President Joe Biden has claimed some turf in his battle to leave behind a legacy rivaling former Democratic Presidents Franklin Roosevelt and Lyndon Johnson, but his plans to convert pandemic-era programs into permanent ones face hurdles on Capitol Hill.
As top officials are busy touting his overhaul of the Child Tax Credit, which goes into effect this summer, the president who wants to be seen as transformative as the 32nd and 36th chief executives is plowing ahead with an intention to convert pricey emergency COVID-19 programs into permanent federal benefits. There is just one problem: the evenly divided Senate.
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The COVID packages were “stuffed” with provisions Democrats hoped to enact whether or not there was a pandemic, but they were able to leverage public health concerns and economic pressure to pass them, said Republican strategist Douglas Heye.
“Similarly, they’re expanding the definition of ‘infrastructure’ to mean anything the Democrats want it to be. It’s a massive expansion in spending and scope, which has nothing to do with why Joe Biden was elected, but Democrats are not letting the COVID crisis go to waste,” Heye told the Washington Examiner.
Biden is lobbying Congress to make three enhanced tax credits permanent through his $1.8 trillion social programs package, casting a wider federal safety net that draws the ire of Republicans who fear the start of a full-blown welfare state. Those measures are the Child Tax Credit, the Earned Income Tax Credit, and the Child and Dependent Care Tax Credit, according to the Bipartisan Policy Center’s Ben Gitis, a senior economics policy analyst.
The White House, for instance, reformed the Child Tax Credit to make it more generous and fully refundable, without so-called phase-in eligibility, through his $1.9 trillion pandemic package. The Treasury Department and Internal Revenue Service announced this week that the now-advanceable monthly payments would commence in July for roughly 39 million households, reaching almost 90% of the country’s children.
Gitis described Biden’s Child Tax Credit as “the most significant” benefit of the three because of its lack of phase-in. But he warned Democrats risked squandering bipartisan support for more modest provisions by asking for too much. Tensions between Democrats and Republicans would be exacerbated if liberals rammed changes through without relying on regular parliamentary order.
“It’s the same story when we go through reconciliation and just do party-line votes: There’s going to be a risk that it gets scaled back once the next party takes over,” he said of the fast-track budget process.
Biden’s pandemic package temporarily broadened the social safety net through supplemented unemployment insurance, rent moratoriums — even direct checks to people, a COVID-era practice that began under former President Donald Trump. But the forced lockdowns exposed the need for more help for self-employed people as well, Gitis added.
“It’s pretty likely lawmakers will find a way to expand the benefits to that portion of the workforce permanently,” he said.
Biden’s bipartisan negotiations may also be complicated by the economy. Already, Biden is facing criticism for lavishing out unemployment insurance, disincentivizing people to return to work. The White House has countered the scrutiny by suggesting employers raise their wages. Likewise, if the economy is performing well, Republicans could argue the measures are unnecessary.
For Brookings Institution governance studies senior fellow Vanessa Williamson, the Democratic political calculus was mixed.
“On the one hand, Americans tend to forget about tax cuts they have received and so do not necessarily reward politicians for cutting their taxes,” she said. “On the other hand, putting extra money in the pockets of working- and middle-class Americans will provide economic stimulus, and a stronger economy traditionally benefits the party of the president.”
But broad-based benefits like the tax credits will be politically difficult for Republicans to cut back, she advised.
“Though Americans may forget about their tax credits, it will likely come to their attention if those credits are threatened in the future,” she said.
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Biden’s pandemic package tripled the Earned Income Tax Credit for childless workers and gave families up to $4,000 per child younger than 13 for qualified child care and a 50% reimbursement for families making less than $125,000 a year under the Child and Dependent Care Tax Credit. The president is proposing to make both permanent under his social welfare plan, as well as the full refundability of the Child Tax Credit. His social welfare pitch also proposes leaving the more generous Child Tax Credit of $3,000 per child between 6 and 17 years old and $3,600 per child younger than under 6 until 2025.
