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Democrats press White House to make expanded child tax credit, other benefits permanent in ‘families plan’

Biden will release his giant economic plan this week, but some Democrats want him to do even more

House Ways and Means Committee Chairman Richard E. Neal (D-Mass.) at a hearing in 2019. (J. Scott Applewhite/AP)
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Top House Democrats are ratcheting up pressure on the White House to include a significant expansion of federal child tax benefits as part of President Biden’s next major economic package, setting down an early political marker as Congress gets to work on an overhaul of the country’s safety-net programs.

The latest push came Tuesday from Rep. Richard E. Neal (D-Mass.), chairman of the tax-focused House Ways and Means Committee. Neal unveiled a new draft proposal that would authorize a universal, paid family leave program while making permanent many of the tax benefits implemented as part of the recently adopted $1.9 trillion coronavirus stimulus.

A key element of Neal’s package targets the benefits that parents can claim for children under age 17. The stimulus enhanced the amount that parents can collect — and for the first time allows them to obtain their payouts on a monthly basis, rather than at the time they file their taxes. The expansion of the child tax credit is set to expire at the end of the year, and Neal’s legislation would make the additional aid permanent.

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The Democrats’ approach marks a break with Biden, who is expected to endorse an extension of the augmented child tax credit for five years as part of his upcoming proposal, known as the American Families Plan. The president’s total package is estimated to include $1.8 trillion in new spending and tax benefits, which Biden is set to unveil during his first address to Congress on Wednesday evening.

And ahead of the speech, Democrats have started to press the issue with the White House directly. On Monday, Neal said he raised the child tax credit during a private meeting with the president’s aides, stressing that party lawmakers largely support a permanent expansion.

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The raft of legislative maneuvering reflects the pivotal role Democrats will play in translating Biden’s broader economic agenda into legislative reality. The president has strained in recent weeks to try to strike a fresh compromise with Republicans, yet he also has to satisfy lawmakers in his own party, many of whom stress that the White House must seize on their narrow but potent majorities in Congress to secure lasting changes to the economy.

“There’s broad agreement on the nature of the problem in front of the American workforce,” Neal said.

Neal’s proposal to extend the child tax credit is part of a broader package that aims to help many of the more than 8 million Americans who are out of a job and 4 million who have stopped looking for one. Many of them are women, the congressman added, who may struggle to reenter the workforce in the absence of new federal programs providing child-care support and paid leave.

“We all know we have to go get [people] to the other side of the pandemic,” Neal said.

For now, Biden’s upcoming $1.8 trillion families package aims to set aside $300 billion in education funding, including a program to make two-year community colleges tuition free; $225 billion for child-care support; and $225 billion for paid family and medical leave. Biden’s plan is expected to include additional sums for prekindergarten instruction and enhanced health insurance subsidies, with the goal of financing the new investments with tax increases on wealthy Americans.

People familiar with the White House’s thinking confirmed the early contours of the package to The Washington Post this past weekend, cautioning that it could change before it is released. The White House did not respond to a request for comment.

By late Tuesday, White House officials still seemed inclined to reject demands to permanently extend the Child Tax Credit. In a partial concession, though, the administration is likely to endorse making permanent a measure to ensure the poorest families receive the full size of benefit, according to two people in communication with the White House who requested anonymity to describe the deliberations.

While the amount of the child benefit may shrink substantially after 2025 under Biden’s plan, the White House’s plan is expected to try and avert a return to the original structure of the credit, which shut out millions of families too poor to qualify, the sources said.

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If Congress ultimately approves such spending, it would mark one of the largest investments in federal safety net programs in a generation. It would meet Biden’s pledge to mobilize the whole of government to combat the country’s lingering economic ills in the aftermath of the coronavirus pandemic, a goal Democrats in Congress overwhelmingly support.

Yet some in the party are still encouraging the White House to go even bigger.

More than 80 House Democrats asked the Biden administration on Monday to include a massive expansion to Medicare in his families plan, an idea that the White House is not expected to address. Rep. Pramila Jayapal (D-Wash.) and Sen. Bernie Sanders (I-Vt.) unveiled legislation in recent days that urges the White House to go further on education, seeking to eliminate tuition for most Americans at public colleges. And Sen. Elizabeth Warren (Mass.) and Rep. Mondaire Jones (N.Y.) on Tuesday led a broad swath of Democrats in calling on the president to spend $700 billion on child care and early learning, far more than Biden is expected to endorse.

“We’re already talking to the White House at multiple levels,” Warren said. "And we’re here to push for a big enough investment to make sure every child, every parent and every caregiver is covered.”

Still other Democratic lawmakers have taken an interest in the child tax credit. The signature element of that program — new, periodic payments to families starting as soon as July — has not yet taken effect. But Democrats say it must be made permanent if they hope to achieve the president’s own goal of reducing child poverty, possibly even by half.

Neal’s new proposal, called the Building an Economy for Families Act, specifically aims to secure the credit along with other tax changes adopted as part of the most recent coronavirus stimulus package. That includes a permanent expansion of the Earned Income Tax Credit, which benefits low-income workers, and the Child and Dependent Care Credit, which provides thousands of dollars to help parents offset day care and other services.

“If you end up with two or three generations of the same families that are poor, it’s time to try something different,” said Neal, adding that he thinks the administration is “open to the suggestions we’re going to have.”

In total, the Committee for a Responsible Federal Budget has estimated that the one-year expansion of all three tax credits generates an approximately $143 billion impact on the deficit, although Neal’s office did not compute a total estimate for his tax package.

Neal’s effort marks only the latest effort to push the White House toward rethinking its position on the issue. Other Democrats, including Rep. Rosa L. DeLauro (Conn.), plan to make their case for a permanent extension of the child tax credit at a public event Tuesday, then huddle with the president’s top advisers later in the day, according to two congressional aides familiar with the matter who spoke on the condition of anonymity to describe the talks.

The congresswoman joined other Democrats, including Rep. Suzan DelBene (D-Wash.) and Sen. Sherrod Brown (D-Ohio), in introducing legislation earlier this year to ensure that the changes to the credit do not expire in the coming months.

“This is the number one federal investment we make in our children, and yet so many children are being left behind,” said DelBene, a vice chair of a centrist House caucus known as the New Democrat Coalition, in a recent interview. The bloc of lawmakers met with Biden’s top aides last week, where the congresswoman said she again communicated that child tax benefits “should be permanent.”

“We can lift 4 million children in our country out of poverty,” DelBene added. “We’re not going to do that in a year.”

In addition to the tax tweaks, Neal’s proposal would authorize a universal, paid and federally funded family and medical leave program for all workers, including those who are part-time or self-employed, with the goal of providing up to 60 days of leave and at least two-thirds of most workers’ wages. The program would also subsidize employers who offer sufficient leave policies that meet federal standards.

The draft bill also aims to triple the federal funds allocated annually to states for child care, providing $10 billion each year to help parents and providers alike, while setting aside $15 billion to improve child-care facilities. Other proposed aid includes a new payroll tax credit designed to encourage child-care providers to raise their workers’ wages, along with an online system that helps parents locate child-care options.

Jeff Stein contributed to this story.