- House Democrats unveiled legislation to set up a program to send checks to families for a year.
- The payments would be up to $US300 monthly, depending on the child’s age.
- Biden has expressed support for the plan, which could form part of his relief package.
- Visit the Business section of Insider for more stories.
Congressional Democrats on Monday unveiled legislation to provide up to $US300 in monthly cash benefits for American families, a measure they want to make a critical part of President Joe Biden’s federal $US1.9 trillion rescue package. It’s part of an effort to significantly cut the number of children living in poverty.
The plan, known as the American Family Act, would provide $US3,600 over the year to families with children 5 and under and distribute $US3,000 to those with kids between 6 and 17. Democrats said they would establish it as a one-year emergency federal program but would likely press for a permanent extension later this year.
Reps. Rosa DeLauro of Connecticut, Suzan DelBene of Washington, and Ritchie Torres of New York sponsored the legislation. They are working alongside Rep. Richard Neal of Massachusetts, the chair of the House Ways and Means Committee. DeLauro leads the House Appropriations Committee.
The initiative would be set up as a monthly benefits program managed by the IRS in a bid to ease the high cost of childcare and assist families struggling with lost income during the pandemic. Millions of households would qualify, including those with no income-tax obligations.
“Nobody pays their bills once a year â€” you pay your bills each month,” DeLauro said at a virtual news briefing on the plan. “The design makes more sense and helps families make ends meet through difficult months.”
The legislation from the three House Democrats will form the bulk of the details about the child-tax-credit expansion in Biden’s relief package. Neal’s office is also involved in marking up the bill with administrative details.
In the version from Neal, the payments would start phasing out for individuals earning $US75,000 and couples making $US150,000. Those are lower income thresholds than in the proposal put forward by the three House Democrats: $US130,000 for single filers and $US180,000 for joint filers.
“Through the legislative process, this will be worked out,” DeLauro said in response to a question from Insider about the thresholds. “We anticipate that those technicalities will be sorted out in the course of debate and discussion.”
The Neal plan would kickstart the monthly payments on July 1, though some experts say that may be an ambitious timeline given the immense strain the IRS faces with the annual tax season and the pandemic.
Currently, families can claim a $US2,000 tax credit for kids 17 and under, an amount last boosted under the 2017 Republican tax law. It is paid annually in a lump sum after people file their taxes.
About one-third of the lowest-income households don’t receive the whole credit because their tax bill is lower than $US2,000, meaning it is not “fully refundable.” Their payments are capped at $US1,400.
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The plan has gained momentum among Democrats over the past several years. Biden incorporated it into his campaign platform and made it part of his administration’s relief proposal.
Researchers at Columbia University projected that it could cut the child poverty rate in half and lift millions of Black and Latino children out of poverty.
Last week, Republican Sen. Mitt Romney of Utah released another child-benefit plan that would provide bigger cash payments to families.
The rollout imparted bipartisan support on the Democratic drive. But Sens. Mike Lee of Utah and Marco Rubio of Florida, supporters of bolstering the child tax credit, lambasted Romney’s plan as a form of “welfare assistance.” It’s a sign that monthly cash payments to families may have limited appeal among conservatives.
“The statement from Mike Lee and Marco Rubio was so strongly worded â€” I think it surprised a lot of people,” Patrick Brown, a former GOP aide in the Senate and a tax expert, said in an interview. “The fact they were not on board from the get-go probably doesn’t speak well to its prospects on the Republican side.”
Brown said he thinks there is “appetite for more discussions” among Republicans on widening access to the child tax credit so it reaches more of the poorest families. Lee and Rubio supported a plan in the past to allow families paying payroll taxes instead of income taxes to claim the credit as well, a move designed to encourage employment.
Democrats’ and Republicans’ competing approaches to helping low-income families could set up a major fight this year over what would be one of the biggest changes to the nation’s social safety net in decades.
Some conservative economists have argued that government payments could disincentivize work among the lowest-income Americans. Other policy experts have said it may be administratively difficult to pull off.
The Biden administration indicated its support for the plan on Monday. The White House press secretary, Jen Psaki, said at a press conference that it was an “essential priority” within the package.
Congressional Democrats are seeking to enact Biden’s relief package by early March using reconciliation, a legislative manoeuvre allowing lawmakers to approve a bill with a simple majority of 51 votes instead of the 60 generally required in the Senate.
Biden’s plan includes $US1,400 stimulus checks, $US400 federal unemployment benefits through September, and assistance to state and local governments, among other provisions. Republicans are staunchly opposed to its level of spending.
Committees in the House are set to start drafting legislation for the Biden plan over the next two weeks with the aim of a floor vote during the week of February 22.
On Friday, the president indicated his strongest support yet for moving ahead without Republican votes. Still, Democrats remain divided on certain issues such as the income thresholds for a third wave of stimulus checks.
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