Biden’s Spending ‘framework’ Would Create the Largest Benefits Cliff Ever Next Christmas

Just over a month ago, millions hit the largest benefits cliff in U.S. history. An estimated 7.5 million recipients saw weekly pandemic unemployment benefits abruptly end on Labor Day, as temporary federal programs simply shut down as a direct result of the Democrats’ March 2021 American Rescue Plan. The media largely ignored the record benefit shutoff (because of its partisan pedigree and the fact that it primarily affected the residents of blue states), but that’s unlikely to be the case for the next one. Right now, Democrats are crafting an even bigger benefits cliff that would hit tens of millions more monthly benefit recipients across the country in about Christmas 2022.

The latest trillion-dollar spending “ framework ” released by the White House last week includes a one-year extension of the expanded and now monthly child tax credit payments made in 2021. That’s down from the four-year extension, at the cost of a whopping $556 billion, they included in the original $3.5 trillion version of the legislation, which they are now being pressed to minimize. The new White House framework would also permanently eliminate the work requirement for collecting any future annual payments, perpetuating new work-free welfare benefits forever.

As a result, the federal checks now flowing for the first time in monthly installments to 65 million children would come to an abrupt end in December 2022.

Meanwhile, President Joe Biden and his supporters have repeatedly said they really intend for these new monthly payments to become permanent. Three important facts are needed to understand what is really going on.

First, the authors of this one-year extension plan actually want monthly federal benefit checks to continue beyond their proposed December 2022 cutoff. The record benefit shutdown currently being crafted, in the type of logic that only makes sense in Washington, D.C., is better viewed as a political maneuver designed to ensure benefits continue beyond their apparent expiration date. As Sen. Sherrod Brown, an Ohio Democrat, recently described, “Imagine you’re a Republican politician running for office next year and a voter from Lima, Ohio, comes up and says, ‘That child tax credit has really changed my life and made my life a lot better.’ … What are you going to do? Are you going to cancel? I think that speaks for itself.”

Second, any alleged “savings” from adopting this apparently scaled-back policy is, to quote Biden, malarkey. The same policymakers who want to make these monthly checks permanent are currently proposing they be provided for only one more year for a simple reason. They don’t have the votes or the money to enact the permanent expansion they really support.

Third, this cynical maneuver is just the latest example of lawmakers intentionally ending benefits at Christmas in order to increase the chances of extending federal largesse. Brown’s quote suggests that, if the new framework is enacted, Democrats intend for another extension to be a key issue in next year’s elections. But if unresolved then, it will matter during the lame-duck session to follow, too. Any Republican who opposes another extension will be derided as a heartless Scrooge offering children lumps of coal instead of more federal benefit checks. Such attacks will naturally ignore the fact that literally everyone who drafted, voted for, and signed into law the policy creating this largest benefit cliff in U.S. history was a Democrat.

In the end, even if a one-year extension is approved now, the enactment of additional legislation overcoming the resulting record benefit cliff in December 2022 is a high-risk strategy. After all, proponents of pandemic unemployment benefits banked on similar political dynamics when they extended those benefits through Labor Day and created the prior record benefits cliff. But then, conditions changed, Republicans opted out, and key Democrats balked at another extension.

Most are already opposed to making the new monthly child benefit checks permanent. With Biden’s support falling fast, it’s not hard to imagine a similar fate for these benefits next year despite the massive benefits cliff ahead. Rep. Ritchie Torres, a first-term Democrat from New York, succinctly summarized the prospects for these benefits if only a one-year extension is enacted now: “As far as I’m concerned, a one-year expansion is a death sentence.”

Matt Weidinger is the Rowe fellow in poverty studies at the American Enterprise Institute.