Monthly child tax credit expires as virus surges

The monthly child benefit — an expansion of the existing child tax credit part of the Biden administration’s response to the pandemic — is ending, just as the latest wave of coronavirus cases is keeping people home from work and threatening to set off a new round of furloughs.

The payments, which started in July and amounted to hundreds of dollars a month for most families, have helped millions of American families pay for food, rent and child care; kept millions of children out of poverty; and injected billions of dollars into the U.S. economy, according to government data and independent research.

Economists warn that the one-two punch of expiring aid and rising cases could put a chill on the once redhot economic recovery and cause severe hardship for millions of families already living close to the poverty line.

Unlike most other programs created in response to the pandemic, the child benefit was never intended to be temporary, at least according to many of its backers. Congress approved it for a single year as part of the $1.9 trillion American Rescue Plan, but many progressives hoped that the payments, once started, would prove too popular to stop.

That didn’t happen. Polls found the public roughly divided over whether the program should be extended, with opinions splitting along partisan and generational lines. And the expanded tax credit failed to win over the individual whose opinion mattered most: Sen. Joe Manchin, D-W.Va.

Manchin cited concerns over the cost and structure of the program in his decision to oppose President Joe Biden’s climate, tax and social policy bill. The bill, known as the Build Back Better Act, cannot proceed in the evenly divided Senate without Manchin’s support.

He has argued that it makes little sense to provide aid to relatively well-off families.

Many supporters of the credit say they’d happily limit its availability to wealthier households in return for maintaining it for poorer ones.

Manchin has also publicly questioned the wisdom of unconditional cash payments and has privately voiced concerns that recipients could spend the money on opioids, comments that were first reported by The Wall Street Journal and confirmed by a person familiar with the discussion.

But a survey conducted by the Census Bureau found that most recipients used the money to buy food, clothing or other necessities, and many saved some of the money or paid down debt. Other surveys have found similar results.

Researchers at Columbia University estimate that the payments kept 3.8 million children out of poverty in November, a nearly 30% reduction in the child poverty rate.