“Putting all the provisions together, the Center on Budget and Policy Priorities estimates that the deal will lift about 400,000 children out of poverty, and make another 3 million less poor, in its first year. By 2025, it will be keeping 500,000 children a year out of poverty. The Tax Policy Center finds that the bulk of the tax cut will go to families earning $20,000 to $40,000 a year, with most families in the bottom fifth of the income scale getting a tax cut. Because of the business tax cuts, the total package winds up concentrating its benefits at the bottom and at the very top of the income scale.
While nothing to sneeze at, this is a far cry from the roughly 3 million children that would been lifted out of poverty in 2022 if the 2021 expansion of the credit had been extended. It is a dramatically more modest step. It also takes as a given that the credit will not be available to families with zero earnings, a key disagreement between Democratic and Republican legislators on which the latter have shown no flexibility.”
“In 2021, the child poverty rate — as measured by the supplemental poverty measure that incorporates the value of government benefits — took a sharp drop to its lowest point on record: 5.2 percent, so that 3.8 million American children were living below the federal poverty line. Then, as a report just released by the Census Bureau found, it experienced the steepest rise in its history in 2022: a hike of 139 percent, or more than double, to 12.4 percent. Five million kids fell back into poverty, pushing the number of kids whose parents were struggling to meet their basic needs up to 9 million.
To anyone following the politics of poverty in America, the jagged rebound was entirely unsurprising. The child poverty rate was like a loaded spring being held down by pandemic-era welfare programs. Chief among them: the child allowance, which expanded on the existing child tax credit (CTC) and sent monthly payments to all parents in poverty, helping to cut child poverty by 46 percent in 2021. Release the spring — or let the expanded CTC expire, as Congress did — and of course it will shoot right back up. The child poverty rates settled right back around pre-pandemic 2019 levels.”
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“The concern is that giving out money to people in poverty without requiring them to work in exchange will ultimately create communities where dropping out of work is both widespread and accepted. Cash with no strings attached “gives up on work,” as one conservative analyst put it.
While there have always been disagreements about that view, increasingly, the evidence is against it. Unconditional cash transfers in low-income countries have been found to stimulate economic activity. In a pilot program for guaranteed income in Stockton, California, recipients of unconditional cash were quicker to find full-time employment than control groups.
Looking specifically at the impacts of the expanded CTC, there was no evidence that receiving the benefit reduced work, and economists at Columbia University estimated that making the program permanent would deliver a more than tenfold return on the investment of about $100 billion per year — a major boost to the economy. That means in addition to solidifying the massive drop in child poverty and giving millions of struggling American families continued support to pay for food, school supplies, utilities, and rent, taxpayers would also save money in the long run.”
“Most surprising is that declines in poverty, rather than stalling with the decline of the Covid-19 pandemic, accelerated. While economic conditions could have led to one of the largest increases in poverty on record, the federal government stepped in to support families as the economy ground to a halt. While the pandemic brought a new set of hardships, these federal relief efforts prompted child poverty to fall sharply: In 2020, according to the supplemental poverty measure, child poverty fell from 12.5 percent to 9.7 percent — by far the largest single-year drop over the previous half-century.
These declines continued in 2021. In figures released Tuesday, we learned that in 2021 child poverty fell even further, to just 5.2 percent, by far the lowest rate ever recorded. This means that, between 2020 and 2021, an additional 3.4 million children were pulled out of poverty, and over the past two years almost 5.5 million children were, as the child poverty rate fell by nearly 60 percent in just two years.”
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“it’s no great mystery how it happened. To stave off a recession and prevent a spike in material hardship amid widespread joblessness and economic uncertainty, the federal government temporarily reinvented the traditional US safety net, pushing cash into US households. There were three rounds of economic impact payments (stimulus checks), expanded unemployment assistance, and, in 2021, an expanded child tax credit, which sent modest monthly cash payments to most American households with children from July through December 2021.
While the traditional safety net targets poor families and relies heavily on in-kind benefits rather than money, the pandemic safety net was largely cash-based, unrestricted, and nearly universal.”
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“it worked.
Over the past two years, tens of millions of people lost work and had their lives disrupted by Covid-19. Yet amid this economic disruption, child poverty plummeted.”
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“An analysis from the Center on Budget and Policy Priorities found that, absent government intervention, poverty in 2020 would have experienced its second-largest increase on record, but as a result of the pandemic safety net, poverty in the US experienced the largest single-year decline in more than 50 years.”
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“these programs were long gone before inflation became more entrenched. Inflation began in the goods-producing sector, as supply chain problems and rising shipping costs, combined with increased demand for goods, led prices to soar. Inflation was further spurred by Russia’s invasion of Ukraine and its impact on global energy and food prices. More notably, as relief programs ended, growth in demand did not appreciably slow. A quick look across the globe reveals that inflation has hit most countries in the wake of the pandemic regardless of the share of children who go to bed hungry.
