Why are popular child tax credits stalling in the Senate?

Business groups are roasting the Senate's inability to pass tax credits that would benefit children and corporations—amid allegations that Republicans are sabotaging the bill ahead of the election.

One senior Democrat told The Hill that "presidential politics" is to blame for this paralysis, amid concerns that awarding Joe Biden a legislative victory would give him a boost in the polls.

The House of Representatives had overwhelmingly passed the so-called Tax Relief for American Families and Workers Act, a $78 billion package, back at the end of January.

However, it's been stuck in the mud ever since.

That's drawn a lot of criticism from the U.S. Chamber of Commerce because some of the measures have already started to expire or will do so soon.

One of them, which lapsed back in 2022, allowed domestic businesses to offset research and development costs against tax liabilities.

All these businesses are now left with is the hope that the act, which is currently stalled in the Senate, would allow credits to be reclaimed retrospectively.

According to the U.S. Chamber of Commerce, any further delays could have a huge impact on small businesses and the wider economy.

For example, in response to expired benefits, some firms are already taking out expensive loans, hiking prices for their consumers, and instituting hiring freezes.

"This pro-growth legislation is vital to the survival of many of America's most innovative small and midsize businesses," the group said.

"Its enactment would help resolve their cash flow and liquidity issues while reinvigorating domestic capital investment."

"Time is of the essence"

Five months have now passed since another influential group, Business Roundtable, also urged the Senate "to approve this essential legislation and send it to the president's desk."

At the time, Business Roundtable's CEO Joshua Bolten said the Tax Relief for American Families and Workers Act "will boost business investment at home, create American jobs and strengthen U.S. competitiveness."

In explaining the rationale for dragging their heels, Sen. Chuck Grassley—a senior Republican member of the Senate Finance Committee—had told Semafor:

"Passing a tax bill that makes the president look good, mailing out checks before the election, means he could be reelected and then we won’t extend the 2017 tax cuts."

Given that this act also includes policies designed to alleviate child poverty, this is quite a statement to make.

Both Biden and Trump are making big promises about the economy, with the Democratic president vowing to extend tax cuts for working Americans while aggressively rolling out social service initiatives.

Meanwhile, the Republican nominee has vowed to expand upon the Tax Cuts and Jobs Act that was signed while he was in office.

Unfortunately, the current political posturing on Capitol Hill risks having a detrimental impact on consumers and businesses alike for the next four months.

That means the economy may end up in a weaker position for whoever re-enters the Oval Office.