Advocates are growing increasingly concerned about the expected lapse of the expanded child tax credit, as the fate of the expansion has become even more uncertain after Sen. Joe Manchin (D-W.Va.) said he opposes President Biden's social spending plan.
The failure to enact an extension of the expanded credit means that households that have received monthly advance payments of the credit from the IRS this year are not expected to similarly receive a payment on Jan. 15.
It's unclear if an extension of the monthly payments will be enacted, since Manchin has both criticized the design of the expanded child tax credit and the broader spending plan that included an extension.
Many Democratic lawmakers, researchers and anti-poverty advocates view extending the expanded child tax credit as a top priority, saying it helps reduce child poverty and middle-class families afford basic expenses.
"The expiration of the child tax credit is devastating and absolutely an unforced error," said Lindsay Owens, executive director of Groundwork Collaborative, a progressive economic policy organization.
The child tax credit was expanded for 2021 under the coronavirus relief law Biden enacted in March. The expansion increased the maximum credit amount and led to the IRS making monthly advance payments of the credit, so that families could receive money in installments throughout the year. Additionally, the relief law allowed the lowest income families to qualify for the full amount of the credit.
Tens of millions of families received the monthly payments from July through December. Families were eligible for payments of up to $300 per child under age 6 and $250 per child ages 6 to 17.
Dale Bannon, national community relations and development secretary at the Salvation Army, said the expansion helped lead to a significant reduction in food insecurity, adding that more families had been "better able to provide the basic necessities that many of us take for granted."
"Fewer children are going to bed hungry or living with the fear of homelessness, and fewer parents are having to make agonizing decisions about whether to buy prescriptions or pay the electric bill," said Bannon, whose organization serves over 30 million people annually with rent assistance, housing and food, among other resources.
Claudia Sahm, senior fellow at the Jain Family Institute and a former Federal Reserve and White House economist, said the child tax credit payments have been helpful to families amid an increase in the price of many consumer goods.
"That's been a very important bridge as prices have been higher," Sahm said.
House Democrats in November passed a version of Biden's spending package that included a one-year extension of the increased credit amount and monthly payments and that would permanently make the credit fully available to the lowest-income families. But the Senate left Washington for the year without taking similar action.
Senate Finance Committee Chairman Ron Wyden (D-Ore.) has said that the IRS told his office that it needed an extension enacted by Dec. 28 in order to make a monthly payment on Jan. 15. The Biden administration has said it's looking at the possibility of double child tax credit payments in February if an extension is enacted in January.
But whether the evenly-split Senate can pass an extension early next year remains to be seen, as Republicans remain strongly opposed to the expansion and Manchin has expressed concerns about it.
Democrats had hoped to use a complex procedure known as budget reconciliation to pass the extension as part of the party's multitrillion-dollar social spending plan, which would have allowed them to bypass a likely GOP filibuster in the 50-50 Senate.
However, its final passage in the upper chamber would require the support of every Democratic senator - the chances of which seem to have only dimmed in recent days in light of Manchin's clear opposition to the spending plan in its current form.
"I cannot vote to continue with this piece of legislation. I just can't. I tried everything humanly possible. I can't get there," he said on "Fox News Sunday." "This is a 'no' on this legislation."
In an interview Monday with West Virginia MetroNews's Hoppy Kercheval, Manchin raised concerns both about higher-income households receiving the credit and a lack of work requirements.
"Make sure the people that need it get it, that's all," he said.
Manchin has also criticized the fact that the bill only included a one-year extension of the expanded credit, arguing that that hides the true cost because the expansion is ultimately likely to last for a longer period of time. The West Virginia senator said in Monday's interview that it's disingenuous to say that programs in the bill will be short-term.
Manchin's desired structure for the child tax credit might be a tough sell for his Democratic colleagues, and also have faced pushback from some experts and advocates.
Elaine Maag, principal research associate for the Urban-Brookings Tax Policy Center, pushed back on the idea of work requirements.
"By and large, people want to work, but they have a lot of barriers to work. They might have a disabled child. They might have a very young child. They might have caregiving responsibilities for older parents. They might not have the skills that match the job market they're in," she said.
Maag said the expanded child tax credit has played a critical role in addressing racial inequities in child poverty faced by some of the nation's most vulnerable families, pointing out the expansion has increased access to the credit for Black and Brown families.
Prior to the expansion passed earlier this year, Maag said Black and Hispanic families, whom she noted are more likely to work in low-income jobs, were less likely than their white counterparts to access the full child tax credit, which had previously been phased in with income.
"So, when we made that child tax credit available to all of those very low-income families, then it helped reduce that income gap between white families and families of color," she said.
The White House has continued to push for an extension of the child tax credit expansion, touting it as dramatically reducing childhood poverty. However, the administration has also signaled room for negotiating with Manchin on the issue.
"The president of course wants to extend the child tax credit. That's something he has spoken to," White House Press Secretary Jen Psaki said Monday. "We know that it was a significant contributor to cutting in half the child poverty rate. I'm obviously not going to negotiate from here. But you know, he doesn't think compromise is a dirty word."