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$1.9 trillion stimulus bill could be turning point in American law for families with new monthly payments to parents

UPDATED: Thu., March 11, 2021

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Chuck Schumer talk Wednesday after signing the $1.9 trillion COVID-19 relief bill during an enrollment ceremony on Capitol Hill in Washington, D.C.  (Alex Brandon/Associated Press)
House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Chuck Schumer talk Wednesday after signing the $1.9 trillion COVID-19 relief bill during an enrollment ceremony on Capitol Hill in Washington, D.C. (Alex Brandon/Associated Press)

WASHINGTON – House Democrats on Wednesday passed a $1.9 trillion economic stimulus package that will send $1,400 payments to most Americans, along with monthly payments to parents of up to $300 per child, a dramatic but temporary overhaul of a tax credit program Democrats hope will become permanent.

The sprawling legislation also includes $350 billion for state, local and tribal governments and billions more to fund vaccination, schools, unemployment benefits and more. Republicans universally opposed the bill, which President Joe Biden is expected to sign into law by the end of the week, criticizing its overall cost and provisions they say are unrelated to the pandemic.

Democrats, including Washington Sen. Patty Murray, have defended the scope of the package whose goals, they acknowledge, extend beyond pandemic relief to encompass a sweeping effort to combat poverty.

“Right now, the country is on fire – and Republicans’ biggest concern seems to be that we want to use too much water,” Murray said March 5. “The reality is, we are far from doing too much, because we will not have done enough until this crisis is over – until families across the nation are safe – and until we rebuild a stronger and fairer country.”

The Democrats’ poverty reduction ambitions are evident in the bill’s provision that expands the Child Tax Credit to as much as $3,600 a year, up from the previous maximum of $2,000, and transforms the year-end deduction into monthly payments of $300 for each child under age 6 and $250 for children aged 6 to 17.

Because Senate Democrats used a process called budget reconciliation to sidestep the upper chamber’s usual 60-vote requirement to pass legislation, the change will last just 12 months, but Biden has already signaled his support for making the payments permanent. Democrats in Congress are betting GOP lawmakers won’t want to strip the benefits from parents when they expire ahead of next year’s midterm election.

“I think this is the first time in a long time we’ve seen deficit spending targeted toward lower-income families,” said Ryan Herzog, an economics professor at Gonzaga University. “Republicans are going to have a hard time saying, ‘We’ve got to take this away.’ ”

Rep. Suzan DelBene, a northwest Washington Democrat who has championed the Child Tax Credit overhaul, is pushing to make the payments a permanent safety net for American children.

“We cannot lift children and families out of poverty for just one year,” DelBene said in a joint statement with Reps. Rosa DeLauro of Connecticut and Richie Torres of New York. “Now is the time to get this over the finish line. We have Presidential leadership, strength in Congress, and the urgency of a pandemic demanding action.”

In its current form, the Child Tax Credit lets taxpayers reduce their taxable income, but the lowest-paid parents don’t earn enough to qualify for the full amount. The new credit will be sent in monthly installments to all parents, regardless of income, with payments gradually phased out for individuals making more than $75,000 a year and couples who earn more than $150,000.

A Columbia University analysis found 35% of Idaho children didn’t benefit from the full tax credit because their parents earned too little, along with 30% in Washington as a whole and 45% in Central Washington’s 4th congressional district. The boosted tax credit, a Columbia report estimated in January, would reduce child poverty by roughly 45% nationwide and by more than 61% for Native American children.

While Republicans have been united in their opposition to the stimulus package as a whole, their criticism of the Child Tax Credit expansion has been relatively muted.

Republican 5th District Rep. Cathy McMorris Rodgers spearheaded a doubling of the Child Tax Credit from $1,000 to $2,000 as part of the 2017 Tax Cuts and Jobs Act, former President Donald Trump’s signature legislative achievement. In a statement, the Spokane congresswoman said the Democrats’ bill “has very little to actually do with crushing the coronavirus.”

“I am disappointed by how hyper-partisan this process has become,” she said. “Now more than ever, we need to come together to offer real solutions that provide targeted relief to the individuals, families, and businesses that continue to struggle. Unfortunately, this bill was not the solution that can deliver those results.”

Rep. Dan Newhouse, a Republican who represents the 4th district, said in a statement, “Instead of handing out thousands of dollars to each family, we should be focused on reopening our schools and getting adults back to work.”

“Republicans expanded the Child Tax Credit when we passed historic tax reform in 2017,” Newhouse said, “and while I am happy to see an emphasis on supporting working families included in this package, the far-left Democrats’ proposal comes up short. This legislation would turn this important tax credit for families into a fully-refundable, no strings attached universal basic income for all parents.”

