Senate Democrats are on a mission to revive the expanded child tax credit. In exchange, they will revive the Trump corporate tax cuts that expired in 2021. (Axios)
NH: The expanded child tax credit was one of the most effective pandemic relief measures.
A JAMA study associated the credit "with a 26% decline in household food insecurity." And according to Census' annual Supplemental Poverty Measure, it kept a stunning 5.3M people above the poverty line, "including 2.9M children."
The credit ultimately expired at the start of 2022 due to Senate Republicans and Joe Manchin blocking the Build Back Better legislation, which would have renewed it. But now there is a new push to reinstate the expansion.
Several Senate Democrats, led by Michael Bennet, have suggested a deal to Republicans: If the GOP helps revive the expanded benefits, the Democrats will restore Trump’s R&D tax credit.
Originally enacted in 2017, the credit allowed companies to deduct R&D expenses in the same year costs accrued instead of amortizing them over five years. This benefit also expired at the start of 2022.
It’s unclear if this bargain will work. Any deal still needs 60 votes, which would require Manchin and ten Republicans to get on board. That’s a colossal task. However, over the last couple of years, several Republicans have championed pro-family policies. (See "Will US Fertility Rise Again?") And while most GOP senators don't want to support Democratic legislation, perhaps a compromise could be reached. For example, Romney has floated a bill to revive the expanded child tax credit with a work provision.
If Congress reinstates this tax credit, it would make a big difference to low-income families. We have already seen what one year of the benefit did to child poverty--at a low cost to the federal budget. If it were made permanent, it would be a game changer for child poverty. It could also help raise the birth rate.
We have written several NewsWires on Americans wanting kids but not feeling financially secure enough to start a family. (See “Are Most Childless Adults Childless by Choice?” and “How Do Americans Feel About Having Kids?”) For some couples, this could provide the financial backstop they need.
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ABOUT NEIL HOWE
Neil Howe is a renowned authority on generations and social change in America. An acclaimed bestselling author and speaker, he is the nation's leading thinker on today's generations—who they are, what motivates them, and how they will shape America's future.
A historian, economist, and demographer, Howe is also a recognized authority on global aging, long-term fiscal policy, and migration. He is a senior associate to the Center for Strategic and International Studies (CSIS) in Washington, D.C., where he helps direct the CSIS Global Aging Initiative.
Howe has written over a dozen books on generations, demographic change, and fiscal policy, many of them with William Strauss. Howe and Strauss' first book, Generations is a history of America told as a sequence of generational biographies. Vice President Al Gore called it "the most stimulating book on American history that I have ever read" and sent a copy to every member of Congress. Newt Gingrich called it "an intellectual tour de force." Of their book, The Fourth Turning, The Boston Globe wrote, "If Howe and Strauss are right, they will take their place among the great American prophets."
Howe and Strauss originally coined the term "Millennial Generation" in 1991, and wrote the pioneering book on this generation, Millennials Rising. His work has been featured frequently in the media, including USA Today, CNN, the New York Times, and CBS' 60 Minutes.
Previously, with Peter G. Peterson, Howe co-authored On Borrowed Time, a pioneering call for budgetary reform and The Graying of the Great Powers with Richard Jackson.
Howe received his B.A. at U.C. Berkeley and later earned graduate degrees in economics and history from Yale University.