Democrats, Including 2020 Candidates, Jump On Massive Expansion of Child Tax Credit

Democratic Sens. Sherrod Brown (Ohio), Amy Klobuchar (Minn.) and Michael Bennet (Colo.). Brown and Bennet have introduced the American Family Act; Klobuchar is one of 36 co-sponsors in the Senate.

It is often posited that child protection agencies are prone to confuse poverty with neglect, unnecessarily involving families with the courts and foster care. A new bill introduced by several Democrats yesterday would attempt to remove that possibility in more cases by supplying more parents with cash assistance. And researchers estimate this could slash America’s shameful child poverty rate.

The American Family Act, which has the endorsement of virtually every Democratic candidate for president, would dramatically increase the Child Tax Credit (CTC) and for the first time make America’s poorest working families eligible for these payments.

“All across the country, families are working harder than ever but have less and less to show for it,” said Sen. Sherrod Brown (D-Ohio), in a statement announcing the bill’s introduction. “Our bill would help put more money back in the pockets of working families and set children up for future success.”

The current CTC in America provides a maximum of $2,000 per year to families in a single payment. But the credit is only partially refundable, which excludes parents with less than $2,500 in taxable income.

The American Family Act would divide CTC into two divisions – one for children between 0 and 5, the other for children between 6 and 16 – and increase the amount. The maximum credit for young children would go up to $3,600; at age 6, the maximum would drop to $3,000.

Both credits would become fully refundable, meaning any tax-filing parent could claim it regardless of taxable income. Bill authors estimate that the current limits on refundability exclude 21 million children from being claimable under CTC.

The bill would also use an advance payment method to pay credits out over time instead of in a lump sum, the goal being to smooth out payments for families. By advancing the credit, a parent or household might avoid taking on some debts that they would pay off with interest later in a one-payment structure.

Child poverty varies widely by state. New Hampshire posted the lowest child poverty rate in 2017 (10.3 percent), according to estimates by the Children’s Defense Fund. Louisiana, ranked last, posted a rate of 28 percent that year.

A team of researchers at the Columbia University Center on Poverty and Social Policy reviewed the changes proposed in the act, and made estimates of its impact using a federal Supplemental Poverty Measure. The report estimates that the changes in the American Family Act would move “nearly 4 million additional children … out of poverty.” The child poverty rate would fall from 14.9 percent to 9.3 percent, according to the study.

The American Family Act has not been scored, but recent estimates of such plans suggest that the cost will be greater than $100 billion over a 10-year window. The plausible path for this bill, or a similar proposal, would be under a budget reconciliation process if the Democrats take the Senate, one of them defeats Trump, and they maintain control of the House.

Even then, some experts are skeptical that a dramatic expansion is politically possible.

“It’s really hard to sell something like a family allowance to moderate Democrats and the public when they can only perceive benefits in terms of welfare or tax relief,” said Josh McCabe, a senior fellow at the Niskanen Center, in a tweet yesterday. “Family allowances don’t fit either category. This will eventually work against the Bennet-Brown proposal.”

McCabe also noted that the last two Democratic presidents have used early political capital on health care, and that several of this cycle’s candidates appear poised to do so as well to promote a Medicare for All plan. Brown, the bill’s author and a potential 2020 candidate, might be an exception, he said.

“He’s already signaled he’s unimpressed with” Medicare for All, McCabe tweeted. “He strikes me as exactly the kind of policy entrepreneur who could carry a family allowance to the finish line.”

Brown introduced the bill with Sen. Michael Bennet (Colo.) and Reps. Rosa DeLauro (Conn.) and Suzan DelBene (Wash.). It begins with 36 Senate co-sponsors and 174 House co-sponsors, all Democrats.

Among the co-sponsors are presidential candidates Cory Booker (N.J.), Kirsten Gillibrand (N.Y.), Kamala Harris (Calif.), Amy Klobuchar (Minn.), Bernie Sanders (Vt.) and Elizabeth Warren (Mass.).

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