4 reasons Congress should permanently expand $300 monthly child tax credits, according to more than 400 economists
- 410 economists urged Congress to make permanent $300 monthly checks to families with children.
- They wrote in a letter the child tax credit will significantly reduce childhood poverty in the US.
- Democrats are clashing over how to include the credit in their $3.5 trillion social spending bill.
As Senate Democrats clash over what an expanded child tax credit will look like in their $3.5 trillion social spending bill, over 400 economists laid it out simply: the credit should be made permanent to combat child poverty in the country.
On Wednesday, 410 economists, led by Berkeley economics professor Hilary Hoynes and Director of Northwestern's Institute for Policy Research Diane Schanzenbach, sent a letter to House and Senate leadership urging them to make the expanded child tax credit permanent.
The signatories, which included former top Obama administration economists Jason Furman and Betsey Stevenson, wrote that childhood poverty is a "staggering problem" in the US, affecting approximately one in seven children and indefinitely impacting their livelihoods as they grow up.
"Children growing up in poverty begin life at a disadvantage: on average they attain less education, face greater health challenges, and are more likely to have difficulty obtaining steady, well-paying employment in adulthood," the economists wrote. The National Academy of Sciences estimated that because of those difficulties, child poverty has cost the country between $800 billion and $1.1 trillion each year.
The economists outlined four reasons why expanding, and making permanent, the child tax credit would be beneficial:
- It would dramatically reduce poverty and improve children's lives by improving childrens' health and educational attainment;
- It would be a long-term investment and bring in more tax revenue down the road by reducing government medical spending for children;
- It would have minimal impact on employment given that the credit would phase out for high levels of earning;
- And the vast majority of people use the credits to pay for necessities, like food and utilities.
President Joe Biden expanded the child tax credit through December in his stimulus law, in which individuals who earn $75,000 or less are eligible for up to either a $250 or $300 direct payment per child depending on their age.
Insider's Madison Hoff reported last month that just the first round of payments managed to keep 3 million children out of poverty, signaling the substantial impact a further expanded credit would have for children and families across the country.
But Congressional Democrats are divided on basic provisions of the program, including how long to extend it and whether low-income families who don't have to file taxes should be able to receive advance monthly payments, known as fully refundability.
House Democrats proposed renewing the program until 2025 in their social spending plan, along with locking in full refundability for families that don't earn enough to pay taxes.
But the structure of the program could change due to resistance from Sen. Joe Manchin of West Virginia, a key centrist. He's pushed a work requirement for parents to receive the credit. He told Insider on Tuesday that the benefit should only go to people paying taxes.
Many Democrats are balking at the idea, including architects of the measure like Rep. Suzan DelBene of Washington and Sen. Michael Bennet of Colorado.
"I think it's already clear in the country the incredible benefits the child tax credit is delivering to families and I hope to find a way to preserve it in its current form," Bennet told Insider on Tuesday.