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Child Tax Credit Could Be Extended Only One Year. Blame Politics

Despite its popularity and effectiveness, the CTC may not receive the five-year extension many Democrats are pushing for.

The Child Tax Credit has provided significant financial relief to millions of families across the United States who have struggled to stay afloat amidst the global pandemic. But that relief may be coming to an end sooner than expected, as Biden’s self-described “tax cut for middle-class people” could only be extended for another year.

Democrats have been pushing for the Child Tax Credit, which has given the parents of 60 million children ages 0 to 17 up to $300 each month per child and a lump sum tax cut at tax-filing time, to be extended at least five years, with those further left arguing it should be enacted permanently.

The cash benefit goes to nearly all parents, as 88 percent of households with kids qualify, including those who don’t file taxes at all. Though the credit phases out at higher limits of income, it’s been a huge boon to families.

Just how much? The U.S. Census Bureau reported that the first round of payments alone cut childhood hunger by 24 percent, and according to a study, put out by Gregory Acs and Kevin Werner of the Urban Institute, extending the credit until 2025 would reduce childhood poverty by over 45 percent in 29 states and the District of Columbia. It’s also a popular program that people like.

But Republicans and a few Democrats are attempting to scale back the CTC under the notion of cutting down the spending bill. In early October, Senator Joe Manchin floated cutting the credit off to families that make $60,000 — therefore ensuring that two parents who make $30k a year would be out of luck. He also floated a work requirement.

While Biden has been adamant in not accepting that deal, in an attempt to compromise, Biden is reportedly entertaining the idea of only extending the Child Tax Credit another year. There is a chance this could then extend on a more permanent basis after that point but would set the program up for another extended battle in a divided Congress — and potentially one that is led by Republicans after the midterms.

And a recent survey showed that for many poor families, the CTC has been essential in helping them survive this extended period of economic uncertainty. The vast majority of low-income families are using their monthly child tax credit payments on households expenses like food, clothing, shelter, utilities, and education.

What is strange about this potential cutback is that the Child Tax Credit has proven to be not only effective but also unbelievably popular among Americans. A Reuters’ poll from September showed that 59 percent of adults in the U.S. approved of the measure, which is an extremely impressive figure given the political divisiveness between Republicans and Democrats.