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FILE PHOTO: U.S. Senate Majority Leader Chuck Schumer smiles from behind a mock U.S. Treasury check as he holds a press conference on the expanded Child Tax Credit payments at the U.S. Capitol in Washington, U.S., July 15, 2021.
Can the child tax credit extension survive the Senate?
On Wednesday, the House of Representatives passed a $78 billion extension of the popular child tax credit by a large bipartisan majority – but now it faces a rocky road through the Senate, where it may be lumped in with another priority.
What’s in the bill? It aims to extend the credit through 2025, tie the size of disbursements to the rate of inflation, and allow parents to use their previous year’s income if it would result in a higher allowance. The bill also restores certain pandemic-era business tax breaks and curbs the employee-retention tax credit, which many fraudsters exploit.
Even getting to this point looked unlikely, as opposition from both far-right Republicans and certain Democrats forced the House to suspend the normal rules of order and pass it by a supermajority. Cooperating with Democrats on spending is a risk for House Speaker Mike Johnson (R-LA), whose predecessor Kevin McCarthy was booted by his own caucus under similar circumstances.
What happens now? Ordinarily, bipartisan consensus is easier to find in the Senate than in the House, but the child tax credit is unlikely to pass unscathed. Sen. Chuck Grassley (R - IA) put the GOP’s conundrum quite bluntly: “Passing a tax bill that makes the president look good, mailing out checks before the election, means he could be reelected and then we won’t extend the 2017 tax cuts,” due to expire next year. Who said politicians aren’t candid?
We are watching for whether Senate leadership opts to bundle the bill alongside government funding legislation that must pass by March 8, or alongside one of its other major current priorities, like Ukraine aid or a border security package.
What's next for infrastructure and Biden's Build Back Better plan?
Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, shares insights on US politics:
Now that President Biden has signed the bipartisan infrastructure bill, what's next for infrastructure?
The President this week signed a significant new investment in infrastructure, about $550 billion beyond the money that's already being spent in the baseline levels for the US infrastructure, and this is a big investment. It about doubles how much money the US spends on infrastructure over the next five years, and the money's going to go to all kinds of places, roads, bridges, tunnels, water projects, broadband deployment for Americans, climate resiliency, electric vehicles. There's a lot of different things that are going to be funded by this pot of cash.
A lot of the projects won't be seen for quite some time however. Much of the money that gets spent on infrastructure in the US goes through the Department of Transportation and then gets sent out through the states. You have to find contractors to do the job. You've got to identify the projects you want to spend money on. So the bulk of this money probably won't be spent until 2023, 2024, or 2025, and maybe even beyond that. But over time, Americans are going to start to see a lot of new projects going on in their communities.
However, the thing that's going to have an even bigger impact on Americans' lives is the next phase of President Biden's spending plans, which is the much larger, probably about $1.5 trillion Build Back Better bill. And this includes a whole lot of subsidies for health care, potentially for housing and education. Certainly a lot of money's going to go towards green energy. And there's also going to be money that extends for funds that were passed in the American Rescue Plan earlier this year to directly subsidize households with children and households below certain income thresholds. So some of these households will see as much as $3,600, additional cash in their pockets as a result of the child tax credit that's proposed by President Biden. Timing on this is much more uncertain. Given the holidays are approaching, it may not end up passing until next year, so many Americans won't see any benefit from this until probably the closer to the summertime of 2022.