Manchin draws his red lines on the child tax credit

Sen. Joe Manchin (D-W.Va.) has told the White House the child tax credit must include a firm work requirement and family income cap in the $60,000 range, people familiar with the matter tell Axios.

Why it matters: While Manchin’s demands would dramatically weaken one of President Biden’s signature programs to help working families, they also would reduce the package’s overall costs.

Stay on top of the latest market trends and economic insights with Axios Markets. Subscribe for free

• That would make it easier for the pivotal senator to support a final package, potentially higher than Manchin’s previous $1.5 trillion top line.

• At the same time, progressives would have a hard time accepting the changes Manchin is demanding.

• They’d also fundamentally alter a program the president funded for one year in the $1.9 COVID-19 relief package passed in March.

• Manchin’s office declined to comment on Axios’ report.

The big picture: Manchin and Sen. Kyrsten Sinema (D-Ariz.) held a call with House centrist lawmakers last Wednesday in which the senators detailed some of their specific concerns about Biden’s $3.5 trillion social spending plan.

• They also discussed the White House’s decision to link the package to approval of the separate $1.2 trillion infrastructure bill — a demand of House progressives.

• Sinema told lawmakers she will not vote for the social spending plan until the House passes the infrastructure bill, according to Reuters.

• Neither Manchin nor Sinema endorsed Biden’s compromise price for the social spending plan in the $1.9 trillion to $2.2 trillion range.

• Manchin also continues to privately tell colleagues the president’s Clean Electricity Performance Program, a cornerstone of Democrats’ plan to achieve zero-carbon electricity, is a non-starter.

Go deeper: While Manchin has previously indicated he wanted progressive to pick one of Biden’s three programs to help working families, he now seems more favorably disposed to policies that target families with young children in need.

Story continues

• In addition to the pared-back CTC, Manchin is open to Biden’s $450 billion plan to subsidize day care and offer free universal preschool, the people familiar with the matter told Axios.

• Manchin, however, wants to impose stricter income caps on the day care subsidies while keeping preschool free for everyone, as it already is in West Virginia.

• The senator is less interested in the $225 billion to $450 billion paid family leave proposal or $400 billion for a new program to provide elder care, according to people familiar with the matter.

By the numbers: Biden expanded the CTC for 2021, giving most families with young children up to $3,600 a year, up from the previous $2,000, with monthly deposits going straight into bank accounts.

• He also extended it to households that didn’t have any taxable income, providing a direct subsidy to poor families that are out of the workforce.

• White House officials say that a permanent and expanded CTC can reduce childhood poverty by half.

• But the program is expensive, costing some $450 billion to extend it for the four years Biden requested — and an estimated $1.6 trillion over 10 years.

• By placing income caps and a W-2 eligibility requirement for receiving the child tax credit, Manchin would lower the overall price by a figure still to be determined.

Like this article? Get more from Axios and subscribe to Axios Markets for free.