While it didn’t get as much attention as the stimulus checks, this child benefit is at the heart not just of Democratic plans to push the economic recovery forward, but of President Biden’s entire strategy to reorient American economic policy for decades to come.
Most Republicans realize that, and they don’t like it. But they haven’t quite figured out how to fight it.
The child tax credit has been around since 1997, but the American Rescue Plan that Biden signed earlier this year made two revolutionary changes to it, in addition to simply increasing its size. First, it made the credit fully refundable, meaning that even families with too little income to pay federal income taxes will still get it. Second, it changed the credit from something you calculate when you file your taxes the following April to a monthly benefit, in the form of a direct deposit or a check.
The government just sends you money that you can use to pay bills, cover your rent or mortgage, or anything else. The expanded benefit only lasts through the end of the year; Democrats are hoping to extend it or make it permanent, perhaps as part of the next budget reconciliation bill.
That makes Republicans uncomfortable. It’s big government in action, which they have a philosophical objection to. It’s likely to be politically popular, benefiting the Biden administration. And it could be hard to undo; it’s axiomatic that it’s much easier to stop the creation of a new benefit than to take away a benefit people already enjoy.
By expanding eligibility up to $150,000, Democrats created a kind of political insurance policy. About 4/5 of U.S. households fall under that limit (but of course not all of them have children under 18), which makes this a program for the poor and the middle class — and politicians are very reluctant to take something away from the middle class.
The White House says 39 million families who filed recent tax returns or registered for stimulus payments will immediately begin receiving checks; some other number of families who had too little income to need to file a return could also sign up. Since there are about 128 million households in the country, that means something like a third of all U.S. households will be receiving this expanded benefit.
And other Republicans are more vocal in their opposition. Sen Marco Rubio (Fla.) called it an “anti-work welfare check.” House Minority Leader Kevin McCarthy (Calif.) called it “welfare without work.” Senate Minority Leader Mitch McConnell (Ky.) said: “Democrats are unlearning the commonsense, pro-work lessons of bipartisan welfare reform from back in the ’90s.”
They all use the word “welfare” quite intentionally, because they know that Americans hear that word and think “undeserved handouts going to lazy racial minorities.” Which is also why they contrast it with “work,” the assumption being that those who get the benefit will quit their jobs and just be a drain on society. You know how those people are.
But that argument is harder to make if tens of millions of middle class people are benefiting from this program. And that strategy — help the poor by helping the middle class at the same time — is something progressives are increasingly inclined to use as a way to create durable benefits.
For instance, since in-person instruction began again this spring, many schools simply gave free lunch to everyone, spending more on meals but freeing themselves of the administrative burden of sorting the kids poor enough to “deserve” it from the rest.
What was in the short term a response to the challenges of the pandemic is giving new momentum to an old idea: Just give all kids in public schools free lunch. Remove the stigma poorer kids feel when their peers see them getting free meals, eliminate the bureaucracy, and just feed all the kids. States like Maine and California have recently decided to do this from now on, and others may follow.
Biden often talks about growing the economy “from the bottom up and the middle out,” and though this may sound like familiar “I’m on your side” rhetoric, if implemented fully, it would be a dramatic change. Not only is he attempting to rebalance power in the direction of workers and consumers, he’s also hoping to widen everyone’s expectations of what government should provide them.
Biden is not going to turn our system into a Scandinavian-style social democracy, no matter how successful he is. But there are opportunities to push us in that direction, and Democrats should make the most of them. And if they can do it in popular ways Republicans have a hard time fighting against, all the better.