“Unemployment insurance has replaced lost income for millions who have lost their jobs,” the senators told Biden. “But millions of others do not qualify for unemployment insurance after seeing their hours reduced, switching to lower-paying jobs, or temporarily leaving the workforce to care for family members during the pandemic.” The direct payments, they wrote “are crucial for supporting struggling families who aren’t reached by unemployment insurance.” They cited an Urban Institute study which “suggests that a single direct payment of $1,200 combined with an extension of enhanced unemployment insurance and other assistance could keep 12 million people out of poverty,” and that “adding a second direct payment could keep an additional 6.3 million people above the poverty line.”
In addition to that, a larger group including Senate Majority Chair Chuck Schumer want to make the expanded child tax credit included in the new law permanent. The law increases the credit from $2,000 to $3,600 per year per child under 6, and $3,000 for children 6-17 and will be paid out throughout the year, instead of in one lump sum at tax time. That’s regular cash coming to families with children, guaranteed income that will allow parents more flexibility in, well, everything. Having a parent stay at home with young children, or allowing parents be able to return to work because they’ll have some help in paying for child care. As of now, the expanded payments last only a year.
But on MSNBC Sunday, Schumer said “I’ll do everything I can to make it permanent. […] That’s one of the most important things we can do. We can change America, if we make them permanent.”
That’s a worthy goal, and one that needs to be considered carefully. And they need to loop Rep. Katie Porter into the drafting of it. The California Democrat supported the stimulus package, but argues that it really penalized single parents, like herself. The problem is where the threshold for both stimulus payments and for the child tax credit is set. This round of restricted survival checks start to phase out $75,000 in income for single Americans, $112,500 for single parents, and $150,000 for joint filers. About 8 million people—single parents—who got the last two rounds of survival checks won’t get them now because of the stricter income thresholds. But having children isn’t any less expensive now than before.
It’s the same for the child tax credit. The phaseouts are for $150,000 for joint filers and $112,500 for unmarried heads of households. As Porter explained, “The original drafters believed that since single parents have one fewer adult in the home, they need less to make ends meet.” Except that’s not really how it works, she points out. “Raising a child costs the same whether you’re married or single.” That means providing child care or after school programs, and of course a safe place to live and nutritious food. “In fact,” Porter continues, “single parents must secure child care to work outside the home, which sometimes is unnecessary for married couples.”
She provides an example:
- The married filing jointly Moore Family has an annual household income of $150,000. They have three children, ages 2, 4, and 5, with estimated annual expenses of $55,848 ($17,628 for child care plus $38,220 for child costs including housing, food, and school supplies.) Under the current proposal, the Moore Family will receive $4,800 from the expanded Child Tax Credit.
- The Smith Family, headed by a single parent filing as head of household, has an annual household income of $135,000. They have the same number and ages of children and exactly the same expenses as the Moores. Under the current proposal, the Smith Family will only receive $1,425 in Child Tax Credit.
“The child costs in these two households are the same. But the married parents will get more help,” she rightly points out. She’s not arguing against income limits in determining which families should get the credits, but to have the same income threshold for all households. “There is no discount in the costs and economic hardships of raising a child for single parents or guardians,” Porter says. “Failing to treat tax filers equally hurts hundreds of thousands of children in single-parent families.” If this is going to become permanent, it needs to be fixed.
In the meantime, this program, the one already enacted, needs to be figured out. As of yet, it’s not clear how often these child allowance payments are going to be provided. The drafters wanted the legislation to establish them as monthly payments, but that triggered problem with the Senate parliamentarian and they wanted to ensure that the provision remained in the bill. Because of course they did—it and the other provisions in the bill will cut child poverty in half this year.
So now the IRS has to determine whether they make those payments monthly or on some other schedule. Senators want it monthly. “I think all of us would like it to be monthly and we’re working toward that,” Colorado Democrat Michael Bennet told HuffPost. Brown is in talks with the IRS about it, and says “The goal is to give the beneficiary a choice between monthly or semi-annual, twice a year.” The IRS is already struggling at the moment to keep up with survival checks—this and previous rounds—and tax returns. In fact, it’s pushed the tax filing deadline to May 17 to help spread out the work.
Given the IRS’s issues, another consideration for the drafters of potentially permanent child allowance payments should consider whether the payments should be sent from the IRS or from the Social Security Administration. There are pros and cons for each—the SSA has more complete information on all children, and already has a system set up for sending out monthly checks. The IRS has more updated information for where benefits should be sent. But many parents don’t make enough money to file taxes, or children live in households that don’t meet the current eligibility criteria for the tax credits. Whichever agency ends up making the payments in a new, permanent version of this child allowance is going to need the funding to upgrade their ancient computer systems and to hire enough staff to do it.
There’s yet another part of the Rescue Plan that could become permanent, rocketing the U.S. into the 21st century with the rest of the developed world. Sen. Kirsten Gillibrand, a Democrat from New York, wants to make paid leave provisions permanent. The law extends the tax credits for businesses giving paid sick and family leave that were included in an earlier response bill until September 30, 2021. But it does not mandate that employers provide it.
“One of my goals is to make paid leave permanent,” Gillibrand told Yahoo Finance. “We are still the only industrialized country in the world without access to paid leave and most workers do not have access.” Less than 20 percent of U.S. workers have paid family leave from their employers, and just about 40% have access to medical leave. And yes, the U.S. is the only industrialized country that doesn’t have it.
The Rescue Plan truly is transformational for American families. But it can be so much more. It has the potential to be the foundation for a new, more equitable, more productive, and actually modern America. That’s within our grasp. We have leadership in this country now that has dared to envision all of this. But it’s not going to happen unless the dead weight fighting progress by clinging to the past, to the filibuster, is made to join the rest of us in the 21st century.