Dec 13, 2021 - Politics & Policy

Manchin seeks child tax credit "we can afford"

Sen. Joe Manchin is seen speaking with reporters on Monday.

Sen. Joe Manchin speaks with reporters Monday. Photo: Sarah Silbiger/Bloomberg via Getty Images

Sen. Joe Manchin (D-W.Va.) is telling colleagues the expanded child tax credit is both the most underpriced item — and biggest inflation-driver — in President Biden’s $1.75 trillion Build Back Better plan, people familiar with the matter tell Axios.

Why it matters: While Manchin’s concern over the CTC could trigger elimination of a program Democrats believe is crucial to address child poverty, it’s also an indication he's engaging with the White House about how to reduce the plan's price tag to a level he can support.

  • It's still a heavy lift: The roughly $1.4 trillion difference between the White House and Manchin estimates on the program's cost highlights the distance the senator would have to move to support the president’s plan.
  • Biden has proposed spending some $185 billion on a one-year extension of the CTC, which provides families with up to $3,600 per child.
  • But Manchin prefers to think of all of Biden's proposed programs over a 10-year time frame, and the most recent forecast from the Congressional Budget Office puts the CTC cost at $1.6 trillion over that budget horizon.

Driving the news: Ahead of a phone call with Biden on Monday afternoon, Manchin publicly laid down some of his markers for how big the bill can get — and how to calculate its true costs.

  • “Whatever Congress is considering, we should do it within the limits of what we can afford,” he told CNN’s Manu Raju.
  • “Whatever plan it would be, pre-K, child care and home care, then it should be [over] 10 years, it shouldn't just be one year here, three years here, five years here.”
  • He called the latest CBO analysis, which calculated a $3 trillion BBB budget deficit, very “sobering.”
  • A spokesperson for Manchin called his conversation with the president "productive," and said they "will continue to talk over the coming days.” A White House spokesman called it a "good, constructive phone call."

The big picture: The expanded CTC, which Biden first included for 2021 in the $1.9 trillion COVID-19 relief package he signed into law in March, is viewed in the Democratic caucus as an effective tool to cut child poverty in half.

  • In the House-passed version this fall, Democrats decided to fund it just for 2022, as a way to lower the overall price tag. They also lowered the income levels for when it would phase out.
  • Biden initially proposed funding it through 2025, but all along White House officials have signaled to activists the ultimate goal was to make it permanent.
  • “It's critically important for child poverty,” Sen. Ben Cardin (D-Md.) told Axios. “We need to continue beyond just one more year, but we also need to figure out ways to pay for it.”

Go deeper: The White House has insisted the Build Back Better plan will be fully paid for over the long run, but many of the corporate and individual tax increases won’t take effect until after 2022.

  • That means more money will be pumped into the economy in the short term, leading some economists to argue that it could add to inflation.
  • Administration officials argue the social safety net features in Biden’s plan will lower costs and free up more women to stay or rejoin the workforce, and help to ease some of the inflationary pressure on the supply side.
  • In a long Twitter thread today, Jared Bernstein, a member of the Council of Economic Advisers, fiercely disputed any suggestion that BBB was inflationary. "@POTUS said a while ago: 'if your primary concern right now is inflation, you should be even more enthusiastic about this plan.'"
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