The Biden administration’s anti-poverty strategy is winning rave reviews from think tanks. The Urban Institute, in a projection requested by The New York Times, estimated that this year’s poverty rate will be cut from its 2018 level by 45 percent. Separately, the Urban Institute estimated that the newly expanded child tax credit, which has been touted by Democrats as a historical achievement, will cut child poverty by 40 percent. And the Niskanen Center predicted that the credit will boost consumer spending by $27.6 billion and “deliver a substantial boost to rural economies across the country.”
The White House will need those data points to help sell the expanded child tax credit, because it isn’t selling itself.
The American Rescue Plan—which sailed through Congress in March on a party-line vote—expanded the child tax credit both in size and in eligibility, and made monthly government checks the default option for receiving the credit. But those changes are temporary, expiring at the end of this year. So Democratic leaders plan to extend the credit in the next budget reconciliation bill, in hopes of embedding it in the national fabric and making any future expiration politically untenable.
But the public is not yet in sync with Democratic leaders. In a mid-July Morning Consult poll, only 35 percent of voters said the expansion should “definitely” or “probably” be made permanent, with 52 percent saying the opposite. A YouGov poll from around the same time found only 30 percent of voters favored permanent expansion; 46 percent opposed it.
These numbers probably surprised Biden and other top Democrats. They certainly surprised me. As I wrote here in February, giving people money is typically a political winner. But if the expanded credit doesn’t become one, then it may not survive budget reconciliation.
Several moderate Democrats have already proposed that, unlike in the American Rescue Plan, the expanded child tax credit—along with everything else in reconciliation—be paid for with tax increases, to avoid increasing debt and boosting inflation. Paying for the credit is difficult because it’s a very expensive policy: it will cost the Treasury about $100 billion annually through 2025, and about $190 billion annually after that (because Donald Trump did his own temporary child tax credit expansion, which expires after 2025, adding to the long-term cost of maintaining the current level of benefits.)
Democrats are looking to spend $3.5 trillion over 10 years through reconciliation; a permanent extension of the expanded child tax credit would cost $1.6 trillion over 10 years—nearly half the total, which would crowd out other priorities. So Democrats are thinking incrementally. Senator Michael Bennet of Colorado said, “I’m going to fight for as many years as we can now. And then we’ll come back and come back and come back until it’s permanent.”
But the worse the child tax cut fares in the polls, the harder it will be to preserve it. That helps explain why the White House’s National Economic Council director, Brian Deese, was quick to tout the Niskanen Center’s finding that “the CTC provides its largest relative benefit to rural communities.” To boost those poll numbers, Democrats need to impress voters beyond their own political base.
The perplexing question is: why aren’t the checks themselves breaking through the partisan divide? Why isn’t the credit selling itself?
Optimists may still believe it will. After all, the first child tax credit checks were sent out only last month. Maybe after a few more months they’ll prove popular.
Maybe. But given the dismal initial polling, Democrats shouldn’t bet on the problem fixing itself. They should develop a persuasive case to strengthen the child tax credit, and they can’t do that until they find out why support for it is so weak.
Here are a few possible explanations:
1. Not everyone gets the checks.
2. Even people who get checks believe that other people shouldn’t.
The Times piece on how Biden’s pandemic relief policies slashed poverty—driven by “stimulus checks, increased food stamps and expanded unemployment insurance”—quoted recipients of relief who were simultaneously thankful and critical.
The Times’s Jason DeParle talked to a single mother of five from Missouri:
“In my case, yes, it was very beneficial,” she said. But she said that other people she knew bought big TVs and her former boyfriend bought drugs. “All this free money enabled him to be a worse addict than he already was,” she said. “Why should taxpayers pay for that?”
The paper also spoke with a former convict in Indiana who was able to get custody of his son with the help of stimulus checks:
…he said he distrusted “the crooked government” and urged poor people to help themselves. “If you want to change your life, you have to get up and do something — not sit home and get free money,” he said.
3. The expanded child tax credit was slipped quietly into a crisis package—perhaps too quietly
Democrats took advantage of the filibuster-proof budget reconciliation procedure to slip the expanded child tax credit into the American Rescue Plan with minimal news coverage or floor debate.
As a legislative matter, that was shrewd strategically. But as a result, the public never heard arguments for why the expanded child tax credit should extend past the pandemic.
Democrats thought cutting fat checks would cultivate political support far better than the subtler stimulus policies of the Obama administration. But Biden may have gone too far in the opposite direction. The child tax credit checks are arriving after a year’s worth of pandemic relief checks. So they feel like another round of relief checks, which may convey the shameful stigma of government welfare, not the warm glow of a tax cut.
4. Voters support crisis help more than permanent help.
In both the Morning Consult and YouGov polls, a majority supported the expanded child tax credit for this year. That majority dissolved when asked whether the extension should be permanent.
That discrepancy speaks to a potential ideological gulf that Democrats need to bridge.
Many Democrats saw opportunity in crisis: Seize the pandemic moment, send out near-universal and unconditional checks, and demonstrate that’s the most direct way to eradicate poverty.
But unpleasant though it is to consider, most voters may not aspire to slashing poverty as much as progressive Democrats do, and therefore may not want to spend huge amounts of money to that end. They may have accepted it only as a temporary necessity to survive a government-imposed economic lockdown, not as a permanent economic policy. The hope that a near-universal policy would forge an allegiance between middle-class, working-class, and poor voters has not been realized.
All these potential explanations stem from the same root cause: selfishness. Not every voter is moved by moral appeals to eradicate poverty. Not every voter feels sympathy for the poor. Most voters prioritize their own bankbook above all else. That’s where the Niskanen report can be most helpful, showing that local economies will benefit broadly from the expanded child tax credit, lifting up all voters.
Still, the Niskanen report omits mention of the dreaded I-word: inflation. There may be some fear out there that continuing past the pandemic the flood of government cash will cause a price shock that will erode the value of the checks and drag down the economy.
The White House and the Federal Reserve say they believe the recent inflation surge will ebb quickly; Larry Summers says he fears it won’t. Not being an economist, I won’t venture any economic predictions. But if the rate of inflation is still high when the reconciliation vote occurs—it’s currently expected in the fall—the Niskanen report won’t muzzle combative Republicans or calm the nerves of skittish Democratic moderates. And anyway, it’s not at all clear that a wonky report can overcome gut emotion.
Still, Democrats have to play the cards they’re dealt. If a large swath of the public doesn’t believe the expanded child credit will help them, then all rhetorical energy should be marshaled toward convincing them otherwise. Because without strong public support for an extension, we can’t assume a narrow majority will materialize in Congress.