Congress Ended Pandemic Cash for Parents, but Some States Have Embraced the Idea

For a brief period during the coronavirus pandemic, the federal government gave most parents monthly cash — up to $300 per child — with no work requirements or restrictions on how the money could be spent.

The experiment, through an expanded child tax credit, died last year after 12 months, when Republicans and Senator Joe Manchin III, the moderate West Virginia Democrat, refused to renew it.

But a growing number of states are moving forward with their own programs, often with Republican support. Last week, Colorado became the ninth state in two years to guarantee some form of cash income to its poorest parents. The law, which passed with bipartisan support, will be the second most generous in the country, providing parents making less than $35,000 per year with up to $1,200 annually for each child under 6.

Minnesota’s program, which became law last month, is the most generous, guaranteeing families earning $35,000 or less with up to $1,750 in cash annually for each child under 17.

“Focusing on child welfare and supporting families has been a really big selling point” across the aisle, said Halah Ahmad, vice president at the Jain Family Institute, a think tank that supports guaranteed income and worked with Colorado lawmakers to craft the new program.

State child tax credits are far smaller than the federal benefit was, and are unlikely to drastically remake any household’s budget. At least initially, most will be paid annually rather than monthly, making them potentially less useful in day-to-day spending decisions.

Still, supporters of the programs say that they will create an important precedent, and test the theory that government can expand cash support to families without discouraging parents from working outside the home — a longtime political and economic concern.

It was in response to that concern that in 1996, President Bill Clinton remade federal welfare by tying work requirements to cash support for single mothers. But the pandemic, inflation and child care shortages have prompted some lawmakers to reconsider that model.

In addition to Colorado and Minnesota, New York, California, Maryland, Massachusetts, New Jersey, Vermont and New Mexico have also passed guaranteed-income child tax credits over the past two years, with cash payments ranging from $25 to $1,083 annually per child, depending on household income.

The policies, most popular with Democrats, have won over about a third of Republican state legislators, according to an analysis by the Jain Family Institute. That is in stark contrast to congressional Republicans, who have coalesced around the idea that child tax credits should be attached to work requirements.

State Senator Janice Rich, a Colorado Republican who represents parts of the rural Western Slope, said co-sponsoring the legislation was an easy call, since it would help families that are struggling with inflation in housing, child care and energy costs.

“I can’t help what the federal government decides,” she said, referencing Republicans in Congress who opposed making the expanded federal tax credit permanent. “It seemed like the right thing to do for Colorado families.”

Ms. Rich noted that other early childhood issues, too, had been bipartisan winners in the Colorado legislature, such as efforts to increase access to pre-K and affordable child care.

Still, there is significant debate around expanding child tax credits, for lawmakers in both parties. In Montana this year, a coalition of Democrats and conservative Republicans killed an effort by Gov. Greg Gianforte, a Republican, to provide $1,200 annually per child for families earning up to $50,000.

Some lawmakers prefer public dollars to be spent on established child care programs, while others continue to be concerned that cash payments will discourage work.

“We don’t want to go back to pre-welfare reform,” said Kevin Corinth, a senior fellow at the American Enterprise Institute, a center-right think tank, and a former White House economic adviser under President Donald J. Trump.

In Washington, he added, “Republicans seem pretty united in the view that you should not get the child tax credit unless you have some amount of earnings. The fact that a state like Colorado has Republicans that are buying into the child allowance is somewhat surprising.”