Editor's note: this story has been updated with the correct monthly tax credit that parents in Colorado receive.
Last year, families started receiving payments of up to $300 per child as part of the expanded child tax credit.
The temporary, six-month expansion was part of the American Rescue Plan, which was meant to help families cope financially during the pandemic. The expanded credit was co-sponsored by Sen. Michael Bennet from Colorado and Democratic Sen. Sherrod Brown from Ohio.
According to Columbia University, the expanded child tax credit kept more than 3 million children out of poverty last year. Studies showed that parents mostly used the money on necessities, like groceries, bills and child care.
Another extension was included in President Joe Biden’s Build Back Better legislation, but support for the bill fell mostly along party lines and lawmakers failed to pass it last year. While most Democrats are in favor of the bill, Sen. Joe Manchin, a Democrat from West Virginia, expressed concern about the cost of the bill and did not vote for it.
Bennet told Colorado Matters host Nathan Heffel that he wants to address these concerns by making sure the child tax credit is paid for by reversing tax cuts signed into law by former President Donald Trump. He also said the return on investment by preventing child poverty would save the country trillions of dollars in the long run.
This interview has been edited for clarity and length.
Nathan Heffel: The expanded child tax credit, which reportedly kept three million children out of poverty last year ended in January because Congress has not yet passed the Build Back Better bill. What is the future of that tax credit right now?
Sen. Bennet: It's unclear what's going to happen. I strongly believe that we should make it permanent. I think we kept 3.7 million kids out of poverty last year, reduced childhood poverty almost in half, and cut hunger in this country by 25 percent during this pandemic. So, I believe there was a need for this even before we had a pandemic.
Heffel: There has been some discussion of breaking up the Build Back Better bill to increase its chances of getting passed, but that also means removing the child tax credit from the overall bill. Is that something you support?
Sen. Bennet: I sent a letter a couple weeks ago with Sherrod Brown, my [Democratic] colleague from Ohio, Cory Booker, [a Democrat] from New Jersey and Reverend [Raphael] Warnock, [a Democrat] from Georgia saying that we thought that the child tax credit extension should be a centerpiece of whatever we end up passing in terms of Build Back Better. My mind is wide open in terms of how to get that done, whether we keep it all together, [or we find] ways of splitting it up.
I just don't want to lose sight of something that has been the most meaningful tax relief for working families in generations and the most substantial reduction in poverty in the United States for generations.
This has actually already been implemented on a monthly basis in Colorado. A million kids are benefiting from this tax credit: roughly 90 percent of the kids in Colorado and their families are gaining an average of about $450 a month that they can use to spend on rent and groceries and childcare.
Heffel: Have you heard from constituents upset about the end of the monthly payments?
Sen. Bennet: Yeah, we have. They're surprised by it; they don't understand it. Of course, they have difficulty understanding it to begin with because we have not done a good enough job explaining what's going on. This was not just about COVID relief; this piece of the package was about recognizing that for 50 years we have had an economy that has worked really well for the top 10 percent of Americans, but hasn't really worked for anybody else.
We have, since 2001, cut taxes by $8 trillion — almost all of which have gone to the wealthiest people in the United States — when we face some of the worst income inequality that we have had since the 1920s.
I'm looking forward to getting back to this debate and hopefully being able to sit down with, among other people, Joe Manchin to have a further discussion about why we ought to move forward with the enhanced child tax credit.
Heffel: Your colleague Senator Joe Manchin, a Democrat from West Virginia has expressed concerns about the child tax credit. It was reported in the Huffington post that he opposes the credit because he believed people might spend the money on drugs. How do you separate bad faith arguments like that from genuine concerns, including debt reduction?
Sen. Bennet: In terms of debt reduction, what I would be happy to do is extend the child tax credit for 10 years, and pay for it for 10 years by reversing the Trump tax cuts for the wealthy and some other things that I think the American people would be extremely excited about. So for me the issue is not: should we add to the deficit to pay for the child tax credit. I think we should pay for the child tax credit — I've always believed that.
Columbia University says that we're going to get an eight-times return on investment on the child tax credit because childhood poverty costs our country a trillion dollars a year. And instead of having to constantly pay for the effects of childhood poverty, if we could actually cut it in half — or in my most optimistic view, end childhood poverty — then you're not paying on the backend for the cost of mitigating it.
Before I was in the Senate, I was the superintendent of schools in Denver. There were a lot of kids in the Denver schools living in poverty. They were not living in poverty because their parents weren't working, their parents were working often two and three jobs and they still couldn't get their kids out of poverty because of the cost of their housing and groceries in the Denver Metro area. So I'm continuing to have a debate with my friend Joe Manchin who is worried about what people will spend the money on and thinks that this is some form of welfare. I think it's very clear in countries that have child allowances, like the child tax credit, that the workforce participation rates are actually higher than they are in the United States of America.
