WASHINGTON -- A push by Senate Democrats to pass a roughly $2 trillion tax-and-spending measure before Christmas appeared in new peril Wednesday as talks soured between President Joe Biden and Sen. Joe Manchin over the size and scope of the package.
The gaps remain immense, with Biden seeking to safeguard his economic agenda from significant cuts while Manchin, D-W.Va., continues to insist on steep spending reductions, according to three people familiar with the matter who spoke on condition of anonymity to describe the sensitive negotiations. The sticking points include the fate of the expanded child tax credit, one of the people said.
Under the current proposal, party lawmakers seek to extend for one year a federal program that sends monthly aid to roughly 35 million families with young children. Once a smaller, yearly benefit, Democrats have touted the expansion as a critical endeavor toward combating child poverty and helping low-income Americans afford expenses including education and food.
The larger payments are set to expire at the end of this year unless lawmakers reauthorize them as part of the Build Back Better Act. The looming deadline has prompted Democrats this week to call for swift action to prevent a lapse in benefits starting in January. But their urgent requests do not appear to have budged Manchin, who has expressed general skepticism about approving aid that sends more checks directly to Americans.
One person familiar with the matter said Wednesday that Manchin essentially seeks to zero-out the program in the bill. A second person familiar with his thinking -- also speaking on condition of anonymity -- said the senator does not oppose the child tax credit specifically but rather the overall measure's construction and price tag.
In private talks with the president, Manchin has maintained that Democrats should spend no more than $1.75 trillion, the second person said.
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Manchin on Wednesday swatted away reporters' questions about the negotiations, though he later said he is "not opposed" to the child tax credit. He did not elaborate beyond decrying "bad rumors," and his office did not respond to a request for comment.
The standoff evinced the divide between Biden and a member of his own party, despite Democrats' repeated efforts over the past year to whittle down their ambitions to assuage Manchin's concerns. Without his support, Senate Democrats simply lack the votes in the narrowly divided chamber to finalize their proposal, which aims to overhaul the nation's health care, education, climate, immigration and tax laws.
HIGH HOPES
The potential roadblocks arrived on a day when Democrats initially sought to project a sense of optimism, believing they could steer the final piece of the president's economic agenda to passage in the Senate roughly a month after House Democrats approved it.
Taking to the Senate floor, Majority Leader Charles Schumer, D-N.Y., began the day by stressing lawmakers' continued work "on getting the Senate into a position where we can vote on the President's Build Back Better legislation." He has repeatedly said he hopes the chamber can complete its work before Christmas, sending a revised measure back to the House.
The White House also tried to strike a positive note. Speaking to reporters, principal deputy press secretary Karine Jean-Pierre said Biden has had "two great conversations with [Manchin] this week that have been productive," declining to share more about the scope of the talks.
Biden expressed "hope" that the Senate could meet its self-imposed holiday deadline. Asked if he had made progress with Manchin, he replied: "Some."
Behind the scenes, though, the White House appeared to find itself warring again with one of its own.
A longtime holdout on the package, Manchin for months has maintained concerns that Democrats are spending too much, and too quickly, potentially compounding the risks of inflation at a time when prices are rising at a rapid clip. He negotiated down the party's original package from $3.5 trillion earlier this year, frustrating liberal lawmakers.
But the senator never endorsed the roughly $2 trillion legislation that emerged from the House, a proposal that aims to expand Medicare, authorize universal prekindergarten, invest new sums to combat climate change and expand federal safety net programs. Instead, Manchin over the past two weeks has intensified his criticisms about inflation and repeated his desire that Democrats hit pause.
The moderate holdout also appeared to take fresh aim at the expanded child tax credit in recent days, raising red flags at an event hosted by the Wall Street Journal last week about some of the direct aid programs that lawmakers adopted over the past year in response to the coronavirus.
"If we keep sending checks," he said, "it's going to be hard to stop the checks."
The developments left some Democrats stunned and furious as they awaited details on what Manchin actually seeks. Sen. Ron Wyden, D-Ore., chairman of the tax-focused Finance Committee, described the expanded child tax credit as a "lifeline" -- and said lawmakers are looking at alternate means to continue it.
"We would not tolerate an interruption of a Social Security payment for vulnerable elderly people," Wyden said.
