manchin (D-W.Va.) announced Sunday he wouldn’t vote for the Build Back Better Act
Manchin joined Republicans in opposing the bill partly because he thinks some parents waste the child tax credit payments on drugs.
Now, 36 million households are about to be left hanging. Low-income families will be poorer, and many in the middle class may feel a bit more financial stress.
“It just boils my blood that a 74-year-old man who drives a Maserati is holding this up,” said Matthew Taylor, a father of two teenagers in Canton, Georgia.
Taylor, 50, works as a data center architect, earning a salary that provides enough for his wife and children, their home and cars. He said the monthly checks have been particularly helpful for his daughter, who has autism. The family used the cash to pay for after-school classes that teach life skills, like cooking and community interaction, and to replace an old iPad that she uses for assisted learning.
“Having that money every month was a big help because we allocated that money directly to her,” Taylor said.
Democrats have no plan to save January’s payment. The IRS has told lawmakers that for January’s installment to go out on time, Congress would need to pass a law by Dec. 28. Senate Majority Leader Chuck Schumer (D-N.Y.) has said the Senate will press forward with a doomed vote on Build Back Better sometime early next year.
Senate Finance Committee Chair Ron Wyden (D-Ore.), meanwhile, told HuffPost he’s also trying to find a way to move separate legislation to save the payment. But such a bill would face bleak prospects, given opposition from Republicans and Manchin.
“We’re looking at every path because I don’t want families to be hurting this way in the middle of the month when the check doesn’t arrive,” Wyden said.
Bigger tax refunds next year may ease the burden of losing the monthly payments. Democrats boosted the annual value of the credit to $3,600 for parents with kids under 6, but the monthly payments didn’t start until July. That means parents can file their tax returns and get refunds for the first half of 2021. The child credit will boost the refunds by as much as $1,800 per child, though the IRS can’t send the checks until mid-February.
As for a more permanent solution, Democrats probably need to cut some sort of deal with Manchin, which will be difficult. He has resisted stating a clear position on the child tax credit, saying he supports the idea of a credit connected to children while refusing to embrace the specific changes that Democrats made earlier this year. Those changes included removing income requirements that prevent the poorest households from qualifying.
Manchin dislikes the monthly payments going to people who are unemployed. At the same time, he’s said it should be easier for grandparents to get the benefit, even though many grandparents who are primary caregivers for their grandkids don’t have regular jobs.
Some Democrats on Capitol Hill this week said that Manchin basically betrayed them, and that his position on the child tax credit is incoherent.
“It makes no sense to negotiate with somebody who I don’t really know wants to negotiate,” Rep. Pramila Jayapal (D-Wash.), leader of the Congressional Progressive Caucus, told HuffPost this week.
Some parents feel betrayed as well. Top Democrats said all year they would make the child tax credit permanent, or at least extend it for years.
Jared Bradford, of Bakersfield, California, made a major financial decision this year partly because he assumed the child tax credit payments would continue: He and his wife traded in an old car and bought a new one. Bradford, 36, has two kids, aged 4 and 7, so he has received $550 each month since July.
He described himself as “solidly middle class,” with a good job at a consulting firm that advises local governments on land use issues. But the extra money, he said, was a big help.
“I’m pretty upset and disappointed by this news, and I feel a little betrayed because I’d been told by the president, by senior senators, that this was going to get done,” Bradford said.
Several middle-class parents told HuffPost how the payments have reduced the stress in their lives.
Vicki Peterson, of Thurmont, Maryland, works for a real estate settlement company. About 10 years ago, she said she was involved in a startup business that failed, causing financial hardship for her family and a lot of emotional trauma for Peterson herself. She has two teenage daughters and she doesn’t want them to go through that kind of experience again. The monthly cash served as a cushion.
“Just being able to get that extra bit of money may help us to get back to where we were before the bottom fell out,” Peterson, 58, said in an interview. “I’m just concerned it’s all going to go away completely.”
Other parents may face a more difficult situation next year. Elizabeth Walton is a single mother in Fishers, Indiana, who said the child tax credit has been her only steady income outside of child support and contract work in marketing and education. She’s cherished knowing that there was money coming in specifically for her 10-year-old son.
“If it was not for that tax credit I don’t know what I would do,” Walton said.
Walton wants to finish her master’s degree in supply chain management so she can get back to having a regular career like she had before becoming a single mom. But she’s sent out dozens of resumes this year with no luck, possibly due to gaps in her work history and employers preferring to hire younger workers. Managers at nearby Starbucks and Costco stores told her she’s overqualified and couldn’t accommodate her child care schedule.
As for what happens when the child tax credit goes away? “I’m terrified,” Walton said.
The most momentous impact of the payments was on child poverty, which plunged nearly 30%, according to research by the Columbia University Center on Poverty and Social Policy. That’s probably a bigger and more abrupt drop in child poverty than has ever resulted from a single policy in U.S. history.
Some people who didn’t receive the money themselves were grateful for the policy.
Princess Russell, a 65-year-old mother of four and a grandmother of 11 in Menifee, California, did not benefit directly from the credit, but she said it really helped her daughter, a widow with a limited Social Security survivors benefit. Russell said December’s child tax credit payment for her daughter’s four kids will dramatically improve the family’s Christmas.
“I’m retired and I can’t help my daughter the way I could when I was working,” Russell said. The child benefit “was like a blessing from God and it’s just been snatched.”
Russell is mad at Democrats for failing to secure an extension.
“All day they’ve been bragging about how they reduced child poverty,” she said. “They bragged so much about how they’re going to make it permanent.”