by Joshua McCabe
As negotiations over the next round of economic relief continues, one thing has become clear to Congress: Families with children are struggling. Congress passed a package earlier this year providing $500 per child to all but the most well-to-do families. It was a lifesaver for many families who found themselves pivoting unexpectedly with school, childcare or reduced work hours.
Now members of Congress from both parties are working to build on that success. One path forward is to expand the reach the existing child tax credit (CTC) by making it fully refundable — meaning it would be available to all families — and introducing periodic payments so families do not have to wait until tax time to receive it. The idea is not new. Although few remember it today, it can be traced back three decades to West Virginia.
President Reagan and Congress created the National Commission on Children in 1987 to “serve as a forum on behalf of the children of the Nation.” Chaired by Sen. John “Jay” Rockefeller of West Virginia, the commission set out to identify the social and economic issues facing American families. In 1991, they released what was colloquially known as the Rockefeller Commission report, which proposed a set of policies to strengthen and support families with children.
The crown jewel among these policies was a proposal to convert the dependent exemption into a fully refundable child tax credit worth $1,000 (about $2,000 today after adjusting for inflation). Rockefeller and colleagues argued this reform would have several pro-family features.
First, it would support hard-pressed parents doing the demanding work of raising the next generation of children. Second, it would “provide a bridge for families” in times of unstable employment by allowing continued payment throughout the year. They recognized that stabilizing income during rough patches meant stabilizing families. Third, in contrast to many welfare programs, it was neutral toward family structure and mothers’ employment. It would not discourage the formation of two-parent families or penalize traditional breadwinner arrangements where one parent chose to stay home to care for children.
Rockefeller’s proposed CTC was just what American families needed, but politics resulted in only piecemeal introduction over time. It was initially sidelined as the Clinton administration put all its energy into its failed health care plan. Congressional Republicans eventually introduced a much more limited CTC in 1997. It was slowly expanded in 2001, 2003 and 2009. Congressional Republicans took a big step forward in 2017 when they folded the dependent exemption into a much larger CTC as part of the Tax Cuts and Jobs Act (TCJA). These successes still fall short of Rockefeller’s original vision though.
A proposed amendment from Sens. Marco Rubio and Mike Lee during the debate leading up to TCJA reveals a major obstacle to achieving Rockefeller’s vision. The Rubio-Lee amendment would have expanded the scope of the CTC to include more working-class families by lowering the corporate tax rate to 21% instead of 20%. Despite being a common-sense pro-family proposal, opposition from business groups helped kill the amendment.
American families deserve better. West Virginia’s representatives can help deliver for them. Sens. Joe Manchin and Shelley Moore Capito were on the right side history when they broke with the majority of their respective parties to vote in favor of the pro-family Rubio-Lee amendment. The next economic relief package offers Manchin and Capito the opportunity to fulfill Rockefeller’s legacy of supporting stable and thriving families through a fully refundable child tax credit. “Failure to act today,” as Rockefeller warned us three decades ago, “will only defer to the next generation the rising social, moral and financial costs of our neglect.”
Joshua McCabe is a senior fellow at the Niskanen Center and author of “The Fiscalization of Social Policy: How Taxpayers Trumped Children in the Fight Against Child Poverty.”
