JD Vance, the Republican vice-presidential nominee, has floated expanding the current Child Tax Credit from $2,000 to $5,000 per child. It is one bold move that will further alleviate the financial burdens faced by families amid spiraling living costs. Here is what is known about Vance’s plan and its implications from a political perspective.
Overview of the proposed expansion
Vance’s proposal for a $5,000 CTC represents a 150% increase over the existing credit. He outlined his vision in an appearance on CBS’s Face the Nation, in which he put forth that there needs to be a universal child tax credit applying to all American families, regardless of their income. “You don’t want a different policy for higher-income families; you just want to have a pro-family Child Tax Credit,” Vance said.
The current CTC, which was temporarily expanded during the COVID-19 pandemic to as much as $3,600 per child, has been credited with significantly reducing child poverty. Without action by lawmakers, the credit is poised to revert to $1,000 per child after 2025, when many provisions of the Tax Cuts and Jobs Act of 2017 expire.
The economic implications
The cost of Vance’s plan could be quite large. Expert estimates say that increasing the CTC to $5,000 could add up to an additional $2 to $3 trillion in federal borrowing over ten years. The concern at hand is how this squares with fiscal responsibility and a national deficit. Marc Goldwein, a senior policy director at the Committee for a Responsible Federal Budget, says Vance does not outline a clear cost for his proposal, particularly on whether it would be fully refundable. A fully refundable CTC is when families can have the full benefit as a tax refund, meaning it will be more expensive than a partially refundable credit.
Advocates of the expanded CTC say it would be literally lifesaving for low- and middle-income families, for whom the expense of raising a child to age 18 easily tops $240,000. But Goldwein cautioned that while financial support does ease some of the pressures, it does not seem to have any kind of major impact on birthrates or family planning decisions. This, at least according to other countries’ experiences with similar policies.
Political context and challenges
Vance’s proposal comes at the height of political divisions over family support initiatives. Just days before the announcement, a bipartisan effort to expand the CTC was blocked in the Senate, and Vance was notably absent during the vote. This has been pointed to by critics, such as Senator Ron Wyden, as undermining Vance’s claims of support for working families. Wyden said, “If JD Vance actually gave a damn about working families across this country, he would have taken the time to show up to the Senate. to vote to pass the legislation to extend the child tax credit.”
Vance explained his absence away, saying that this was simply a “show vote,” meaning that his vote would not have changed the results. This answer has been criticized by both parties. Many, including those of his own party, say it’s answers like these that explain why problems like this don’t get resolved—nobody puts in the effort.
The future of the Child Tax Credit
The future of the CTC remains in jeopardy, as it is torn between various priorities that lawmakers have to juggle and tight fiscal budgets. While Vance’s measure reflects the growing recognition of the need to boost support for families, it would hardly sail through Congress. Traditionally, Republicans wanted policies that mandated work in return—a stumbling block to the enlargement of the CTC without mandating work.
In addition, with the election year of 2024 slowly closing in, family support policies, especially the CTC, will be brought up over and over again. Vance’s proposal will more than likely provide a rallying point for greater financial support of families but also create the kind of scrutiny associated with large potential increases in spending and their possible consequences on the federal budget and the broader economic health.
