How history is likely to see the end of improved monthly child tax credits

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Children learn on the playground to compromise. Maybe it’s time for adults in Congress to learn the same lesson.

Key points

  • Historians will one day determine how well the United States supported families in 2022.
  • Studies show that expanding the child tax credit lifted 3.7 million children out of poverty without hurting the job market.
  • The only way to revive the enhanced child tax credit is for both sides to reach a compromise.

Talking about a divided America sells newspapers. However, for most of us, our differences are just that – differences. They are not the start of another civil war or a reason to hate our neighbors. Differences come from filtering information through our own experiences, and no two people experience life exactly the same.

When historians reflect on this era, they will likely focus on our shared culture and the things Americans have in common. And one thing the majority of American parents had in common in 2021 was the improved monthly child tax credit. What will historians write about the enhanced child tax credit and its impact on American families? While there’s no way to know for sure, it’s a safe bet that historians will investigate the following three things.

1. The impact on the average family

In April, the bipartisan nonprofit group Humanity Forward released a study titled “The Impacts of the 2021 Expanded Child Tax Credit on Family Employment, Nutrition, and Financial Well-Being.” Not only is the title a mouthful, but the report is filled to the brim with interesting facts. For example, due to the enhanced Child Tax Credit:

  • Fewer parents had to sell their blood plasma to pay their bills.
  • Fewer parents have been forced to take out payday loans at exorbitant interest rates. Child tax credit recipients were almost twice as likely to stop taking predatory loans.
  • About 70% of Child Tax Credit recipients said the monthly payments helped them better manage prices affected by inflation.
  • Despite Senator Joe Manchin’s concern that parents are using enhanced Child Tax Credit payments to purchase drugs, the study found that Child Tax Credit recipients were nearly half as likely to start to use illegal drugs. Additionally, a 2014 analysis of 19 studies found that drug use decreases when families receive cash assistance.

As Humanity Forward says, “money is protection”. For many Americans living on the brink and worried about how they will pay for groceries, even a little extra cash can be the difference between desperation and protection.

Given that improved child tax credit payments have helped lift 3.7 million children out of poverty, it’s hard to call the program anything but a success.

2. Some states needed more help than others

Treasury Department data revealed that these 10 states received more child tax credit money than all the others:

  • Alaska
  • Idaho
  • Iowa
  • Kansas
  • Montana
  • Nebraska
  • North Dakota
  • South Dakota
  • Utah
  • Wyoming

Not a single Republican voted in favor of the enhanced child tax credit, meaning 19 of 20 senators representing those 10 states voted against sending out enhanced payments. The only exception is Senator Jon Tester, a Democrat from Montana. Interestingly, all but one of these states also have a Republican governor.

3. Why the Enhanced Child Tax Credit Finally Ended

President Joe Biden hoped the improved payments would continue through at least 2025, helping families pay for necessities. Republicans fought tooth and nail to end the enhanced Child Tax Credit after six months, pushing 3.7 million children back into poverty. Here are some of the reasons why:

  • The future of the enhanced child tax credit was part of the Biden administration’s Build Back Better (BBB) ​​plan. Simply put, neither side wanted to compromise and enhanced credit fell victim to political infighting.
  • Republicans have expressed concern that the enhanced payments were not targeted enough. Not only have the payments hit the bank accounts of some high-income families, but the enhanced Child Tax Credit has allowed non-working parents to receive payments. Republican lawmakers wanted a more targeted program. For example, Senator Joe Manchin believes that only working parents should benefit from the enhanced Child Tax Credit.
  • Manchin’s concern echoes that of the GOP — that sending money to families discourages work (although the evidence has not confirmed this theory).
  • Senator Mitt Romney would be happy to see a new, more targeted version of the child tax credit. Under Romney’s plan, low-income households could receive the enhanced child tax credit, but would have to give up another safety net benefit. In other words, if the GOP agrees to move forward with the enhanced child tax credit, it would prefer that to be its version of the plan.

Hopefully the subject of the improved child tax credit will have a happy ending, even if it means making compromises in the nation’s capital. But if politicians can learn to compromise in these partisan times, it will be truly historic.

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