It is costly this time of year, especially for young parents. According to a survey conducted by T. Rowe Price in 2016, 25% of parents either withdraw their retirement funds or dip into emergency savings to pay for holiday expenses.
Now, enter the Grinch—or rather, the Senate’s lackadaisical pace. Parents of children under the age of 15 will not receive $250-300 per month if Senators do not pass the House’s $1.75 trillion social spending bill. This includes an extension to the Child Tax Credit (CTC). It gets worse. The expiration of CTC would occur on December 31. This coincides with the end of almost two years of federal student loan payments. These are on average between $250 and $300 per month.The Federal Reserve estimates that $200 to $300 per month is possible.
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Colorado Democrat Senator Michael Bennet has been insisting on his fellow Democrats to quickly vote for the Build Back Better act to prevent the CTC disruption. He says that the financial impact on young families could prove to be devastating.
“I’m deeply worried,” he says, “that there could be a double whammy of both the [federal student loan] forbearance and the CTC going away.”
‘Pulling the rug out’ from underneath young families
In July, the latest and largest iteration, the expanded CTC was put into place. The CTC was increased to approximately 90% of U.S. kids. A left-leaning Center on Budget and Policy Priorities’ (CBPP), found that it is likely to decrease the percentage of children living in poverty by over 40%. According to an August Census Bureau report, the food insecurity rate among children living at home dropped by almost 24% after just one CTC monthly payment.
Experts say that the absence of that expanded CTC payment—even temporarily—could have a similar impact on child poverty, but in the negative. “If the Senate fails to move forward quickly on Build Back Better, they will pull the rug out from under millions of families who are using this monthly Child Tax Credit payment to pay for rent, for food, for school supplies, and other everyday needs,” CBPP President Sharon Parrott told reporters on a Wednesday press call.
According to Senator Bennet, lawmakers think that President Joe Biden only has to sign into law the Senate-passed Build Back Better Act by Dec. 28, in order for the IRS be able make its January payment on time. (The IRS has not responded to our request to comment on when the bill would need to be dropped in order for it to make the January payment.
A timeline that seems increasingly unlikely
Congress has not yet met that deadline. In a letter to colleagues Monday, Senate Majority Leader Chuck Schumer wrote that while he still hoped to move on the sweeping legislation “before Christmas and get it to the president’s desk,” other Senators were less optimistic. In conversations with reporters Wednesday, centrist Democrat Senator Joe Manchin did not underscore the urgency of passing the bill in light of the expanded CTC’s expiration.
“Whatever happens [on timing], you should get the bill right,” he said.
Every Democrat who is a member of the Senate’s upper chamber must support the bill, as the Senate is divided 50-50. There are several key sticking points to preventing the bill from passing quickly. These include concern about tax credits that union-made electric cars can receive for four weeks, paid family leave and tax credits for those who have high taxes in their state or local.
Bennet says he’s confident further changes to the House version of CTC won’t be among the measures that are further watered down. But the slow-rolling negotiations on those final issues are posing threats to the expanded CTC’s on-time delivery in January, sort of like how the global supply chain crunch might prevent the cardigan you ordered for grandma from arriving by Dec. 25.
“It’s time for folks to decide. We’ve been discussing this for a long time,” Rep. Suzan DelBene, a moderate Democrat from Washington State, told TIME on Tuesday. “People have said there’s not a specific timeline that requires a date driving [the Senate passage of BBB], but the Child Tax Credit is one specific piece that absolutely is driving it and why it’s so important we get this done before the holiday.”
A powerful provision
CTC was first created in 1997 as a credit to middle-class families who had children. Last March, Congressional Democrats expanded it significantly in the American Rescue Plan—transforming it into what is now essentially a universal child allowance.
The new rules expanded the eligibility for the CTC. Parents no longer need to have any income, or pay taxes, and children from the most disadvantaged families are now eligible. The money was distributed to parents in monthly installments instead of as one lump sum at tax time. This allowed the family to cover child care expenses whenever they arise, as opposed to once per year. The total credit increased from $2,000 per child, to $3,600, for children under 6, and $3,000 for those aged 6-17. Families were also able to claim credit for their 17-year old children.
The House-passed version of Build Back Better extends the “fully refundable” aspect of the expanded CTC on a permanent basis. The other significant tweaks—the higher allotments, the monthly installments, and the inclusion of 17-year-olds—would be extended for an additional year if the Senate doesn’t make further tweaks to the measure.
If the Senate somehow manages to pass the legislation and get it to Biden’s desk ahead of the Dec. 28 deadline, it will not be unlike the Seussian green grump that almost stole Christmas. After being responsible for putting the legislation’s material components in danger, they will be able to save the day. This is at least until next year when Congress will most likely vote again to expand the CTC.
