Biden introduces family aid plan – but would it help the families who need it the most?

On Wednesday, Biden argued that the expanded child tax credit should be extended through the year 2025, adding that “we can afford it.”

The child tax credit reduces the amount of federal taxes owed for people with a child under the age of 17.

The American Rescue Plan – a nearly $2 trillion COVID relief package passed by Congress and signed into law earlier this year – expanded the child tax credit from $2,000 to $3,000 for each child age six and above, with parents receiving a $3,600 credit for each child under the age of six. Biden’s proposal seeks to extend the expanded credit, and would also make 17-year-olds eligible for the credit.

Lyman Stone, research fellow at the Institute for Family Studies, told CNA that programs including free child care, paid maternity leave, and child allowances can have a limited positive impact on families – and by extension, the birth rate.

The recent Census showed that U.S. population growth in the past decade was the slowest since the Great Depression. Data from 2019 showed the U.S. birth rate at its lowest recorded level.

Stone emphasized that policies providing direct cash benefits to families are “the most effective – that is, they give you the most babies per dollars that you spend.”

“But the differences are not dramatic,” he added. “So we can expect that his [Biden’s] proposal would probably increase the birth rate somewhat.”

Stone said there are some “concerning elements” of Biden’s proposal as well, adding that most of its financial commitments are toward policies that primarily benefit working or higher-income parents, such as child care, community college, and spending on universal pre-K.

“The more a family works, the more likely it is they will avail themselves of free child care,” he said. “The more a family works, the more value a family places on the work, the fewer children they’re likely to have to begin with. And the fewer children they desire to have.”

A family that works more, Stone said, would also likely have a higher income to begin with.

“So this is aid disproportionately going to families that have less need, and who may have smaller family desires to begin with,” he said. “So in general, I think that family policy that is routed through work – that is, it only goes to working families – is a mistake.”

A wiser course of action, he argued, would be “to focus on a child allowance, and get a good, large, permanent child allowance, and make that the number one priority.”

“Unfortunately, Biden’s current proposal does not do that,” Stone said, noting it is a temporary expansion to 2025, when the 2017 tax cuts expire.

“When they want to raise corporate taxes, and things like that, and undo the Trump tax cuts, they want to be able to offer the child allowance as a big countervailing tax cut so they can say ‘oh, we didn’t raise taxes!’ But what’s really going on is that they, in fact, would be raising taxes, but they would just be sort of doing a budget game, with extending the child tax credit,” he said.

In response to Biden’s plan, two Senate Republicans argued that the expanded credit should also include a work requirement.

In a joint statement, Sens. Marco Rubio (R-Fla.) and Mike Lee (R-Utah) said they support the policy of a child tax credit, and worked for that credit to be doubled in the 2017 tax law.

“The impact was enormous. Working American households making between $20,000 and $50,000 received the largest increase in tax cuts from the expansion, and families with less than $20,000 in income saw their child benefits skyrocket by nearly 250%,” they said.

Rubio and Lee said their plan would have increased the credit to $3,500 per child six and older, and $4,500 per child under the age of six, and every senator in their party voted in favor of it.

They criticized Democrats and Biden for making family assistance available as a cash benefit rather than instituting work requirements.

“But Democrats chose the alternative: simply handing out cash to parents, including ones already on welfare or in households where nobody is working,” Rubio and Lee said. “This kind of universal basic income makes more Americans dependent on government, and severs the vital elements—work, marriage, community, and beyond—required to raise healthy families.”

“As then-Senator Biden put it in 1988, the old American welfare system broke down because ‘it only parcel[ed] out welfare checks and [did] nothing to help the poor find productive jobs’,” they said.