Democrats have started deliberating on extending the new child tax credit payments under the American Rescue Plan until 2024 but negotiations may cut the package's size.
Sources confirmed to Business Insider that discussions are currently underway for the child tax credit extension for three more years. However, the payment amount might scale back to $2,000, the payment before the pandemic, during the election year.
An aide also said that some Democrats in the Senate might also be looking into eventually scrapping full refundability for parents who don't owe any taxes or pay just a small amount because of funding issues. The source added that nothing had been locked in, but the extension, along with its original conditions, has the support of House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer.
Child Tax Credit: $385 Billion Funding
In March 2021, the Senate Finance Committee set aside $385 billion to improve America's child care infrastructure under President Joe Biden's term. Of this amount, $330 billion has been estimated for child tax credit payments for the next three years alone.
But Biden's American Rescue Plan will also include the adoption of a universal pre-school initiative for kids below 4-years-old, upgrades to childcare facilities across the U.S., training sessions for childcare workers, subsidies for daycare costs, and an increase in the wages of public childminders and caregivers to create additional jobs.
According to The Washington Post, this would be the first largest federal investment in child care programs to ease the burdens of families. The Democrats see this as a justified compensation after years of neglecting to provide options for the parents. The coronavirus pandemic has piled on more hardships and challenges for families who have been forced to make hard decisions between keeping their jobs or taking care of their kids.
Rep. Robert C. "Bobby" Scott, who helped craft the new plan, has started the deliberation of the child care expansion under the House Education and Labor Committee on September 9. Sen. Patty Murray said that since this expensive program has never been done before, negotiations could take time to get things right.
Reduction of Poverty
Meanwhile, a study from the Urban Institute showed that extending Biden's child tax credit scheme after 2021 could slash the poverty rate down from 14.2 percent to at least eight percent across the country. Elaine Maag of the Urban-Brookings Tax Policy Center said that at least 11 states could cut their poverty rate by as much as 50 percent. States that will experience the biggest decline include Louisiana, Mississippi, New Mexico, and Washington, D.C., with many kids living below the poverty line.
Democrats are reportedly keen on fast-tracking the child care bill and have been pooling support. Maag said that if the child tax credit won't be extended after 2021, current efforts to reduce poverty and food insecurity would be reversed.
The third child tax credit payment is due to hit parents' bank accounts on September 15. Three more payments are expected until December 2021, while the rest of the money will be given in lump sum by April 2022.
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