Yet it remained unclear Wednesday how the Senate would move such a bill through the narrowly divided chamber, given the expected Republican opposition to the idea. Democrats are able to sidestep the GOP in adopting the Build Back Better Act through a process known as reconciliation, which avoids the possibility of a filibuster, but that avenue may not be available to extend solely the child tax credit expansion.
CHILD-TAX CREDIT ENDING
The expanded child tax credit is one of the most far-reaching of all the federal aid programs launched during the pandemic -- up to $300 per child going directly into families' bank accounts on the 15th of each month.
But the last checks went out Wednesday unless Congress revives the program for 2022.
The swift launch, and potentially quick end, to the bolstered credit highlights the risks of enacting sweeping social policy changes in a politically divisive environment, without consensus to make the changes stick. Biden and his party might not have been praised by voters for adding the benefit, but they almost surely will be blamed if the money abruptly stops flowing.
"We need to keep them going," said Rep. Suzan DelBene, D-Wash., and chairwoman of the House's New Democrat Coalition. "Families deserve that predictability and certainty."
The child tax credit wasn't new when Democrats, over the objections of Republicans, altered the program as part of Biden's $1.9 trillion coronavirus relief bill shortly after he took office in January. But rarely has it provided the boost to families seen with this year's changes.
For more than 20 years, American taxpayers have been afforded a tax break for their children. Started as a $500 per child write-off under President Bill Clinton in 1997, it changed over time and was beefed up under President Donald Trump's GOP tax cuts in 2017.
Biden's American Rescue Plan increased the credit to $3,000 a year, added 17-year-olds and boosted the amount to $3,600 for children younger than 6. Most dramatically, it gave the credit to millions of families with low or no income, even if they didn't earn enough to pay income taxes or pay enough tax to qualify for the refund.
Studies suggest the tax-credit expansions are expected to cut child poverty by 40% -- with 9 of 10 American children benefiting. All told, some 4.1 million children are on track to be lifted above the poverty line, according to analysis from the Center for Budget and Policy Priorities.
After the first checks started arriving in July, about a third of recipient families used the money during the first few months to pay down debt, along with paying for school supplies and child care, according to preliminary reports from the U.S. Census Bureau.
Families in New Mexico, which has one of the country's highest child poverty rates, spent nearly 46% of the money on food, a study by Washington University in St. Louis' Social Policy Institute found.
"It says a lot about what families are worried about," said Sharon Kaye, communications director for New Mexico Voices for Children. "This is hugely important to a lot of families."
NOT A FAN
On Tuesday, Sen. John Thune, the No. 2 Republican, said his side was fine letting the policy lapse as the coronavirus crisis eases.
"The thing I don't think you want is a huge spike in spending," Thune told reporters. "And that would probably be the most obvious example of an inflationary-type policy."
A Democrat who has had "many, many, many conversations" with Manchin is Sen. Michael Bennet of Colorado, who said the West Virginian "is not at this moment a fan of the child tax credit."
Bennet said he hopes Manchin will come to see that the extension would help the country because it would enable more parents to afford child care and work. "My hope is that with the one-year extension of the enhanced credit he will become a fan, and we'll see," he said.
Proponents described the expanded credit as an element of trust that had been lacking in much of the American social safety net -- relying on parents to make the right decisions on their family's needs.
Robert Greenstein, a visiting fellow at the Brookings Institution, compared the child tax credit to America's signature safety net programs -- Social Security, Medicare and Medicaid -- which have been adjusted over the years but have become mainstays in American life. He said there are few policies that are more important.
Greenstein said the benefits flow beyond the families receiving the cash, with the potential to bring long-term improvements. "We'll end up having healthier, better-educated generations of children who can be more productive workers in the U.S. economy of future decades," he said.
"People are often skeptical -- the government doesn't do things right," he said. "This is an example of something that they really got right."
Emma Mehrabi, director of poverty policy at the Children's Defense Fund, called the potential interruption of payments "a real slap in the face for families in need."
"There is no other tool in our toolkit that has significantly reduced child poverty for decades," she said.
Information for this article was contributed by Tony Romm and Seung Min Kim of The Washington Post; and by Lisa Mascaro, Ashraf Khalil and Josh Boak of the Associated Press.