One of the biggest changes to the American economy since Social Security is starting today, and the country will never be the same — for better or worse. Uncle Sam is going to start giving parents with children up to $250 per month for each child age 6 to 17 and $300 for each younger child. We’re talking cash deposited in your bank account, just like a Social Security payment for older people, every month until Dec. 15.
And not just low-income parents. The income thresholds are the same as for stimulus checks: $75,000 a year for individuals, $150,000 a year for married couples filing jointly and $112,500 a year for people like single parents who are filing as a head of household. Above that, the payments are decreased, but the phase-out limits are generous too — $150,000 to $400,000 if filing married filing jointly, $112,500 to $200,000 if filing head of household, and $75,000 to $200,000 if filing single or married filing separately.
Clearly, this goes way beyond helping children in poverty, which is supposedly the goal. The payments will reach about 39 million households that account for 88% of the country’s families with kids. Basically, if you’re not getting this money for your kids, you’re so well off you don’t need it.
It’s officially called the Child Tax Credit, approved in March as part of the Biden administration’s American Rescue Plan. It is available only for this tax year, though Democrats would like to extend into next year and beyond. The payments are a partial advance of a tax credit that would normally be claimed on next year’s tax return. But to help families pay bills now as the pandemic winds down, they will get half the credit early, in monthly payments over the second half of this year.
The payments will be made on the 15th of each month through December. The money covers half of a family’s estimated child credit, while the other half will be paid next year when the family files its tax return.
This is a fundamental change in the relationship between the government and taxpayers, and again, not just low-income taxpayers. It’s essentially the start of the guaranteed annual income proposed by people like 2020 Democratic presidential candidate Andrew Yang.
States with highest number of SNAP recipients
1. California - 3,789,000
2. Texas - 3,406,000
3. Florida - 2,847,000
4. New York - 2,661,000
5. Illinois - 1,770,000
6. Pennsylvania - 1,757,000
7. Georgia - 1,424,000
8. Ohio - 1,383,000
9. North Carolina - 1,298,000
10. Michigan - 1,180,000
Uncle Sam is give parents a nice chunk of money each month to help pay for their kids’ expenses. And you’d better believe this $250 or $300 per month per child will make a huge difference in the lives of many families. For impoverished families, this could (and hopefully should) mean the difference between worrying about having food in the refrigerator and electricity in the home or having those basic needs taken care of.
No parent will be able to go out and buy a Mercedes with this money, but it will help a lot. Do the math: A parent with two kids over the age of 5 now has $500 more each month. For three kids, that would be $750 per month. Again, if those children are 5 or younger, the monthly payment per child is $300. That is real money for the poor, and even for the middle class.
So what’s not to like? Two things:
A) Once these payments start, many parents will not want to give them up. They will understandably like the monthly boost to their income for their kids, and most Democrats in Congress will want them to continue.
B) The biggest drawback is that old problem — paying for it.
As usual, Congress is borrowing the money from these payments from the future because deficit spending is locked into current budgets. These payments will cost the government over $100 billion this year alone, but big numbers with zeroes have basically lost their meaning in Washington.
Our country’s combined federal debt is more than $25 trillion if anyone cares, and most people don’t. That $78,734 in debt for every living person in the country or $201,903 for every household. From 2000 to 2019, the federal debt nearly tripled, increasing to 297%.
The Congressional Budget Office says increased federal spending from the pandemic raised the fiscal year 2020 deficit to $3.7 trillion. For the 2021 fiscal year, the deficit is pegged at $2.1 trillion. Just a few years ago, $1 trillion was a yearly debt threshold that some members of Congress actually feared.
Such worries have long since faded. Democrats frankly don’t care about the deficit much, if at all. Republicans care about the deficit … only when the president is a Democrat, which is of course hypocritical. And under Trump, annual deficits soared even though the economy was booming.
At some point, this gargantuan debt will affect the American economy, and not in a good way. Interest rates will rise and inflation will eat away everyone’s income. Inflation is already starting to rear its ugly head, and some economists are starting to get nervous.
The general thinking is it will end soon as the economy gets back to normal after the pandemic finally fades. If it does, your paycheck will go about as far as it used to. If inflation doesn’t fade with the summer heat, we have a problem.
TTaschinger@BeaumontEnterprise.com