On February 15, DOGE head Elon Musk, as part of his campaign to eliminate “waste and fraud” across the government, posted a chart to X, listing what was described as “IRS Welfare.” The chart showed a spike in payments in 2021, to which Musk stated, “such a big jump in a short time doesn’t make sense.”
As multiple people pointed out in response, it would appear that Musk is unaware of the reason for that spike: The passage, in 2021’s American Rescue Plan, of a temporary expanded child tax credit.
“In today’s news, Elon is looking at a graph of Joe Biden’s child tax credit expansion and suggesting it is evidence of fraud,” journalist Jordan Weissmann pointed out.
“Elon Musk isn’t aware that the Tax Cuts and Jobs Act increased the child tax credit, and so is implying the increase must be fraud,” economics professor Andy Barenberg said in response.
Others noted that someone with as many children as Musk should probably be aware of the existence of such a credit, while others pointed out that the man behind DOGE should probably know more than he does about the recent history of how government spending has worked.
About the Child Tax Credit
As part of the American Rescue Plan, which was passed in the opening weeks of the Biden presidency, the existing child tax credit was expanded, which entailed monthly payments while expanding availability and making it fully refundable.
According to numerous studies, including one by the Brookings Institution, the expanded credit was a massive policy success, especially when it came to lifting children out of poverty. Per Brookings, 3.7 million children were lifted out of poverty as a result of the credit.
However, there was one other provision of the credit that turned out to be important: It was set to expire after one year. And a subsequent Biden initiative that would have expanded it further, known as the Build Back Better Act, failed to pass. Parts of that package made it into law in 2022, as the Inflation Reduction Act, but not the expanded child tax credit.
Could the Expanded Child Tax Credit Return?
In the years since, with Republicans taking over the House in 2023 and eventually Trump returning to office, the idea of expanding the child tax credit has largely fallen off the agenda.
J.D. Vance, now the vice president, did propose a $5,000 child tax credit during the 2024 campaign, up from its current level of $2,000. One senator, Sen. Josh Hawley (R-MO), proposed something like the Vance proposal in January.
However, it doesn’t appear that such a proposal is any type of major part of the current spending negotiations in Congress. The Trump tax cuts from 2017, which are up for renewal now, did increase the child tax credit to the current level of $2,000, which is set to expire at the end of the year.
Meanwhile, in the States…
There are some places where expanded child tax credits are in play- at the state level, in both red and blue states.
Ohio Gov. Mike DeWine has proposed expanding the state’s child tax credit, which would be paid for, at least in part, by raising taxes on cigarettes.
Former President of the United States Donald Trump speaking with attendees at the 2023 Turning Point Action Conference at the Palm Beach County Convention Center in West Palm Beach, Florida.
In New York, Gov. Kathy Hochul has proposed expanding the child tax credit for more than 2.75 million children. The plan would “give 1.6 million New York families an annual tax credit of up to $1,000 per child under age four and up to $500 per child from four through sixteen.”
About the Author: Stephen Silver
Stephen Silver is an award-winning journalist, essayist and film critic, and contributor to the Philadelphia Inquirer, the Jewish Telegraphic Agency, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. For over a decade, Stephen has authored thousands of articles that focus on politics, technology, and the economy. Follow him on X (formerly Twitter) at @StephenSilver, and subscribe to his Substack newsletter
