Democrats want to make coronavirus relief provisions permanent in new package

The cost of President Biden’s $1.9 trillion coronavirus relief package is on track to double if popular provisions like an expansion of the child tax credit are made permanent, which is exactly what Democrats say they plan to do.

The new package includes a one-year expansion of the child tax credit and bolsters other popular tax breaks like the earned income credit. If made permanent, it would be expected to increase the cost of the package to as high as $4 trillion.

“Overall, we could be looking at the cost of this package doubling from $2 trillion to $4 trillion over the decade,” said Brian Riedl, a senior fellow at the Manhattan Institute. “And if that happens, interestingly, the permanent extensions will cost as much as the 2017 tax cuts.”

It’s part of a historic expansion of the welfare state. The new spending adds to the $4 trillion spent in the previous COVID-19 rescue packages and pushes the national debt closer to $30 trillion.

One of the most high-profile tax provisions is an expansion of the child tax credit from $2,000 to $3,600 for children under 6 and to $3,000 for other children.

The Committee for a Responsible Federal Budget estimated that if the expansion is permanently extended, the 10-year cost would total $1.1 trillion.

The costs add up to $2 trillion when you add in benefits like food stamps, supercharged unemployment benefits, the earned income and child and dependent care credits, Obamacare subsidies and Medicaid expansion, CRFB projected.

“If you’re looking to permanently expand government without paying for it, it was a very smart move,” Mr. Riedl said. “You just call it stimulus and you don’t have to pay for it.”

The National Taxpayers Union Foundation placed the total cost at closer to $3 trillion if major temporary provisions are made permanent.

The NTUF analysis included projected extensions of items like $175 million for a community navigator program through the Small Business Administration and a one-time $7.6 billion boost for community health centers.

“It’s all front-loaded with spending and back-loaded with revenues coming in down the road with some of the tax changes that they made,” said Demian Brady, NTUF’s vice president of research and the author of the report. “That brings up the argument that we’re making in this paper that they’re hiding the cost of these proposals that they are definitely going to try to come back and make permanent.”

Mr. Brady envisioned a coming attempt at a “grand bargain” where Republicans will fight to extend the expiring tax cuts in the 2017 GOP tax law and Democrats will push to extend the new spending provisions in Mr. Biden’s package.

“There’s going to be an opportunity for both sides to come to the table with what they want and try to strike some kind of deal and find a way to pay for this because we already have a really massive debt,” he said.

Mr. Biden and the White House have waved aside short-term concerns about deficits as they eye their next big spending package, which will potentially encompass infrastructure and climate change proposals.

“The president has made clear that being fiscally responsible is a priority of his,” said Bharat Ramamurti, deputy director of the National Economic Council. “He’s also made clear that, right now, one of the best things that we can do is deficit finance these investments because that’s what gets the economy moving more quickly. And in the long term, growth helps bring down the debt and deficit levels as well.”

Mr. Biden supports a permanent extension of the expanded child tax credit and Capitol Hill Democrats are currently crafting plans to make it happen.

Senate Majority Leader Charles E. Schumer said the credit is intended to help lift children out of poverty early on in life so they can lead “good, productive lives as citizens and as taxpayers.”

“We’re doing that for the first time here, and I hope it’s something that we can continue,” said Mr. Schumer, New York Democrat.

Lisa Gennetian, a professor of early learning policy studies at Duke University, said the federal poverty pivot toward children is long overdue.

“The legislation — including its comprehensive tax plan — is a step toward a grander and bolder needed policy experiment in the U.S.,” Ms. Gennetian said. “Simplifying the provision of income support for children and leveling the playing field is a path to future economic security of America.”

Mr. Riedl said neither party will be willing to go off the “cliff” in a year on popular provisions like the expanded child credit.

“Because Democrats will say you’re going to increase poverty and Republicans will call it a tax increase,” he said. “And so it was a smart move.”