Biden’s extension on child tax debt that attracts children from poverty. Democrats should just pass you by.

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Biden's extension on child tax debt that attracts children from poverty.  Democrats should just pass you by.

It’s a huge change for a father with one child in college and four at home who are on the autism spectrum, and Copeland credits the expanded child tax credit created via the American Rescue Plan as making the difference.

Despite concerns that these payments could cause taxpayer dollars to go to waste or discourage people from seeking or returning to work, early data returns appear to show that the extra monthly income has gone to support the immediate needs of American family budgets, like Copeland’s, and has had little effect on the labor market thus far.

The child tax credit was changed in three essential ways this year by the American Rescue Plan: The amount grew from $2,000 to as much as $3,600; recipients could sign up to obtain the money monthly rather than annually; and it became fully refundable, which made even the lowest-income Americans eligible.

Critics maintain, however, that the changes to the child tax credit could create fiscal, economic and administrative hardships in the long term if made permanent.

Story Highlights

  • He found another job working a forklift at a different warehouse. Copeland, 59, and his wife closed on their first house after saving for years, and for the first time they don’t feel like they’re living paycheck to paycheck.

  • “I was able to take the kids on a trip to the beach for a couple days, because we hadn’t gone anywhere since the pandemic, but a lot of it has gone to clothes for them, housing bills and just about everything else in our budget,” said Copeland, who also noted the cost of his children’s autism therapies.

Monthly payments is a significant change, with the first installment hitting bank accounts July 15 and at the same point each month after. Families receive $300 per child under 6 years old, or $250 per child 6 to 17. The next payment goes out Friday.

A school playground in New York in May.Benjamin Norman for The New York Times

Of the historic expansions to the American social safety net created during the pandemic, this is one Democrats hope to cement in President Joe Biden’s social spending bill for at least five more years. Amid political gridlock, there are concerns over the legislation’s future and for the Democratic majority if they fail to pass it. “I’m not sure the current political environment would support sending $2,000 or $3,000 checks to every person every year, but I do think there’s political will behind providing more benefits for families raising kids, especially when we saw how hard it is when you have to be home with the kids and home schooling when that was necessary,” said Gregory Acs, vice president of income and benefits policy at the Urban Institute, a nonprofit policy research organization.

As of now, this benefit program ends in December despite huge popularity and the appearance of real need. The Census Bureau has maintained a household survey to probe how recipients are using the child tax credit, and it seems most families are putting it toward their most essential bills.

In the week after the first monthly payment in July, it found that 29 percent of households used the extra cash on food, clothing, utilities, school supplies and books, tuition or their rent or mortgage. An additional 10 percent put it toward a vehicle payment, household debt or savings. That first group of households spending on food, clothing and more grew to 35 percent in the most recent survey, and those putting it toward debts or savings remained steady at 10 percent.

Concerns over the costs of the benefit have led Republicans to stonewall making the expansion permanent and debate among centrist Democrats. The Tax Foundation, a right-leaning think tank, estimates that doing so would cause federal revenue to drop $1.62 trillion from 2022 to 2031. Erica York, an economist at the Tax Foundation, said Congress needs to address these fiscal concerns before it makes the measure permanent. She also noted that the tax credit could discourage work and burden the Internal Revenue Service by having to provide a benefit through the tax code.

“These payments have given parents a sense of financial security and relief,” said Jacob Goldin, a law professor and economist at Stanford University, who helped organize a letter to Congress signed by more than 460 economists advocating making the benefit permanent. “There’s real reason to believe that this assistance will translate into higher social and economic mobility, make it easier to find jobs, for the parents as well as the children down the road.” This money, experts say, has added a buffer to family budgets each month, providing low-income parents and children an opportunity to plan their finances and their future.