Democratic Sen. Joe Manchin’s opposition to extending the monthly child tax credit payments, as part of President Biden’s social spending package, has caused 305,000 West Virginia children to lose the benefit. The tax credit was part of Biden’s $1.9tn coronavirus relief package and had been paid out to more than 36 million families. Manchin objected to extending the credit due to concerns that the money would discourage people from working and that it would fuel inflation, which is currently at a 40-year high. Families have only received half of their 2021 credit on a monthly basis, with the other half coming when they file their taxes.
According to IRS data, 305,000 West Virginia children benefited from the expanded credit last month.
Manchin’s opposition in the evenly split Senate derailed Biden’s social spending package and caused the expanded tax credits that were going out in the middle of every month to expire in January. This is whittling down family incomes at the precise moment when people are grappling with higher prices.
However, families only received half of their 2021 credit on a monthly basis and the other half will be received once they file their taxes in the coming months. The size of the credit will be cut in 2022, with full payments only going to families that earned enough income to owe taxes, a policy choice that will limit the benefits for the poorest households. And the credits for 2022 will come only once people file their taxes at the start of the following year.
West Virginia families interviewed by The Associated Press highlighted how their grocery and gasoline bills have risen and said they’ll need to get by with less of a financial cushion than a few months ago.
“You’re going to have to learn to adapt,” said Roberts, who worked as an auto dealer for five decades. “You never really dreamed that everything would all of a sudden explode. You go down and get a package of hamburger and it’s $7-8 a pound.”
By the Biden administration’s math, the expanded child tax credit and its monthly payments were a policy success that paid out $93 billion over six months. More than 36 million families received the payments in December. The payments were $300 monthly for each child who was five and younger, and $250 monthly for children between the ages of six and 17.
The Treasury Department declined to address questions about the expiration of the expanded child tax credit, which has become a politically sensitive issue as part of Biden’s nearly $2 trillion economic package that has stalled in the Senate.
Manchin has supported some form of a work requirement for people receiving the payment, out of concern that automatic government aid could cause people to quit their jobs. Yet his primary objection, in a written statement last month, sidestepped that issue as he expressed concerns about inflation and that a one-year extension masked the true costs of a tax credit that could become permanent.
“My Democratic colleagues in Washington are determined to dramatically reshape our society in a way that leaves our country even more vulnerable to the threats we face,” Manchin said. He added that he was worried about inflation and the size of the national debt.
But Joanna Vance of Beckley, who works for a nonprofit social justice group, said Manchin needs to learn more about his constituents, especially southern communities where thousands of coal mining jobs were lost over the past decade as companies and utilities explore using other energy sources such as natural gas, solar and wind.
“Take a drive through there,” Vance said Friday. “Now they’re just ghost towns. There’s no jobs there. There’s no child care there. There’s no transportation there. And it’s that way for 20 miles in either direction.
“So I understand wanting to have a work requirement. You can’t have a work requirement when it’s not even viable.”
The Census Bureau surveyed the spending patterns of recipients during September and October. Nearly a third used the credit to pay for school expenses, while about 25% of families with young children spent it on child care. About 40% of recipients said they mostly relied on the money to pay off debt.
There are separate benefits in terms of improving the outcomes for impoverished children, whose families could not previously access the full tax credit because their earnings were too low. An analysis by the Urban Institute estimated that extending the credit as developed by the Biden administration would cut child poverty by 40%.
The tax credits did not cause an immediate exodus from the workforce, as some lawmakers had feared. The Bureau of Labor Statistics reported that the percentage of people with jobs increased from 58% the month before the monthly payments began to 59.5% last month. That same trend occurred in West Virginia, where the employment-population ratio rose to the pre-pandemic level of 52.9%.
There’s an academic debate over whether the credit could suppress employment in the long term, with most studies suggesting that the impact would be statistically negligible.
Academics who study the tax credit are torn on how a permanent program would affect the economy and child welfare.
