One of the great tragedies of American governance during the past year was the untimely death of the expanded child tax credit (CTC), which died along with President Biden’s Build Back Better agenda.
Now, Sen. Mitt Romney has introduced a new version of the expanded CTC, a revision of a previous proposal the Utah Republican had championed. And this will pose a test to certain actors in our political system.
For instance, it will challenge Sen. Joe Manchin III. The West Virginia Democrat, who had previously supported the expanded child tax credit as part of last year’s covid-19 rescue package, developed sudden qualms about it. But Romney’s proposal moves in Manchin’s ideological direction. Will he drop his objections?
Romney’s new CTC also poses a test to the much-vaunted “populist” conservatives in the Senate, who opposed earlier versions of this policy. Will they now support Romney’s revision?
The plan, which Romney introduced with GOP Sens. Richard Burr (N.C.) and Steve Daines (Mont.), is described by its sponsors as “pro-family, pro-life, and pro-marriage,” while also being more generous than the current CTC. The main features:
- $4,200 per year for each child up to age 5, and $3,000 for each child between 6 and 17.
- Benefits would begin during the last four months of pregnancy, providing $700 a month to expectant families.
- A family must have earned at least $10,000 the prior year to be eligible for its full benefits. Those who earned less than $10,000 could get prorated benefits, which does somewhat perversely mean that the poorer you are at those lowest levels, the less help you’ll receive.
- While the expanded CTC wasn’t available to couples with incomes over $150,000 a year, Romney’s proposal provides benefits to those with up to $400,000 a year in income.
- It would be paid for mostly by substituting these benefits for portions of the earned-income tax credit and by eliminating the state and local tax deduction (SALT).
Liberals are raising reasonable objections to the proposal. Unlike the fully refundable expanded CTC, this credit would offer fewer benefits to the most desperately poor, those with little or no income.
In addition, because the Romney plan consolidates a number of existing tax credits, there are scenarios in which some low-income people could find themselves worse off. So if and when negotiations start in earnest, Democrats should push for changes mitigating those problems.
Nevertheless, while many progressives would have preferred the CTC expansion of 2021 to continue, Romney’s proposal may end up looking better than the status quo now that the expansion has expired. The new version would offer significantly more support to most families than they’re now getting, make the payments monthly and expand support to part of a woman’s pregnancy.
Romney’s proposal should also be harder for Republicans claiming the populist mantle to oppose. They talk a good game about turning the GOP into a pro-worker party, yet when Romney rolled out an earlier version of the proposal, at least one leading populist senator dismissed it as “welfare.”
Romney’s new proposal is tailored to address conservative concerns. As a Niskanen Center analysis shows, unlike the previous expanded CTC, families would need to reach a minimum income threshold to receive the full benefit. And its EITC-related tweaks would do away with “marriage penalties,” which result in higher benefits paid to single adults than married couples.
On top of that, the child tax credit already represented a pro-family (and thus conservative-friendly) approach to poverty. So will the populists support Romney’s revision?
And what about Manchin? He had worried the previous expanded CTC would discourage work. The new proposal’s efforts to address conservative concerns, then, should appeal to Manchin as well.
Manchin also insists every five seconds that everything must be bipartisan. Well, this proposal is expected to have some Republican support. So will he support it?
“Now that Romney’s proposal has several senior Republican co-sponsors, and with more waiting in the wings, it’s undeniable that a bipartisan CTC expansion has the potential to pass this Congress,” Samuel Hammond, director of social policy at Niskanen, told The Post.
At the very least, this proposal could form the basis of negotiations — if everyone is willing to try.