Despite near-historic low unemployment rates and President Joe Biden’s reelection campaign, some Democrats claim that the U.S. economy is terrible, particularly for low-income people.
Criticism of Biden’s Economy
According to the released report of AEI, Sen. Michael Bennet (D-CO) lamented that parents are currently “scraping by… in this savage economy,” suffering from some of the lowest economic mobility, and having practically the greatest rate of child poverty in the developed world, during his testimony at a recent Senate Finance Committee meeting.
Democratic witnesses claimed that although unemployment was significantly higher than it is now and weekly COVID-19 fatality rates were 10 times higher than they are now, conditions for millions of households were markedly better during the pandemic in 2021. One witness claimed that in comparison to 2021, “inequities in the job market” had gotten worse and that too many families are now having financial difficulties. One respondent remarked how her family might go on vacation in 2021 but that they now had trouble affording children’s shoes.
Why are these Democrats criticizing Biden’s economy as we approach 2024 and the White House is touting “Bidenomics”? due to their frantic attempt to resuscitate the huge, but temporary, expansion of the child tax credit in 2021.
Under the 2017 Trump tax cuts, the value of the child tax credit increased, allowing working parents to get up to $2,000 per kid in annual tax relief. If parents worked but didn’t make enough money to owe federal income taxes, the IRS may also provide up to $1,400 in tax payments. Parents had to work to receive this benefit up until 2021, representing the “work requirement” of the program, and low-income parents received a higher tax credit when they worked more, reflecting the “work incentive” of the program.
But for some leftists in the Beltway, that wasn’t sufficient. It meant that non-working parents were not eligible for child tax credit payments and that those who worked but made insufficient income to be subject to federal income tax received less than the maximum amount. To assist the country in “weathering this storm” of COVID-19, Democrats’ $1.9 trillion American Rescue Plan promised what one journalist called “fat stacks of cash,” including a temporary extension of the child tax credit.
Child Tax Credit Revision
To avoid their trillion-dollar long-term cost, the American Rescue Plan makes three important changes to the child tax credit, which will take effect only in 2021. First, it raised the maximum amount of the child tax credit to $3,600 for each child under the age of six and $3,000 for every older child.
Second, payments were now done in monthly installments rather than just being made in cash as part of annual tax filings. Third, all parents received the same $3,000 or $3,600, regardless of whether they paid income taxes or not. This was true regardless of the child’s age.
Those regulations brought back the job-free welfare checks that had been in place for decades — and then some — when former President Bill Clinton imposed provisions requiring welfare claimants to work. The child tax credit’s employment condition was removed as part of the 2021 expansion, which gave nonworking families—including more than 5 million adults and children—fresh benefit checks. Payments to an extra 10 million households were increased by eliminating the employment requirement for the child tax credit.
Numerous supporters of the child tax credit expansion sang from the party’s favorite songbook on the economy. For instance, Sen. Debbie Stabenow (D-MI) claimed that the administration had created 13 million jobs, even though the fact that the majority were merely the return of jobs that had been lost due to the pandemic. Liberal commentators contend that these metrics make the present economy figuratively the best, notwithstanding Sen. Sherrod Brown’s (D-OH) recent declaration that “wages and employment numbers are the best we’ve seen in decades.”
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