BIDEN HAS A CHANCE TO BE “NEW DEAL” PRESIDENT

 

                                     …President Biden signs child-allowance bill

 

But will he blow his chance to have a history-defining legacy.

 

Over the past month, many media pundits have lavished praise on President Biden and his domestic policy agenda. The White House has basked in comparisons to Franklin Roosevelt’s New Deal and Lyndon Johnson’s Great Society; some even argued Biden might leave more of a lasting imprint on the role of government than did, Barack Obama.  The president in whose shadow Biden lived for 8 years.

But in truth, Biden risks falling short of such history-defining legacies. That’s because he’s getting cold feet about making the most consequential part of his own agenda thus far permanent.

The trigger for all those comparisons between Biden and previous “paradigm”-shifting Democratic presidents was the $1.9 trillion fiscal relief bill signed last month.  Most of that legislation was advertised as a temporary, targeted response to the immediate crisis.  That is rather than any sort of lasting transformation of the nation’s welfare state.  That is with one prominent exception: its revamping of the child tax credit.

As child poverty experts and Democratic lawmakers such as Rep. Rosa DeLauro (Conn.) and Sen. Michael Bennet (Colo.) have been urging for years, the bill converted the existing annual child tax credit into a more frequently issued “child allowance” (amounting to $250 or $300 per month, depending on a child’s age).  Perhaps more significantly, it made this benefit “fully refundable.”  That means even children whose parents make too little to pay any taxes at all, they would get infusions of cash.  Previously, ultra-poor families had been excluded from eligibility for the child tax credit, even though they arguably had the greatest need for financial help.

Just as Roosevelt created Social Security for seniors, Biden had now effectively created it for kids, with a guaranteed income even for the poorest of the poor. Biden and other progressives celebrated the achievement, frequently touting one remarkable topline takeaway: the legislation would cut U.S. child poverty, currently among the highest in the developed world, in half.

But there was a catch. The bill created this new, celebrated government program for only one year.  Because it is not permanent, it will take additional legislation to keep the benefit in place beyond 2025.

Fortunately, tons of Democrats (and at least one prominent Republican) have expressed support for making a monthly child allowance permanent.  Among those on record for permanency are Senate Majority Leader Charles Schumer (D-N.Y.); House Speaker Nancy Pelosi (D-Calif.); Sen. Ron Wyden (D-Ore.) and Rep. Richard Neal (D-Mass.), who oversee congressional tax-writing committees; and most other Democratic lawmakers.

The White House has said the president also wants the policy to be permanent. Many of us are asking why would the president allow such a monumental achievement to disappear?

But based on what we are hearing, Biden is only expected to ask Congress for a temporary extension of his child allowance program, as part of his forthcoming $1 trillion “American Families Plan.”  Under this proposal, child allowances would expire in 2025, unless the lawmakers choose to extend the policy again or to make it permanent.

It’s extremely risky for Biden to cross his fingers and hope that whoever controls government in 2025 will choose to protect this critical program, and thus Biden’s Legacy.  Especially since the 2024 Senate Election map looks perilous for his party, with several Democratic incumbents in red or purple states up for reelection.  Democrats must make their priorities permanent while they know they have power.

As Biden’s assault weapons ban showed, there’s no guarantee that a progressive priority, even a popular one, will be extended once it is slated to sunset.  And it is a heavier lift for Congress to renew

an expiring policy than to simply leave a permanent one in place.  As a good example, Obamacare has managed to survive, despite many GOP attempts at repeal and years of controversy, in part because its default was to remain law.

The reporting suggests Biden settled on a four-year extension of the child allowance for fiscal reasons.  The overall cost of his American Families Plan is expected to be enormous, and he wants to pay for everything, so he’s limiting how much each element costs. That includes letting child benefits sunset.

But the fiscal dynamics of a child allowance are unusual; some research suggests that the costs of monthly checks will be at least partially offset by other government savings.  That is because the children who benefit will grow up to make higher earnings and pay more taxes, and will probably need fewer services as adults.

Moreover, even if the policy does get renewed in 2025, structuring it as a series of temporary extensions is likely to be more expensive in the long run than just making it permanent upfront.

Why? Because history suggests Republicans will extract all sorts of other expensive concessions (estate, corporate, capital gains tax cuts) as part of negotiations.

Biden has an opportunity to be fiscally responsible; to permanently lift millions of kids out of poverty, promoting racial equity in the process; and to cement his legacy as the kind of transformational president he aspires to be.

He should not waste it.

Copyright G. Ater 2021