Despite Democrats’ failed efforts over the past two years to permanently expand the child tax credit (CTC), recent reports suggest that some progressive lawmakers in Washington want to block an end-of-year omnibus bill in order to get their way. That effort is unlikely to succeed, but a longer-term compromise may be within reach.

There’s a straightforward plan for the new Congress to consider—consolidate the CTC and the earned income tax credit (EITC) into one working family credit (WFC) offering greater tax relief to working families and a better anti-poverty work incentive to poor families.

In 2021, Democrats temporarily increased the existing CTC to give almost all families with children as much as $3,600 per child, up from the current maximum of $2,000 per child (including up to $1,400 per child for families with no federal income tax liability). This policy temporarily eliminated the requirement that parents must have earnings to claim the CTC, and workers and nonworkers alike got the same payments for the first time in the CTC’s 25-year history.

However, Democrats failed to make the changes permanent because of the policy’s large cost and their insistence on eliminating the CTC’s work requirement—which Senator Joe Manchin (D-WV) strenuously opposed . Eliminating this work requirement would decrease employment and negate decades of social science research demonstrating the importance of work to reducing poverty.

The case for expanding the CTC to nonworkers has always been thin.

Originally proposed as pandemic relief, supporters quickly coalesced around the CTC’s anti-poverty goals when arguing to make it permanent. The Washington Post editorial board framed the CTC expansion as addressing a policy flaw, writing that the expanded CTC “fixed a kink in the law that funneled more money to those with higher incomes than to the poorest, which had shortchanged some 27 million children.”

However, this fundamentally misunderstands the purpose of the CTC and ignores the broader safety net. Congress originally intended the CTC to be tax relief for working families with children, not a poverty-fighting tool. It was not even available to poor families until the early 2000s.

The CTC’s design was not a flaw: It was meant to assist parents who worked enough to owe federal income taxes. Congress already had created the refundable earned income tax credit, which assisted families who worked but remained poor. And there were a host of safety net programs that helped the non-working (and working) poor, such as welfare, food stamps, housing, and disability assistance. However, Congress has repeatedly expanded the CTC, layering additional assistance on top of existing government benefits without considering its role in the broader safety net.

In the recently released " American Renewal: A Conservative Plan to Strengthen the Social Contract and Save the Country’s Finances ," we argue for consolidating the CTC, EITC, and Head of Household tax filing status into the WFC, which would give a low-income family with two children a maximum of $9,000 per year and phase-out at upper income levels.

Our consolidated tax credit would be as generous as the current combined CTC and EITC for most single parent families, and more generous for married-couple families. We propose alleviating marriage penalties in the existing EITC, which is currently more generous when two low-income, working parents stay unmarried.

A key component of our plan is to rapidly phase in the WFC after the first dollar earned—which would reward parents when they work. We believe sending a check to the most vulnerable families with no expectation for employment is wrong, as it discourages work and marriage in favor of single parenthood and government dependence. We also maintain that local officials are in the best position to offer appropriate social services to non-working families so that they can get on a path toward self-sufficiency, and our proposal reinforces that goal, too.

Progressive proponents have spent the past two years painting an expanded CTC as the best way to reduce poverty in the US, but this ignores a key piece of history. Child poverty in the U.S. had already declined to record lows before the pandemic and the 2021 CTC expansions. This was due to work-based welfare reforms accompanied by generous work supports like the EITC, which increased earnings among single-mother families.

Rushing through a CTC expansion during a lame-duck session is a step in the wrong direction. Instead, reducing child poverty further is best achieved by reforming the safety net and by consolidating the CTC and EITC into the working family credit to better support employment and marriage so more families are able to support themselves in the end.

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This article originally appeared in the AEIdeas blog and is reprinted with kind permission from the American Enterprise Institute.