While government pandemic spending has certainly played some role in pushing prices upward, it is important to recognize the uncertainty around the economic recovery. These same policies were responsible for the economy’s rapid recovery and swift employment growth. Following the Great Recession, unemployment remained elevated for years, to devastating effect.”
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“in the last two years, labor force participation rates have steadily recovered as the economy adjusted to living with the pandemic and showed no sign of accelerating as income supports expired.”
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“One pandemic-era policy is permanent: a change to the way food assistance benefit levels are calculated. This will reduce hardship and poverty going forward and should be celebrated. But most of the new Covid-era safety net has already expired, and we should expect child poverty to rise in tandem in 2022.
The clearest avenue for action, to relieve the current rise in hardship and ensure the lessons of the pandemic safety net are not lost to history, is to revive the expanded child tax credit. Most wealthy Western nations use a universal child allowance or child benefit — money sent to families with children across the income spectrum — to help defray the big costs that come with raising children and better ensure the healthy development of that nation’s children.
For the final six months of 2021, the US finally joined this group, and the results, as we now know, were staggering. Child poverty, child food insecurity, and other measures of material hardship all fell sharply. Critics feared the payments would provide a disincentive to work, but the policy had no discernible impact on the labor force participation of recipients. The benefits of the policy were extraordinary, and the downsides were negligible. We can, and should, bring it back.”
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“But what about inflation? Can we really send more cash to households while the Fed is trying to rein in spending? Data shows that low- and middle-income families receiving child tax credit payments in 2021 largely spent the funds on necessities, like food and utilities — the same necessities that Americans are now paying higher prices for — so the payments would go a long way toward relieving rising material hardship.
At the same time, a number of economists have noted that the expanded child tax credit is “too small to meaningfully increase inflation across the whole economy.” Perhaps most importantly, the government can help the most vulnerable in our society, even if it means asking others to chip in more to offset those costs. The Inflation Reduction Act begins that process by ensuring that the IRS can collect the tax revenue that high-income Americans actually owe.”
“Almost half the United States is ready to outlaw abortion now that the Supreme Court has overruled Roe v. Wade. But many of those states are not willing to give new babies and their families the educational, medical, or financial support they need to lead a healthy life. That could leave tens of thousands of future children unnecessarily disadvantaged and living in poverty.”
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“Those births will predominately be in the states with the most draconian post-Roe abortion restrictions. And with a few exceptions, those 22 states rank in the bottom half of states in the comprehensive support they provide to children and their families, according to the State-by-State Spending on Kids Dataset compiled by Brown University’s Margot Jackson and her colleagues. The disparities can be enormous: Vermont spends three times as much money on education, health care, and other economic support for children as Utah.”
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“The children born in these circumstances will start life a few steps behind, all because their political leaders strove to ban abortion without offering support to the children who would be born if their aims were achieved.”
“Child care costs exceed those of a mortgage or college in many states. Access to affordable child care is one of the biggest barriers to women’s work, and there’s increasing evidence that the cost of raising children is a barrier to having more kids as well, according to a New York Times survey. Low quality early childhood care situations have lifetime ramifications for children, including worsened health and economic trajectories and an increased likelihood of needing future government assistance.”
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“The evidence of improved outcomes for children from universal preschool and universal child care is mixed at best. The preponderance of evidence shows the largest gains for at-risk kids and unclear results for everyone else, and state-based programs haven’t been around long enough to suss out long-term effects.
Moreover, providing generous subsidies to nearly all American families, irrespective of need, will make child care more expensive by increasing demand, which will necessitate larger subsidies over time. This is a recipe for spiraling costs; look no further than our experiments in health care or college to see how quickly costs inflate when the government makes something “affordable.” Exacerbating these dynamics, the administration’s proposal will also constrain child care supply by mandating higher wages and skill levels from providers who already have thin margins as well as potentially limiting religious providers. Faith leaders across religions (Catholic, Muslim, Christian and Jewish) have expressed concern that their ability to continue to provide care will be negatively impacted by BBB. Those providers make up a huge portion of child care providers: A Bipartisan Policy Center poll from last year found that 31 percent of working-parent households used center-based care, and over half, or 53 percent, of these families used one that was affiliated with a faith organization.
To be sure, most parents will be shielded from the effects of rising costs because of the generous subsidies they are receiving, making the policy seem like a win-win on the surface, though they might be affected by the reduced choice providers. But nothing is free. Taxes on the rich and corporations can only go so far, and at some point that money will also need to go toward the historic debt we’ve accumulated. Estimates from the Committee for a Responsible Federal Budget and Moody’s suggest that the BBB child care provisions alone will cost nearly $1 trillion over 10 years once fully implemented, far exceeding the money to be provided by the tax increases that Democrats have proposed to fund the legislation. The people likely to pay for BBB and the runaway spending in Washington are the very children whom such policies are supposed to benefit.
