Bad Credit

What it means for monthly child tax credit payments

This latest development is bad news for parents.

Many Americans have struggled tremendously during the pandemic. And while the economy is, thankfully, in better shape now than it was earlier this year, a lot of uncertainties still reign.

Right now, COVID-19 cases are skyrocketing nationwide, and the emergence of the new omicron variant could lead to widespread restrictions that are hampering our economic recovery and hurting many people individually. Add in the fact that inflation has been rampant, and it’s easy to see why so many households are stressed out and struggling to make ends meet.

For months, families with children received a lifeline in the form of monthly child tax credit payments. The credit, which was enhanced for the 2021 tax year, currently stands at $ 3,600 for children under 6 and $ 3,000 for those aged 6 to 17.

President Biden is looking to extend the strengthened child tax credit until 2022 as part of his Build Back Better plan. This spending bill has so far passed a vote in the House. But now he needs Senate approval to move forward. Unfortunately, the lack of support from a key legislator could destroy the bill’s chances of moving forward.

Senator Manchin is a no

West Virginia Senator Joe Manchin has said he will not vote for the Build Back Better Act. This is problematic, as Manchin is a Democratic senator and his support is needed to move the bill forward in a divided Senate.

To be clear, this news is not totally out of left field. Manchin has long expressed concern about the bill, but previously Democratic lawmakers had confidence in their ability to involve the West Virginia senator. But based on recent statements from Manchin, it appears he is unwilling to budge.

Bad news for cash-strapped Americans

If Biden’s spending bill isn’t approved – and soon – families who received monthly child tax credit payments won’t see one hit their bank account in January. And that could force many households to fall behind on their bills and take on serious debt.

So far, these monthly payments have helped lift millions of children out of poverty and have helped many households consolidate their finances. But if these payments do not continue, much of the progress made so far on the poverty front could be reversed.

Meanwhile, failure to pass the Build Back Better Act could impact the US economy as a whole. In fact, investment banking giant Goldman Sachs has already changed its economic outlook for the worse following Manchin’s clear opposition to the bill. Failure to adopt the spending measure could limit economic growth, Goldman says, and lead to major setbacks at a time the United States cannot afford it.

Of course, that doesn’t automatically mean the Build Better plan is dead in the water. But at this point, it seems likely that at the very least, those who have received child tax credit payments will see that income stream interrupted. And that alone could have serious consequences.