House Democrats, Biden at odds over enhanced child credit

Laura Davison

President Joe Biden and House Democrats are clashing over how much to prioritize an extension of an expanded tax credit for parents.

House Ways and Means Committee Chairman Richard Neal on Tuesday released a plan calling for a permanent extension of the child tax credit. Biden told lawmakers last week he is only planning to propose a temporary extension in the “American Families Plan” that he’s set to release this week.

The clash isn’t ideological – Biden told members of Congress he prefers a permanent extension – but the differences over how long to offer the credit highlight the difficulties of enacting expensive social programs. The Tax Foundation estimates that a permanent expansion could cost $1.6 trillion over a decade.

Rep. Richard Neal, D-Mass., speaks at a news conference on Capitol Hill in Washington, Friday, July 24, 2020.

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The extension would follow up on the March pandemic-relief legislation, which expanded the tax break this year to $3,600 for children 5 and younger and to $3,000 for children 6 and up. Without an extension from Congress, the credit would revert to $2,000 next year. It begins phasing out for single parents making more than $112,500 and married couples making more than $150,000.

Several Democrats, including Senators Sherrod Brown of Ohio, Cory Booker of New Jersey, and Representative Rosa DeLauro of Connecticut, held a news conference Tuesday calling on Biden to make permanent the increase in the credit.

“Some have been concerned about the cost. I say the cost of inaction is too great,” Representative Suzan DelBene, a Washington Democrat, told reporters. “The president will propose his plan. Congress is going to write the bill.”

Fighting Poverty

Democrats are hoping that the expanded family benefit will lift children out of poverty and prove to be popular among voters. The measure has historically had bipartisan support, but some Republicans criticized the newly expanded version, saying that it gave too much direct cash support to households.

Neal’s plan also would provide universal paid family and medical leave for all workers. It would increase childcare funding for states, invest $15 billion in childcare facilities, create a portal aimed at helping parents find local child care and establish a payroll tax credit for child care workers.

The plan would also permanently extend more expansive versions of the earned income tax credit and the child and dependent care credit passed under the March stimulus legislation.

Neal’s plan is likely to influence Congress’s attempts to shape Biden’s economic proposals into legislation over the coming months. Speaker Nancy Pelosi has said she wants to pass some legislation tied to Biden’s economic agenda out of the House by July 4.