Expanded Child Tax Credit Grabs Attention in Campaign’s Final Weeks

The future of the expanded Child Tax Credit—either the version passed during the Trump administration in 2017 or the expanded CTC proposed by President Biden and passed in 2021—has become an unlikely lightning rod on the 2024 campaign trail, including during Tuesday’s vice presidential debate. Spotlight spoke recently with Patrick T. Brown, a fellow at the Ethics and Public Policy Center and the author of “Family Matters,” a weekly Substack update, about the proposals and counter-proposals. The transcript has been lightly edited for length and clarity.

So, is there an CTC arms race of sorts?

I think at least rhetorically there is. There’s a recognition that we have to do something because nobody in D.C. wants the current level of the CTC to go down by half. It’s $2,000 right now and if they don’t act next year, it’ll be cut in half to $1,000. That would be an effective tax increase on tens of millions of parents and no congressman is going to want to have to explain that back home. And so, I think it’s pretty clear there will be some steps on the CTC next year. Now, what that looks like and if it’s an arms race or not, that’s a harder question.

The rhetoric is there. Certainly, we’ve seen the plan from Vice President Harris, who is essentially carbon copying the expansion of the CTC during the pandemic. And then we’ve seen a couple Republicans throw around big numbers, most notably Senator Vance of Ohio, the Republican vice president nominee, who casually tossed out a $5,000 number when he was being interviewed on one of the Sunday morning shows. That’s bigger than anybody else has talked about and I’m not sure if that’s within the realm of political reality. But it’s at least saying that both presidential tickets recognize that the CTC is a meaningful way of delivering for parents, and that there’s some pressure on them to focus on that, whoever is in the White House next year.

And to just give our readers a bit more background, the current increase was enacted during the Trump administration and expires next September, correct?

It expires with the next tax year, right. But the important thing to remember is that when they passed the CTC expansion in 2017, they did it in conjunction with removing other benefits in the tax code. It’s not the case that if they don’t act but go back to $1,000, we’re just back to the status quo ante; parents would actually be worse off than they were prior to 2017. So, there’s a real incentive for Congress and the White House, whoever’s in the White House, to focus on, at the bare minimum, keeping it at $2,000, if not expanding it. We’ve seen very high inflation, which has eroded the real value of the credit, so if you were just to say, okay, let’s make it equivalent today to what it was in 2017, you have to increase it to about $2,500.

And do you know enough about what the Trump/Vance proposal might be to compare it with Harris/Walz? Or is it still sort of embryonic at this point?

I guess embryonic is a way to say it. Again, we rhetorically we know what Senator Vance has talked about, and we’ve heard him over the years in, in sometimes colorful language, talk about the need for something like a Child Tax Credit. And I think I were to put on my pundit’s hat, I would imagine what a CTC proposal coming from Senator Vance would look like, as he’s talked very openly and forthrightly about the fact that working class families, due to the structure of the credit, often don’t receive the full value. If you’re making $30,000 a year, you don’t get the same amount of CTC as your neighbor down the street who’s making $40,000 a year because of the refundability structure of the CTC.

if Senator Vance is writing the proposal, I think he would focus on that, but it is hard to know exactly where former president Trump’s head is on some of these things. If Vance is in his ear, I think we could see some, some meaningful changes in a helpful direction.

I know you’re a fan of Senator Romney’s proposal. Has Senator Vance talked about making this universal? Has that been part of his interest in the past?

So again, he’s never, to my knowledge, spelled out exactly what he’d like. But he has gestured to the fact that low-income families don’t benefit the same way as they would have with the second iteration of the Romney proposal, where you had a very modest earnings requirement of $10,000 a year. I would suspect you would see something very similar to that in a Vance proposal saying, look, we we’re not comfortable with going full universal but we want to be encouraging people who even just have a toe in the labor force.

And to that point, who are the other players that you would expect on this, particularly on the Republican side?

