Important to Pay For Child Tax Credit Expansion
For Immediate Release
Democratic lawmakers are planning to unveil legislation to substantially boost the Child Tax Credit from $2,000 to $3,000, providing monthly payments to households and higher payments for younger children. While this thoughtful proposal to expand support for children deserves consideration, it cannot legitimately be classified as COVID relief and should be fully paid for under the House PAYGO rules and normal principles of budgeting. The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
We are still in the midst of a pandemic and economic crisis, and more borrowing will be needed to provide necessary relief and support the economic recovery. However, emergency borrowing authority must be reserved for pandemic-related needs, not for enacting long-sought-after policy priorities.
House PAYGO rules make clear that new spending increases and tax cuts not related to the COVID response or climate change must be paid for. Expanding the child tax credit clearly doesn’t qualify under either of these exemptions, as it is clearly meant as a permanent policy and is in many ways duplicative with the proposed $2,000 per child in recovery rebates.
Replacing the current $2,000 child tax credit with a more broadly available $3,000 to $3,600 credit would help address the disadvantages that kids face in the federal budget. But we shouldn’t borrow from our kids in order to pay for their care when there are plenty of offsets available.
Overall, this policy will cost over $100 billion per year and more than $1 trillion over a decade if made permanent. Reducing child poverty is a worthy policy priority and one worth paying for.
Senator Mitt Romney’s recent proposal to consolidate existing support for children and workers and repeal regressive tax breaks represents one possible package of offsets. The $5.4 trillion of tax increases and budget savings proposed by President Biden during the campaign also offers many alternatives. Offsets could also be phased in to avoid imposing tax increases during a pandemic or disrupting a fragile recovery.
This is a worthy policy aimed at achieving a worthy goal. That’s not an excuse to throw budget discipline out the window. Borrowing for the pandemic isn’t an excuse for unrelated tax cuts, nor is it a reason to enact permanent policies that aren’t properly financed.
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