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Op-Ed

Democrats Call Biden’s Economy “Savage” in Attempt to Revive Child Tax Credit

Washington Examiner

June 30, 2023

With unemployment near record lows and President Joe Biden running for reelection, some Democrats recently offered an unexpected take on the U.S. economy: It stinks, especially for low-income families.

During a recent Senate Finance Committee hearing, Sen. Michael Bennet (D-CO) thundered that parents are currently “scraping by … in this savage economy,” burdened with “some of the lowest economic mobility” and “almost the highest rate of child poverty in the industrialized world.”

Just as oddly, Democratic witnesses argued conditions for millions of families were significantly better amid the pandemic in 2021 despite the fact that weekly COVID-19 deaths were 10 times current levels and unemployment was significantly higher than today. One testified that, in contrast to 2021, too many families are now “struggling to make ends meet” and “inequities in the job market” have grown. Another noted how in 2021, her family could afford a vacation yet today was straining to afford children’s shoes.

Why are these Democrats bashing Biden’s economy in the run-up to 2024, even as the White House is extolling “Bidenomics”? Because of their desperation to revive 2021’s massive, but temporary, expansion of the child tax credit.

The child tax credit’s value doubled under the 2017 Trump tax cuts, with working parents receiving up to $2,000 per child in annual tax relief, including up to $1,400 in tax payments from the IRS if parents worked but didn’t earn enough to owe federal income taxes. Until 2021, to collect this benefit, parents always had to work (reflecting the program’s “work requirement”), and low-income parents received a larger tax credit when they worked more (its “work incentive”).

For some Beltway liberals, however, that wasn’t good enough. It meant parents who didn’t work were ineligible for child tax credit payments and others who worked and earned too little to owe federal income taxes collected less than the maximum benefit. That’s why Democrats’ $1.9 trillion American Rescue Plan offered what one journalist dubbed “fat stacks of cash,” including a temporary expansion of the child tax credit, which the White House cast as helping the country “weather this storm” of COVID-19.

The American Rescue Plan made three significant changes to the child tax credit, effective only for 2021, to avoid their trillion-dollar long-run cost. First, it increased the child tax credit’s maximum value to $3,600 per child under age 6 and $3,000 per older child. Second, payments were made in monthly installments for the first time instead of only in annual tax refunds. Third, all parents, including those who didn’t work or pay income taxes, received the same $3,000 or $3,600, varying only for the child’s age.

Those policies effectively revived—and then some—the work-free welfare checks that ended decades ago when then-President Bill Clinton enacted reforms requiring welfare recipients to work. By repealing the child tax credit’s work requirement, the 2021 expansion offered new benefit checks to nonworking families, including more than 5 million adults and children. Repealing the child tax credit’s work incentive increased checks for another 10 million households.

Those temporary expansions expired at the end of 2021, and extensions proposed since then have been repeatedly blocked by Republicans and Sen. Joe Manchin (D-WV), who object to their enormous cost and anti-work features. But while larger child tax credit checks were paid, they added to literally trillions of dollars in pandemic benefits flowing to many of the same households, including stimulus checks issued to 150 million households and record unemployment benefits paid to more than 30 million people at their peak. Food stamp rolls swelled to more than 40 million recipients, and Medicaid caseloads soared to more than 90 million. Those pandemic expansions, many only now expiring, meant tens of millions collected record benefits that paid far better than working.

To be sure, some proponents of reviving the child tax credit expansion sang from the party’s preferred hymnal on the economy. For example, Sen. Debbie Stabenow (D-MI) credited the administration with creating 13 million jobs—never mind that most simply reflect the return of jobs lost during the pandemic. Sen. Sherrod Brown (D-OH) recently argued that “wages and employment numbers are the best we’ve seen in decades.” Liberal analysts claim such figures make the current economy literally the best ever.

As the 2024 races heat up, some members of the president’s party will no doubt agree with him that it is the best of times. But others pushing to revive the 2021 child tax credit expansion and still more pandemic benefits are likely to convey a darker take. For them, the current “savage” economy will somehow always trail conditions at the height of the pandemic—when record government benefits flowed like water, and the cost to taxpayers was no object. That’s because, in the end, regardless of current conditions, permanently reviving those massive benefits is their only real goal.

About the Author

Matt Weidinger