As Democrats in the Senate appear unable to come to an agreement on President Joe Biden's Build Back Better legislation, it is unlikely that the enhanced, monthly child tax credit (CTC) will be extended into 2022.
Democrats were poised to extend the enhanced credit, worth up to $3,000 to $3,600 per child annually, for one more year with Build Back Better. But Sen. Joe Manchin's, D-W.V., dismissal of the legislation means it likely will not pass before the new year. Democrats need all 50 senators on board to pass the bill.
That will result in an estimated 10 million children falling back into poverty, according to the Center on Budget and Policy Priorities (CBPP).
The enhanced credits are the cornerstone of Biden's anti-childhood poverty agenda. In fact, the monthly payments have helped lift millions of children out of poverty over the past six months. Studies estimate that if renewed, child poverty in the U.S. would fall by 40%.
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But "if the expansions end in 2021, this historic progress would be reversed, driving child poverty up substantially," the CBPP reports.
Many families will still qualify for the standard CTC next year, worth $2,000 per child. But the monthly advance payments will cease, and an estimated 27 million children will receive less than what they are currently getting, or will receive nothing at all, according to CBPP.
The poorest households will be hurt the most: Families that do not file a tax return because they make too little — who account for more than 80% of the enhanced credit's poverty reduction benefit — will once again be ineligible next year.
Many recipients of the enhanced credit, particularly those with annual incomes under $35,000, spent the monthly payments on food, school expenses, utilities, housing payments and clothing, according to the U.S. Census Bureau's Household Pulse Survey. Without the enhanced payments, many will once again be late on bills or go into debt, reports the CBPP.
"Poverty and the hardships that come with it — unstable housing, frequent moves, inadequate nutrition, and high levels of family stress — can take a heavy toll on children," the CBPP says. Growing up in poverty is associated with lower levels of education, lower earnings in adulthood and poorer health in adulthood, among other negative outcomes.
But the additional income provided by the enhanced credit could lead to better outcomes for children, says CBPP: "Extending the expanded credit and making the child tax credit fully available on a permanent basis to families with low incomes would improve children's lives in the near and long-term and benefit society overall."
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Don't miss: The last advance child tax credit payment of 2021 is being distributed