That's no surprise to me having worked in Denver, because I know how important it is for families to be able to afford daycare so that they can actually work. I mean, we have seen that throughout the entire pandemic.
Heffel: Manchin says that there are so many fiscal responsibilities, "We have to get our house in order first." He talks about obligations like Medicare, Medicaid, dependency on retirees and things like that. What are you willing to concede to get up to his level, to figure out how this can move forward?
Sen. Bennet: As I said from the time that I introduced the child tax credit, I believe we should pay for it. And I think that over time, we have got to get out of the fiscal mess that we're in.
I deeply regret that there are repeat politicians in Washington that cut taxes for the wealthiest people almost by $8 trillion and didn't pay for a single cent of it. I deeply regret that we fought two wars in the Middle East that lasted for 20 years and [we] didn't pay for a cent of it. I deeply regret that we have a healthcare system that costs twice as much as any other industrialized country in the world. We're amassing a lot of debt because of that.
I'm more than willing to consider cutting off the child tax credit [so it doesn’t] go up to $400,000. I would gladly cut it off with $150,000, and maybe even below that.
Heffel: There is a path I'm hearing from you: things that you could give or take. I also want to talk about the concerns that the child tax credit contributes to rising inflation.
Sen. Bennet: I don't think that anybody really seriously believes that: that $425 a month on average for people living in Colorado are driving prices up. It certainly wouldn't be true if we pay for it as I have described. I mean, that would be offsetting because of the revenue we would be raising to pay for it.
I do believe that we have a broader issue with inflation because of supply chains and the recovery that we're seeing that is raising prices for families. It just defies imagination that people spending the child tax credit to buy what little daycare they can get for their kids is the source of the inflation that we're confronting now.
Heffel: That is a talking point that Republicans are putting out there.
Sen. Bennet: People will think of all kinds of talking points to not benefit people in our society that need it most. I don't understand it. I have been in Washington, D.C. at the end of the year when tax cuts were expiring for the wealthiest people in the country, when tax cuts were expiring for the most profitable corporations in America, and Congress had absolutely no trouble extending those tax cuts and never paying for it.
And now we have the child tax credit that we expanded that ends at the end of the year and Washington, D.C. walked out on it, knowing that the result was going to be doubling childhood poverty and increasing hunger in the United States by a quarter. It gives you the sense of how out of whack people's priorities are back there.
Heffel: Let's move on with Build Back Better because that is a huge part of the president's plan moving forward. We know that includes efforts to slow the effects of climate change — effects we know contributed to the Marshall fire here in Colorado. If Democrats can't get Build Back Better passed, are there other ways the Senate can start addressing climate change right now?
Sen. Bennet: There are. I think that the money that is in there for the climate is really important. And a lot of it is tailor-made for exactly what we're doing in Colorado. There are tax incentives that I worked on in the finance committee that are critical to our clean energy and community in the state of Colorado. There's $27 billion for forestry and for watershed protection and mitigation; $27 billion for conservation that would be important to our farmers and our ranchers and soil and health.
My own view of this is that we ought to just take a beat here; not forever, but for a week or two and see whether we can reconstruct something that makes more sense. For example, I am very unhappy with the fact that this bill does not reverse the Trump tax cut for the wealthiest people in the country. That, by the way, would raise $710 billion to pay for a lot of what we're talking about.
Heffel: But Senator, it seems to me that this is a discussion you have to have with members of your own party, because they are holding the cards here. How do you address that?
Sen. Bennet: The way I'm addressing it is by saying that — there's one senator who thinks that we shouldn't reverse the Trump tax cuts on the wealthy. There's another senator who, for the moment, is saying that it's OK to raise taxes on working people and the poorest people in the country during a pandemic. Because of the way the House constructed this bill, it cuts taxes for three-quarters of the millionaires in America because of the state and local tax deduction. I think we can write a much better bill than that, and one that can hopefully get 50 votes in our caucus and get signed by the President.
Heffel: The massive destruction of the Marshall fire has only exacerbated the issues of affordable housing in Colorado. The market was very tight before the fire and home prices continue to rise. How can the federal government address this crisis?
Sen. Bennet: We have a widespread crisis in this state that's affecting everybody's quality of life; Whether it's urban, rural or mountain communities. And it's gotten so bad that there are places where we can't fill jobs. I don't want Colorado to turn into San Francisco or Seattle.
I recently put together a housing affordability strategy group with people from all over Colorado — rural and urban and everything in between — to give us a set of recommendations. What they said was we need to increase supply; we need to give communities more flexibility; we need to prevent unnecessary evictions; and we need to integrate innovation in a way that we never have before.
When I was school superintendent, I'd meet people who taught in Denver Public Schools who lived here as well and paid rent or owned houses. Today, that seems like an impossibility. I think that the exciting thing is that there is money in the recovery act that Governor Polis and the legislature are going to be using to try to relieve some of the short-term issues with respect to housing, and think hard about what the long term should look like. So, I think there's some help on the way.