Salvador Ortigueira, a Washington State University economist whose research focuses on anti-poverty tax policy, said the provision in the stimulus bill represents a turning point in the U.S. government’s approach to aiding parents.

Until now, the Child Tax Credit has been conditioned on working, but Ortigueira said that policy has become less tenable as unemployment has skyrocketed during the pandemic.

“The trend in the last 20, 30 years in the U.S. has been that people without education are suffering,” he said. “Not because they are lazy or don’t want to work hard, but because even if they work hard, sometimes don’t make it over the poverty line. It was accelerated by the pandemic.”

“What I suspect is that we are moving toward a European system, like it or not,” Ortigueira said, pointing to child allowances common in European countries. “Unless we manage to improve the education system, unless we do some industrial policy in order to create jobs that pay higher wages, I don’t see another solution. You cannot let an increasing fraction of the population live in poverty, because that creates other types of problems.”

The stimulus package also includes tens of billions of dollars to boost vaccination, testing, contact tracing and other anti-coronavirus efforts. Sen. Maria Cantwell, D-Wash., highlighted that part of the bill in a speech on the Senate floor March 5.

“Our health care workers are working tirelessly, along with other government officials, to get shots in the arms of individuals,” Cantwell said. “That’s why this bill is so important. Because it provides $20 billion to invest in vaccine administration and distribution. That includes launching community vaccine centers, deploying mobile vaccine units to hard to reach areas, and continuing to support an increased pace of vaccinations.”

“That is job one right now: Get the vaccine into the arms of Americans.”

But Republicans contend the legislation is largely a vehicle for long-time Democratic priorities and unnecessary spending that will burden future generations with massive debt. They point to the $350 billion in aid to state, local and tribal governments despite states losing just $1.7 billion in revenue, according to a March 3 estimate from the Tax Foundation, a right-leaning think tank.

The bill also distributes that revenue-replacement money using a formula based on unemployment rates and other factors GOP officials say unfairly benefit Democrat-led states that imposed more restrictions on businesses.

Gov. Brad Little, R-Idaho, wrote in a March 8 op-ed in the Idaho Press that the stimulus package would “bail out big, poorly-managed states and punish states that have operated responsibly during the pandemic.”

Sen. Mike Crapo, another Idaho Republican, lamented the lack of negotiation between the parties over the stimulus bill. After Congress passed pandemic relief packages in March and December 2020 with bipartisan support, Democrats took a different tack, arguing the latest package had bipartisan support among Republican voters and state and local officials despite near-universal GOP opposition in Congress.

“We should have debated political wish-list wants versus Americans’ needs,” Crapo said in a statement. “This process bypassed committees, bypassed regular order, and was devoid of true deliberation or debate. This spending spree grossly misses its mark, and places an undue burden on future generations.”

Critics worry the massive infusion of money into the nation’s economy could trigger inflation and increase the national debt to an unsustainable level, but Herzog said those complaints are hard to take seriously when neither party has had qualms with increasing the federal deficit when it benefits them – either Democrats increasing spending or Republicans cutting taxes.

“I think a lot of it is political,” Herzog said. “After all of the stimulus in 2020, combined with the deficits from the Great Recession and the rising deficits under the Trump administration, is the $1.9 trillion just the icing on the cake that’s going to cause inflation?”

Herzog said concerns over inflation are likely overblown, since inflation has remained low in recent years and the Federal Reserve can prevent a sudden increase by raising interest rates.

Crapo also raised concerns about the way the Child Tax Credit expansion was crafted, pointing to a proposal by Sen. Mitt Romney, R-Utah, that would have given even larger monthly payments to parents.

“I supported the successful Republican effort to double the Child Tax Credit in the 2017 tax reform law, and both Republicans and Democrats have recently put forward additional ideas that could provide additional support to low- and middle-income children,” Crapo said. “However, there are significant concerns about changing the administration of the CTC without any hearings or debate to consider the possible ramifications of these changes, and the challenges they may pose for the Internal Revenue Service.”

Rep. Russ Fulcher, a Republican who represents North Idaho, also objected to the lack of GOP input in the package and its overall price tag.

“These efforts started as a way to provide specific relief to those struggling during the pandemic, but have grown so large that less than a quarter of the funds even pertain to combatting COVID-19, with the vast majority funding a liberal wish list of items,” Fulcher said in a statement, pointing to the aid to states and the lack of a provision to block the use of taxpayer funds for abortion.”

Orion Donovan-Smith can be reached at (202) 853-2524 or at orionds@spokesman.com


Orion Donovan-Smith's reporting for The Spokesman-Review is funded in part by Report for America and by members of the Spokane community. This story can be republished by other organizations for free under a Creative Commons license. For more information on this, please contact our newspaper’s managing editor.

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