The Coming Push to Revive Work-Free Child Tax Credits

With their House majority about to end, some congressional Democrats, prodded by liberal advocates, are making one last push to revive recent welfare-without-work expansions of the child tax credit (CTC). Temporary and now-expired CTC expansions were included in the March 2021 American Rescue Plan, the mammoth $1.9 trillion stimulus law that even senior Democratic economists have blamed for surging inflation. President Joe Biden admitted in May that “winding down emergency programs” and otherwise “reducing the federal deficit . . . will help ease price pressures.” But with the election now in the rearview mirror, deficit reduction appears to be yesterday’s news, especially for liberals desperate for one last round of benefit expansions before the House majority changes hands.

There were three parts to the temporary CTC expansion enacted in 2021. First, it increased maximum annual benefit amounts from up to $2,000 per child to a flat $3,000 for each child aged six to 17 and to $3,600 for each child under age six. Second, it provided these increased payments on a monthly basis for the first time, with half of the expanded benefit paid out in six monthly installments between July and December 2021. And third—the policy some hope to revive now—it expanded eligibility and benefits by providing full payments for the first time to parents who don’t work or don’t owe federal income taxes.

Those benefit expansions had nothing to do with recovering from the pandemic and everything to do with liberal policymakers’ quest for more federal income redistribution. Along the way, the expansions temporarily made the IRS into America’s number one welfare-paying agency. Even though President Biden and other supporters wanted to make the benefits permanent, they legislated these changes for a single year for a simple reason—their enormous cost. They wrongly assumed that, when it came time to extend the policy, there would be a groundswell of support, no matter the price tag. Instead, further extensions were blocked by Senate Republicans and Senator Joe Manchin (D-WV), who specifically opposed extending benefits to parents who don’t work. Despite that opposition, the latest policy push proposes exactly that—a revival of work-free welfare payments through the CTC.

Supporters suggest the cost of reviving full payments including for parents who don’t work would be a “modest$12 billion per year through 2025. However, that annual cost is almost 70 percent greater than the $7 billion that taxpayers currently pay out in welfare checks (known as “basic assistance”) under the Temporary Assistance for Needy Families program. That’s the welfare block grant that since the 1990s has expected parents to work or train in exchange for welfare checks. But under the proposed expansion, no such work requirement would apply for those collecting CTC checks in the years ahead. Indeed, under this proposal the same $2,000 per child payments would be made to all parents whether they don’t work at all, work only part time, or work full time or more. If enacted now, this expansion will surely be just a prelude to future eligibility expansions and benefit check increases—just like the 2021 policy effected, including for nonworkers.

This proposed welfare-without-work expansion is also starkly at odds with senior Democrats’ pro-work closing arguments during the recent campaign. For example, former President Barack Obama, campaigning on October 29 in Wisconsin, forcefully extolled the virtues of Social Security benefits payable because people “worked for it”:

You know why they have Social Security? Because they worked for it. They worked hard jobs for it. They have chapped hands for it. They had long hours, and sore backs, and bad knees to get that Social Security.

With the exception of the temporary 2021 expansion that some are now hoping to revive, the same could be said of the child tax credit throughout its 25-year history. Recipients have to work for it, including long hours to get the full benefit. But now, as Democrats are about to lose their sole grip on power in DC, offering de facto federal welfare checks to nonworkers through the CTC is back in vogue. Perhaps that shouldn’t surprise longtime observers of Washington politics and policies. But it would be surprising if Republicans and Sen. Manchin, who previously insisted on connecting this important benefit to work, let them get away with it.

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