The big voice in the Senate is Senator Crapo of Idaho, who is the ranking member of the Senate Finance Committee and the lead Republican voice when it comes to negotiating the tax code. And he was part of the reason why the House passed a deal to expand refundability of the CTC, the deal that he and Senator Wyden and Rep. Jason Smith came up with earlier this year. And Senator Crapo was a very influential voice saying in saying let’s wait until after the fall elections because we’ll have a better sense of where our negotiating strengths are. I think you should expect to see some other elected Republicans who want to see the party move in a more working class friendly, pro-family direction in the mix as well, like Senator Rubio.

And do you think there’s anyone who would specifically take up Romney’s bill?

We will see. Senator Romney’s time in the Senate has a ticking clock, but the nice thing about his bill is they’ve done all the leg work. It would be easy for someone to take it, tweak a few things and make it their bill, which happens in D.C. all the time. But my suspicion is there won’t be appetite for something that would mean such a drastic change in how the CTC works. I think what’s more likely to happen is Republicans say we’re going to increase the top line of the credit, maybe tweak some of the refundability aspects a little bit, and then maybe make some cosmetic changes here or there. And we know where the Democrats are going to stand, which will be the Biden-era or pandemic-era CTC. And then they will have to hash it out.

And on the Democratic side, Senator Bennet and others have obviously been very active on this. Is the sense that they are comfortable lining up behind the Harris/Walz proposal at this point?

I think so. One of the first things she mentioned in her debate with former president Trump last was the Child Tax Credit. Fiscal spending bills only require 50 votes and if she has even, 49, 50 51 Democratic Senate seats and she’s in the White House, I would be shocked if the CTC isn’t front and center. They know how to do it, and they know they have the votes for it.

Obviously, people have different views on the impact of the CTC expansion, but do you think that there’s general bipartisan agreement that it has had at least some positive impact?

In the sense that there are some people on both sides who agree with that? Yes.

That’s a good way to put it.

There are definitely corners of the GOP that still grit their teeth. People who write for the Wall Street Journal editorial page, and, and even some of former president Trump’s economic advisors, have come out with comments suggesting that that was the reason why we have had high inflation or other ridiculous objections. They don’t love it because their priorities are lowering the corporate tax rate and then trying to just lower rates across the board rather having what they see as special interests benefit. There’s always going to be some opposition from my corner, but as we saw in January with the Wyden and Smith CTC deal, two thirds of House Republicans voted to expand the CTC and that was a pretty modest change.

I think you could see something similar happen where the usual voices raise a hue and cry and call it welfare but if there’s leadership coming from a Vice President Vance or President Trump, I would expect Republicans to fall in line. I think it would be harder if it gets painted as an exclusively a Democratic priority. If this is a Democratic must have and they try to strongarm it through, I think will polarize it in the way that everything gets polarized in D.C.

And Patrick, do you think that the public support for this has grown, perhaps a case of absence making the heart grow fonder? I think there was generally the view when the Biden expansion went through that this would be so wildly popular that it would remain in, in effect forever. That that didn’t turn out to be true.

It’s hard to say. Certainly, I think we were all surprised that the Biden pandemic expansion of CTC basically disappeared without a trace. There were a couple of op-eds here and there, but it was pretty clear that at the time Joe Manchin was the key Senate voice, and he was dead set against it. And I think especially coming when it did, when there was so much going on in the terms of recovering from the pandemic, high inflation and all that supply chain stuff, I think people just saw it as a nice sort of one-off temporary thing, and we’ll get back to business as usual.

Now, can the support be mustered for it? I think so. It’s been interesting to see Vice President Harris foreground the issue the way she has because I’ve not seen evidence in any of the polling to suggest that the Child Tax credit is a huge driver of people’s votes. It seems to be viewed as a nice thing to have, an add-on, rather than something that’s shifting people’s votes on the margin. And so, in that sense, we get back to the bipartisanship conversation, because it’s not something like universal childcare where there’s a really strong partisan divide on it. I would be a little concerned about sharpening it too distinctly so that it becomes one party’s thing or the other.