Republicans think they’ll retake the House of Representatives and maybe the Senate in 2022, in a traditional midterm snapback against the president’s party. President Biden has a clever plan to stop them.
On May 17, the Treasury Department outlined details of the new child tax credit, which for the first time will arrive as a monthly check or automatic bank deposit for millions of parents. The American Rescue Plan, which Congress passed in March with only Democratic votes, enlarged the child tax credit and made it advanceable. The baseline credit was up to $2,000 for each child 16 and under. Parents would claim the credit for a given year when filing their taxes the following year, so it was a delayed benefit.
The ARP expanded the credit to $3,600 for kids under 6, and $3,000 for older kids. It expanded eligibility to include 17-year-olds and made the credit refundable, which means lower-income families that don’t pay taxes will get the money, too. And instead of waiting till the following year to claim it, parents will now get half the benefit on a monthly basis, beginning in July. Payments will arrive automatically, based on data the IRS already has on each family, unless taxpayers opt out, which few are likely to do.
The enhanced benefits are temporary, and expire in December. As part of his American Families Plan, Biden wants to extend the tax breaks through 2025. That would be expensive—around $110 billion per year—and Congress might not go that far. But once those payments start to arrive in July, any politician who votes to end them will plainly be on the wrong side of what is sure to be a very popular benefit.
Money arriving monthly
About 39 million families in every Congressional district will start receiving these payments in July. Since there are income cutoffs—$75,000 for single taxpayers and $150,000 for married couples—the benefits will accrue to working- and middle-class families and be unavailable to wealthier taxpayers. It’s a meaningful amount of money, too. A married couple with one kid in each age bracket would get $6,600 per year, with half of that arriving in $275 payments on a monthly basis, upfront.
Whether you think such generosity is appropriate or excessive, it’s politically shrewd to create a cash entitlement that will expire unless voters keep the political party that made it happen in office. Shrewder still to administer the credit as a real-time payment. Tax credits claimed on a tax return are real money, but also an abstraction obscured by tax-filing tedium. Money that arrives on a monthly basis is about as tangible as it gets.