Feb 1, 2022 - Politics & Policy

Scoop: Key Senate Dem considering a scale-back of the CTC to please Manchin

Sen. Michael Bennet is seen listening during a congressional hearing.

Sen. Michael Bennet. Photo: Rod Lamkey/CNP/Bloomberg via Getty Images

One Senate Democrat — desperate to revive a cornerstone of President Biden's progressive agenda — is open to scaling back eligibility for the child tax credit to lure support from Sen. Joe Manchin (D-W.Va.), Axios has learned.

Why it matters: Sen. Michael Bennet (D-Colo.) has been at the center of negotiations to revive the CTC, which expired Dec. 31. His openness to a concession signals to Manchin he's serious about coming to a compromise.

Driving the news: Bennet told Axios he's amendable to lowering the income limit for the full payment from $150,000 for families and $90,000 for individuals without adding a work requirement.

  • Bennet did not say how much he's willing to reduce the income limit but confirmed the White House knows he's willing to consider lower caps.
  • "I always believed those were reasonable caps, but I'm happy to think about other caps if that's important to getting something done here," Bennet said.
  • Manchin, for his part, told West Virginia MetroNews he wants to prioritize it for those making $75,000 or less.

But, but, but: Bennet's outreach puts the White House in a tough spot: supporting a means-tested child tax credit means that some families making less than $400,000 a year will see their taxes go up in 2022 — which could be construed as a tax increase.

The big picture: Five Senate Democrats sent a letter to the president and Vice President Kamala Harris last week.

  • The lawmakers urged them to reinstate the expanded child tax credit through the Build Back Better agenda, after Biden said during a news conference it may need to be dropped.
  • The letter was signed by Bennet and Sens. Sherrod Brown (D-Ohio), Cory Booker (D-N.J.), Raphael Warnock (D-Ga.) and Ron Wyden (D-Ore.).

Others, like Booker and Brown, have not publicly indicated they'd be open to a lower income cap.

Nonetheless, they acknowledge it's one of the paths forward, a Democratic aide told Axios.

  • "I spoke to the president the other day. He's a hundred percent for" the child tax credit, Brown told Axios.
  • He declined to say whether he'll propose lowering the income cap to Manchin.
  • "I'm troubled it's gone away temporarily, but it's coming back," Brown said.

What they're saying: House Majority Whip Jim Clyburn (D-S.C.) told the Washington Post he'd support a lower income cap in a revived form of the child tax credit to get Manchin's support.

The big picture: Last year, Democrats experimented with an expanded the credit for one year, offering some relief for households making up to about $400,000 a year.

  • They also increased the subsidy to as much as $3,600 — from $2,000 — and deposited the money directly into parents' bank accounts.
  • Biden planned to extend it in his Build Back Better plan, but it died in December — in part after Manchin said he couldn't support it.
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