Congress failed to renew expanded child tax credit — can bipartisanship save it?

WASHINGTON (OSV News) — A child tax credit expansion was not included in an omnibus funding bill passed at the end of December, despite efforts by some lawmakers to reinstate the expired policy that is credited with lifting millions of children out of poverty. Still, some Catholics see hope that bipartisanship in Congress may save a valuable tool in the fight against poverty and even abortion.

The expanded child tax credit, part of the COVID-19-era 2021 American Rescue Plan, sought to help alleviate parents’ rising consumer costs during the pandemic, granting eligible recipients $3,000 per child between 6 and 17 years old, and $3,600 per child under the age of 6. Reports from the U.S. Census Bureau, academic institutions and other nonprofit research organizations found a significant decrease in child poverty as a result of the policy.

Lawmakers allowed the expanded version of the credit to expire at the end of 2021, despite calls from some Catholic groups, including the U.S. Conference of Catholic Bishops, over this past year to renew it.

Anthony J. Granado, the vice president of government relations for Catholic Charities USA, told OSV News in an interview that the child tax credit is an “invaluable” tool toward “supporting the well being and stability of families.”

“For those members of Congress who said they’re very pro-family, pro-family values, believe in strengthening the family, this is a key way to do that,” Granado said.

Julie Bodnar, a policy adviser for the USCCB’s Department of Justice, Peace and Human Development, told OSV News the child tax credit, while it was implemented, lifted millions of children out of poverty.

“We know this credit can work and that it can lift more children out of poverty,” Bodnar said. “The fact that we’re not using it to do that, that we’re not taking advantage of, or not improving it and strengthening it so that it can have its maximum impact, is really unacceptable. We know how to lift children out of poverty. We should be doing it.”

Bodnar said the credit still has room for improvement to meet the needs of the lowest-income families by making it fully refundable, and that the U.S. bishops would like to see the credit expanded to unborn children.

The expanded child tax credit could also be a powerful, lifesaving tool in the fight against abortion, which in the U.S. is heavily correlated with poverty and low incomes. The abortion research firm Guttmacher Institute reported 75 percent of women seeking abortion were low-income, with 50 percent below the federal poverty line. About six out of 10 women seeking abortion were already mothers. The top concerns reported included not being able to afford another child, losing the ability to work or continue education, or having to care for dependents or other family responsibilities.

In an article for Public Discourse, demographer and Institute for Family Studies research fellow Lyman Stone predicted the U.S. could reduce the abortion rate by 5% — with potentially 40,000 babies born a year that otherwise would be victims of abortion — if it provided direct cash transfers to parents, by spending an additional $3,500 annually on top of the child tax credit per child. He pointed to a similar initiative in spending, where direct cash support to parents reduced the abortion ratio in Spain.

The USCCB’s Bodnar expressed optimism about the potential for bipartisan compromise on the expanded child tax credit.

“We’ve seen members of Congress on both sides of the aisle talking about how they want to improve this credit,” she said. “There may still be some big gaps about what those details look like, but I think that the fact that there’s even interest on both sides of the aisle is really encouraging and tends to give us a place to start.”

The USCCB has advocated for the expanded child tax credit. Several committee chairs in a May 2022 letter to House and Senate members pointed out the policy reduced child poverty, and helped parents pay for basic needs like groceries, housing and utilities.

“Addressing this poverty is a moral imperative of the highest priority,” they stated, emphasizing it would offset immediately the effects of inflation which are “making it even more expensive to raise children.”

Multiple reports have found the enhanced child tax credit had a measurable effect on the child poverty rate.

The U.S. Census Bureau found in a November 2022 paper that the expanded Child Tax Credit accounted for 2.1 million children out of nearly 3 million lifted above the poverty line.

A November 2022 report by the Center on Poverty and Social Policy at Columbia University reached a similar conclusion.

“The weight of the evidence is clear,” the report stated. “[W]hile in place, the expanded Child Tax Credit reached the vast majority of families with low, moderate, and middle incomes; shored up family finances amidst the continuing COVID-19 and economic crisis; helped reduce child poverty to the lowest level on record; decreased food insufficiency; increased families’ ability to meet their basic needs; and had no discernable negative effects on parental employment.”

The same report found that after the policy expired, these children saw “a reversal of fortune directly attributable to the loss of the credit — including lower disposable income and increased poverty, food hardship, and financial strain.”

“Combined with recent inflation trends, the expiration of the expanded Child Tax Credit has posed an ongoing challenge for families nationwide,” the report stated.

Granado said, “the data is clearly there, that it has helped keep people out of poverty, helping particularly children.”

“It’s brought stability to families,” Granado said.

At the end of 2022, Democrats listed the renewal of the expansion as a key priority in their omnibus negotiations with Republicans, offering some corporate tax benefits in exchange. But Republicans did not agree to the offer, with some arguing it was not a true concession as many Democrats already support those credits.

Sen. Michael Bennet, D-Colo., in a Dec. 20 statement criticized Republican leaders for not discussing “a deal that would benefit America’s kids and businesses,” saying “the coming year will be much harder for America’s families as a result.”

However, Republicans have been divided among themselves about the child tax credit policy. Some Republicans, like Sens. Marco Rubio of Florida or Mitt Romney of Utah, have proposed alternative versions to the child tax credit backed by Biden that would provide a child subsidy to working parents.

While some Republicans have cast such direct support to parents as a government handout, others have argued, especially in the wake of the Supreme Court’s ruling in Dobbs v. Jackson Women’s Health Organization, that such efforts are pro-family.

“There is bipartisan support for this,” Granado said. “It’s a question of whether there’s enough.”

Kate Scanlon is a National Reporter for OSV News covering Washington.

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