After a key setback to President Joe Biden’s spending agenda, U.S. Sen. Susan Collins signaled openness on Tuesday to an effort that would overhaul a child tax credit set to expire in January if Congress does not act.
It is a side effect of negotiations around the president’s $2 trillion social and environmental measure known as the Build Back Better plan. Sen. Joe Manchin, D-West Virginia, said he could not support it on Sunday. Since Democrats only control the Senate with 50 seats and the tie-breaking vote of Vice President Kamala Harris, changes are needed to pass it.
An expanded federal child tax credit could be an initial casualty. Democrats’ $1.9 trillion stimulus bill passed in March expanded the credit to $3,000 for every child over age 6 and $3,600 for younger children. But they only funded it for one year and the failure to advance the new spending bill now leaves it on track to end in January.
While Republicans including Collins have been in lockstep against Democratic stimulus plans in 2021, the Maine senator said a revived tax-credit push led by Sen. Mitt Romney, R-Utah, is among “a number of proposals worthy of consideration” on that issue. While she stopped short of backing it outright, it could signal a bipartisan willingness to make a narrower deal, though the plan still faces obstacles.
“I am open to proposals that would support working families and reduce childhood poverty and look forward to working with colleagues of both parties on bipartisan solutions,” Collins said in a statement.
The U.S. has had a child tax credit since the late 1990s. It was expanded in former President Donald Trump’s 2017 tax-cut package, but many lower-income families were prevented from getting the full benefit because they did not earn enough.
After the change, the credit is fully refundable and paid monthly to families, though it is reduced for higher earners. Roughly 90 percent of Maine children are in families that qualify for the credit and it was expected to reduce child poverty here by 50 percent, the liberal Maine Center for Economic Policy said.
Romney released his plan early this year before Democrats passed their package. It would provide a larger benefit of $4,200 annually to young children and pay for itself by phasing out other tax programs and cash assistance for low-income families under the state-run Temporary Assistance for Needy Families program. Even with those changes, it would go slightly further than the Biden plan in eliminating deep poverty, according to a Niskanen Center analysis.
The plan attracted little support across the political spectrum as Democrats went after their wider spending bill and two top Republicans derided it and other child allowance proposals as “welfare assistance.” While Romney is trying to revive it now as the cliff looms, that calls into question whether it could get the 60 votes needed in the Senate to pass by itself.
It may also take some time for Democrats to embrace it and let parts of their larger plan go, with Biden spokesperson Jen Psaki telling reporters on Tuesday that it is still the president’s preference to pass Build Back Better after being asked about Romney’s plan.
“We are going to work with anybody who’s interested in taking steps to lower costs for the American people, whether it’s on child care or elder care or health care,” she said.