- Millions of families have received an extra boost in their bank accounts this week as part of a more generous child tax credit.
- The monthly payments are set to continue throughout this year, as authorized by the American Rescue Plan Act.
- Whether or not those payments continue past then is up to Congress. Some advocates are already saying the extra income needs to be made permanent.
Sasha Demskie received a welcome deposit in her bank account this week: a $250 payment from the government as part of the new monthly child tax credit payments.
The money will go to pay basic bills, said Demskie, 46, of Conway, Arkansas, who lost her job in April while she was in the hospital with Covid-19.
Today, Demskie, a college-educated data analyst, still has not been able to collect unemployment benefits from the state.
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Demskie qualifies for the monthly child tax credit payment for her 9-year-old daughter.
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"Anything that's coming from the government right now is greatly needed," she said.
On Thursday, about 35 million families were set to receive the first monthly payments of the expanded child tax credit. The payments are scheduled to continue through the end of this year.
However, family advocates are already pushing to make the expansion permanent.
Demskie is one of them, having signed a letter as part of a group of mothers from all 50 states asking President Joe Biden and Vice President Kamala Harris to keep the expanded credit, including monthly payments, to help them juggle responsibilities at home and work.
"As mothers, we say loud and clear: we need help," they wrote. "Many moms want to be at work right now, but have either been laid off or can't return because of demands at home.
"It is time for our government to have our backs."
The expanded child tax credit was included in the American Rescue Plan Act passed by Congress in March. While the child tax credit has been around for a long time, this new version is more generous and also implements monthly payments for the first time.
The payments include up to $300 per month per child under age 6, and $250 per month for kids ages 6 to 17.
In total, eligible families will receive up to $3,600 per child under 6 and $3,000 for those ages 6 to 17. The total sums have been raised from $2,000 per child, so long as a parent or family falls within certain income thresholds.
Half of the new sums will be available to families via monthly payments, with the rest to be paid when they file their tax returns. The credit also now includes 17-year-olds. In addition, it is now fully refundable, so lower earners stand to get more money.
Estimates suggest the new child tax credit and other initiatives tied to the American Rescue Plan Act will help cut child poverty in half.
Consequently, many officials, too, are calling for the changes to be made permanent. Among them is Treasury Secretary Janet Yellen, who said in an interview this week that it is "very important to continue" the enhanced child tax credit.
Whether the new credit will stay will depend on politicians on both sides of the aisle agreeing to sign off on the hefty tab.
Over 10 years, expanding the child tax credit permanently would cost roughly $1.5 trillion, according to Shai Akabas, director of economic policy at the Bipartisan Policy Center.
Part of why it would be so expensive is that the expansion is not particularly well targeted, meaning that it goes to a significant majority of the population — not just the neediest, Akabas said.
Further, it is not clear whether Republicans would back renewing it, given that none of them voted for the broader package that authorized the temporary expansion.
"There is at least a decent chance that it runs out if they're not successful in moving it through the reconciliation package," Akabas said of Democrats' push for a $3.5 trillion budget deal.
While it may be difficult to make the expanded child tax credit permanent, Democrats will likely look to extend it to at least 2025, when some other tax provisions are set to expire, said Ed Mills, Washington policy analyst at Raymond James.
Moreover, because about $500 million was appropriated to create the system to send out the checks, that also shows some commitment to the program.
"Generally speaking, $500 million for a program that's going to give out six checks seems unlikely," Mills said. "I think they set this up to be extended, if at all possible."
The last monthly check is scheduled to go out 10 days before Christmas.
"Does Congress leave for Christmas and not extend out the child tax credit?" Mills said. "I think that timing was purposeful."
For families who rely on the money, the loss of the bigger credit and monthly checks could be a difficult adjustment.
"Having to deal with sudden changes that are going to come about because a temporary policy is expiring every year or couple of years is just not the way we should go about creating policies that are meant to be predictable and helpful for American households," Akabas said.
For Demskie, being able to count on those monthly child tax credit checks would help her plan long-term for both her and her daughter, she said.
For now, she is relying on the help of her father and hoping to find a job so she can set aside the extra money.
"We're in a predicament right now, as thousands of us are," Demskie said.
"Planning is the key thing," she added. "If I could just be able to save money, that's worth a lot to me."