White House, Senate Democrats Consider Hail Mary Child Tax Credit
The White House is engaging with Senate Democrats to make a final push for an improved child tax credit this year — and could dangle support for the former’s expired research and development tax credits. President Trump in exchange for GOP votes, Axios has learned.
Why is this important: Some Democrats view a year-end legislative horse trade as their last chance to enshrine a version of President Biden’s enhanced child tax credit into law before Republicans take one — or both — houses of Congress. .
- A compromise package would require 60 votes in the Senate, meaning at least 10 Republicans would have to back it with no Democratic defections.
- In response to the Supreme Court’s decision on Roe v. Wade, some Republican senators, including Mitt Romney (R-Utah) and Marco Rubio (R-Fla.), have offered family-friendly policies, including a cheaper, less expansive version. of the Biden child tax credit.
But, but, but: A Hail Mary tax package would face not only a countdown from Congress, but also potential opposition from Sen. Joe Manchin (DW.Va.) — who may be unwilling to support more deficit spending.
The context: Republicans and Manchin let Biden’s one-year child tax credit, which offered families up to $3,600 per child, expire at the end of 2021.
- After some discussion about lowering income caps and including it in a slimmed-down version of Build Back Better, the tax credit ultimately did not make it into the Cut Inflation Act that Biden signed into law in august.
- Business groups have searched all year for opportunities to restore some of the R&D tax credits that were included in Trump’s 2017 corporate tax reform package but were allowed to expire after four years.
Driving the news: Biden officials have been in low-key conversations with Democratic senators, including Sen. Michael Bennet (D-Colo.) — a top child tax credit champion — to discuss how to get a deal done.
- “It’s a priority for the White House and it’s absolutely a priority for me,” Bennet told Axios. “We should never have allowed him to lie down, and I think we can find a way at the end of the year.”
- “I would be very reluctant if we extended things like the R&D tax credit for businesses, without extending this important tax cut for working families,” he said. “And hopefully we can come to an agreement on that.”
The big picture: Congress will return to Washington after the November election for a lame session, in which government financing, and potentially a set of debt ceilings, will top the agenda.
- But acting on a child tax credit is clearly a priority for Democrats, who believe they have found a potential leverage point over Republicans, according to Business Insider.
Between the lines: If Democrats retain control of both chambers — and bolster their majority in the Senate — there will be less urgency to mess with the tax code this year.
- Biden will want to use a possible 2023 fiscal reconciliation package to revive many of his Build Back Better priorities that Manchin vetoed.
- The initial $3.5 trillion Senate legislation, with new funding to dramatically expand the social safety net, was eventually whittled down to a $740 billion package that included only new climate funds, health care and the IRS.
What they say : “I have a proposal that has a lot of support on our side of the aisle,” Sen. Mitt Romney (R-Utah) told Axios. “I haven’t really socialized him across the aisle yet.”
- “I’ve had conversations with the White House,” Romney said. “They say they are interested and we would like to discuss it.”
- “Would I like there to be an agreement? Absolutely,” said Sen. Mark Warner (D-Va.). “I think those are two good policies.”
- “I’m both for the child tax credit and for R&D,” said Ron Wyden (D-Ore.), chairman of the Senate Finance Committee.
- “We’re just not going to help businesses, help big business, without helping the child tax credit,” said Sen. Sherrod Brown (D-Ohio). “This administration is aware of this.”
Be smart: Bennett, who faces a tough challenge from moderate Republican Joe O’Dea, would like to have some movement on the child tax credit ahead of the election to help motivate his progressive base.
- But he is realistic about the short-term outlook: “I don’t think it will be plausible before my election,” he said.