Katherine Michelmore, an associate professor of public policy at the University of Michigan, and two other researchers estimated that roughly 350,000 parents would exit the workforce, a figure that is not all that significant in an economy with roughly 150 million jobs.
Michelmore said the long-term effects of a permanent tax credit would have a positive impact on the economy, as children who grow up in families with higher incomes “tend to do better in school, they’re more likely to graduate from high school. It might be 15 years down the road but there will be more cost savings in the future.”
One of the key questions for policymakers is whether bureaucracies or parents are better at spending money on children. Manchin has proposed a 10-year, funded version of Biden’s economic proposal that would scrap the child tax credits focus and instead finance programs such as universal pre-kindergarten, to avoid sending money directly to families.
“It’s a moral question of do you trust families to make their own decisions,” Michelmore said.
Hairdresser Chelsea Woody is a single mother from Charleston, West Virginia, who works six days a week to make ends meet. The extended child tax credit payments had helped pay for her son’s daycare, as well as letting her splurge on clothes for him.
“It truly helps out a lot. It’s an extra cushion, instead of me worrying how I’m going to pay a bill or if anything comes up,” Woody said as she loaded groceries into her car. “It’s helpful for a lot of people. It helps working families out because we struggle the most. I’m hardly home with my kid because I work all the time.”
In conclusion
Democratic Senator Joe Manchin’s opposition to extending the monthly child tax credit payments, as part of President Biden’s social spending package, has resulted in 305,000 West Virginia children losing the benefit. The tax credit was part of Biden’s $1.9tn coronavirus relief package and had been paid out to more than 36 million families. Manchin’s opposition in the evenly split Senate derailed Biden’s social spending package and caused the expanded tax credits that were going out in the middle of every month to expire in January. Families only received half of their 2021 credit on a monthly basis, and the other half will be received when they file their taxes in the coming months. Families interviewed have highlighted how their grocery and gasoline bills have risen, and they’ll need to get by with less of a financial cushion than a few months ago. Manchin has supported some form of a work requirement for people receiving the payment, out of concern that automatic government aid could cause people to quit their jobs. The Census Bureau surveyed the spending patterns of recipients during September and October. Nearly a third used the credit to pay for school expenses, while about 25% of families with young children spent it on child care. There are separate benefits in terms of improving the outcomes for impoverished children. An analysis by the Urban Institute estimated that extending the credit as developed by the Biden administration would cut child poverty by 40%.
FAQ
How many children have lost their child tax credit payments due to Joe Manchin’s opposition?
A total of 305,000 West Virginia children lost the benefit.
Why did Manchin object to extending the monthly child tax credit payments?
Manchin objected due to concerns that it would discourage people from working and fuel inflation, which is currently at a 40-year high.
How much have families received from the expanded child tax credit, and how often were the payments made?
Families received $93 billion over six months, with payments of $300 monthly for children five and younger, and $250 monthly for children aged six to 17.
When will families receive the other half of their 2021 credit?
Families will receive the other half of their 2021 credit once they file their taxes in the coming months.
Will full payments of the child tax credit be given to all families in 2022?
No, the size of the credit will be cut in 2022, with full payments only going to families that earned enough income to owe taxes.
How did families spend their child tax credit payments?
Nearly a third used the credit to pay for school expenses, about 25% of families with young children spent it on child care, and about 40% of recipients said they mostly relied on the money to pay off debt.
What is the academic debate over the child tax credit?
There is a debate over whether the credit could suppress employment in the long term, with most studies suggesting that the impact would be statistically negligible.
How did the child tax credit impact employment?
The tax credits did not cause an immediate exodus from the workforce, as some lawmakers had feared, and the percentage of people with jobs increased in the month that the monthly payments began.
What is the impact of extending the child tax credit on child welfare?
Extending the credit as developed by the Biden administration would cut child poverty by 40%, according to an analysis by the Urban Institute.
What has Manchin proposed instead of extending the child tax credit?
Manchin has proposed a 10-year, funded version of the credit, with a work requirement for people receiving the payment.