Senate fails to advance major tax bill that would expand Child Tax Credit

Washington — A major tax package that would bolster the popular Child Tax Credit and cut taxes for businesses failed to advance in the Senate on Thursday in the face of widespread Republican opposition, despite clearing the House by wide bipartisan margins earlier this year. 

Known as the Tax Relief for American Families and Workers Act of 2024, the legislation would expand the Child Tax Credit to provide relief to lower-income families. Though it's more modest than a pandemic-era enhancement of the credit, which greatly reduced child poverty and ended in 2021, it could still lift roughly half a million children out of poverty, according to the Center on Budget and Policy Priorities. The bill also included some revived tax cuts for businesses, like research and development deductions. 

The legislation fell short in a vote of 48 in favor to 44 opposed, with 60 votes needed to advance the measure. Three Republicans — Sens. Josh Hawley of Missouri, Markwayne Mullin of Oklahoma and Rick Scott of Florida — joined with Democrats in favor of moving forward with the bill. Sens. Joe Manchin of West Virginia and Bernie Sanders of Vermont, independents who caucus with Democrats, were also opposed.

The bill would make it easier for more families to qualify for the Child Tax Credit, along with increasing the amount from $1,600 per child to $1,800 in 2023; $1,900 in 2024; and $2,000 in 2025. It would also adjust the limit in future years to account for inflation. 

The credit expansion would cost roughly $33 billion, according to the Congressional Budget Office. It includes various offsets to pay for the tax breaks, and the CBO estimates it would have little impact on the deficit over the next decade.

Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat, and House Ways and Means Committee Chairman Jason Smith, a Missouri Republican, unveiled an agreement on the legislation in January, calling it a "common sense, bipartisan, bicameral tax framework."

Then, the House approved the legislation in a 357 to 70 vote later in the month in a rare moment of bipartisanship. Wyden said on Wednesday that the bill was "designed with balance in mind."

"On a normal day you can't get 357 House members to agree to order a piece of apple pie," Wyden said on the Senate floor Wednesday. "But that's the kind of support this tax bill had."

Wyden added Thursday that when it comes to tax policy debates, "this is the easy stuff," saying the difficult issues don't see the kind of bipartisan agreement that the House demonstrated in January. He warned that if Senate Republicans can't work across the aisle, there will be some "very, very heavy lifting" going forward.

Still, Senate Republicans expressed concerns about the cost of the bill and the possibility of bolstering Democrats' chances in November. While some have advocated for an amendment process, others have voiced support for waiting until after the election, with control of Congress and the White House up for grabs, to address the tax issues.

Sen. Mike Crapo of Idaho, the ranking Republican member on the Senate Finance Committee, criticized the approach to moving the legislation through the chamber ahead of the vote on Thursday, claiming Democrats are pushing the measure for show, rather than substantive reasons. 

"While there are plenty of provisions in this bill that my colleagues and I support, the proponents have known this since before it was released — that Senate Republicans would need to change the bill in order to gain substantial bipartisan support," Crapo said on the Senate floor. "It has been months since any real attempt at engagement of outreach has taken place, which suggests that my colleagues are not actually serious about passing a bill, but are instead focused on election-year messaging."

Sen. John Cornyn, a Texas Republican, said on Wednesday that the Senate should leave the issue until next year to come up with a better product. He said on the Senate floor that it's a "designed-to-fail vote" and not a serious way to legislate. And he added that although the bill cleared the House, the Senate needs to shape the legislation, saying the upper chamber "is not a rubber stamp." 

Cornyn claimed that Senate Democratic leadership "sat on the bill intentionally for six months and waited until the final hour before a five-week recess to bring it to the floor," suggesting that it's a show vote planned purely for use as a talking point on the campaign trail.

Despite the opposition from Senate Republicans, Democratic leaders pushed forward with the legislation, aiming to put the GOP on the record with Thursday's vote. 

Senate Majority Leader Chuck Schumer acknowledged the bill's slim chances on Thursday morning, saying "unfortunately, it seems like Senate Republicans plan to vote no today."

The New York Democrat painted the GOP opposition as contrary to the party's view of itself as the "party of family and business," saying it's "very odd" to see them come out against the legislation and calling the arguments against the measure "nonsensical."

Schumer said on Wednesday that there's no "great mystery" about why Senate Republicans are expected to oppose the package, arguing that they're looking to the calendar and "have decided they care more about results of the election than in passing a law."

"They hope that if things go their way they can get a more conservative package sometime in the future," Schumer said. "And they're willing to walk away from expanding programs like the Child Tax Credit along the way."

The White House had urged the Senate to pass the bill on Thursday, saying in a statement from the Office of Management and Budget that the bill "represents a fair bipartisan compromise, and the Senate should send it to the President's desk."