Colorado U.S. Sen Michael Bennet has a reputation as a mild-mannered guy. He makes self-effacing jokes. He calls himself an “accidental senator”— a reference to his surprise appointment in 2009 to fill the seat vacated by Ken Salazar when he joined President Obama’s cabinet. He can have real conversations with colleagues on both sides of the aisle —something that has earned him a reputation as a moderate. When Bennet ran for president, he promised voters that he would be a boring occupant of the Oval Office: someone Americans wouldn’t have to think about as they went about their daily lives.
But last week, in partnership with U.S. Sen. Sherrod Brown of Ohio, Bennet chalked up the most significant legislative accomplishment of any Colorado legislator in at least a generation, and the most transformational progressive, pro-family, pro-working-and-middle class change to federal tax laws in a generation, too.
The headlines when President Biden signed the American Rescue Plan last Thursday focused mainly on the House and Senate vote tallies, the extension of unemployment benefits, and the much-anticipated stimulus checks that will be going to over 150 million Americans. But after those headlines have faded and the economic recovery has come, the lasting change delivered by the American Rescue Plan is likely to be the groundbreaking inclusion of Bennet and Brown’s overhaul of the child tax credit.
The legislation transforms the existing child tax credit, both by making it larger and, more consequentially, by making it “fully refundable,” which, in effect, means that American families will get a direct payment of $300 per month for each child age five and under, and $250 per month for older children. The benefit will almost immediately halve child poverty in the United States, (and will cut child poverty among Black, Latinx, and Native American children by more than half). It will provide more support to tens of millions of middle-class families too. Though it phases out for higher income families, it is nearly universal; about 93% of American families with children will benefit.
The moral reasons for the policy are self-evident: it is appalling that, even before the phenomenon was exacerbated by the pandemic, one in seven children in America were living in poverty. But the plan makes good economic sense too. A Columbia University analysis of the tax credit’s impact suggests that the initial investment —approximately $100 billion — will yield returns of over $800 billion in terms of education, health, decreased crime, and increased earnings. This analysis is in line with groundbreaking work by Nathaniel Hendren and Ben Sprung-Keyser at Harvard that looks at dozens of social programs over the last century in the United States and analyzes their return on investment. Investments in low-income children’s health and education are the best social investments, often delivering a return to taxpayers as well as recipients because of increased tax revenue from the higher earnings of the programs’ direct beneficiaries (along with decreased health care and other costs).
While the Bennet-Brown plan is not yet permanent, it’s easy to see how it might quickly become so popular that it will be difficult to revoke. In some ways, the legislation provides a beginning-of-life mirror image to the basic income promised by Social Security at the end of life. That program was born in another crisis: President Franklin Roosevelt tasked his labor secretary, Frances Perkins, and four other cabinet members with developing plans to address the economic insecurity experienced by millions of Americans in the Great Depression. Perkins, the first woman Cabinet member and the longest-serving labor secretary in U.S. history, was not regarded by labor leaders as a lefty in her day. But she helped draft and push through Congress the Social Security Act, midwifing a universal program that dramatically changed the life of the American worker by promising a basic income in old age. What began as a Depression-era social insurance program became a non-negotiable moral commitment that workers should not be destitute in their old age, and a foundational component of the American social contract.
Bennet and Brown’s tax credit represents a similar paradigm shift. It’s not just a floor of support for struggling American families, it is a statement about the kind of economy and the kind of society we want to have — one in which the measure of our present, and the success of our future, both rest on a commitment to the proposition that children should not be poor.
Daniel Baer is a senior fellow at the Carnegie Endowment for International Peace. He is a former U.S. diplomat and a former executive director of the Colorado Department of Higher Education.