Policymakers can do better. Republicans should up the ante on what Democrats have proposed with an alternative child care proposal — one that is more targeted, sustainable and also more transformative — by providing greater support and choice to parents.”
“For the past six months, families with kids have received monthly payments from the federal government as part of the expanded child tax credit — a policy that has slashed child poverty in the US.
If Congress doesn’t act, however, this measure is set to expire for future payments near the end of the month. The last monthly payment was scheduled to go out on December 15, after which these installments will end.”
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“The Center on Budget and Policy Priorities, a think tank focusing on social programs, estimates 9.9 million children could fall back into poverty or deeper into poverty if the credit is not extended. It estimates, too, that poverty rates for Black, Latino, and American Indian or Alaska Native (AIAN) children, in particular, will be hardest hit. If BBB doesn’t pass, poverty rates would be 22 percent for Black children compared to 13 percent if it did, 21 percent for Latino children compared to 12 percent, and 18 percent for AIAN children compared to 10 percent.”
“The expanded child tax credit, a policy passed in March 2021 that beefed up monthly payments to most families with kids, has already had a massive, positive effect on the lives of America’s children. After just one monthly payment, it cut child poverty by 25 percent — and should the larger payments continue, it could slash child poverty by more than 40 percent in a typical year, according to the Urban Institute.
This is a huge decline in a very short time frame. According to the Brookings Institution, child poverty rates dropped by 26 percent between 2009 and 2019, meaning the tax credit accomplished in one month what other policies took a decade to achieve.
Despite that success, the expanded child tax credit (CTC) is in serious danger. As part of their budget negotiations, Democrats are debating how long to extend the program — most likely for a year, with some calling for a four-year (or even indefinite) extension. In the best-case scenario with a short extension, the program will probably run out of money by the end of 2022. In the worst-case scenario, it could end as soon as April 2022, when families are currently due to receive their final enhanced payment.”
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“Opponents of the policy, however, argue that these payments could deter recipients from working since parents without an income can receive the help as well. Manchin has expressed this concern, arguing that work and/or education requirements ought to be added to the policy should it be extended. “Don’t you think, if we’re going to help the children, that the people should make some effort?” Manchin has said.
Some researchers have pushed back against this view, noting that a continual credit might help parents join the workforce by enabling them to afford basic services like child care. Given that the expanded child tax credit has only been distributed since July, it’s too early to ascertain which argument is correct, though data from a Columbia University study found that the credit hadn’t had a “significant effect on employment or labor force participation” so far.
There is also debate as to whether access to the credit should be capped even more. Right now, families that make up to $150,000 a year receive the full boost, a figure that Manchin would like to see go down. Manchin has argued that the policy should be capped at households that make $60,000 or less.
Proponents of a more universal policy, meanwhile, argue that broadening the constituency that benefits from the credit will increase its political support. More universal programs including Social Security and Medicare are some of the most popular government offerings and have polled better than Medicaid, which is means-tested.”
“In 2019, Mitt Romney made history: he became the first Senate Republican to endorse a form of child allowance, where all low- and middle-income parents would get a cash benefit to help raise their kids, regardless of whether or not they’re able to work. At the time, the plan was modest, amounting to only $1,500 a year for kids under 6 and $1,000 for kids 6-17.
But on Thursday, Romney went even further and proposed the Family Security Act, one of the most generous child-benefit packages ever, regardless of political party. The plan completely overhauls the current child tax credit (CTC) and turns it from a once-a-year bonus to massive income support, paid out monthly by the Social Security Administration.”
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“Romney’s plan would replace the CTC, currently worth up to $2,000 per child and restricted to parents with substantial income (it doesn’t fully kick in until you reach an income of over $11,000), with a flat monthly allowance paid out to all parents:
Parents of kids ages 0 to 5 would get $350 per month, or $4,200 a year
Parents of kids ages 6 to 17 would get $250 per month, or $3,000 a year
Parents with multiple kids could get a maximum of $1,250 per month or $15,000 a year; that translates to five kids between the ages of 6 and 17. Very large families would be somewhat penalized, but many families with three or four kids will get the full benefit.”
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“Romney’s proposal would phase out for wealthy parents — the benefits begin phasing out for single filers with $200,000 and joint filers with $400,000 in annual income.”
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“If you’re a liberal reading this and wondering if there’s a catch, there is — but it’s not necessarily a huge one. Romney doesn’t want his plan to add to the deficit, and he wants to simplify the set of child-related benefits the government currently offers. So his plan would pay for the child allowance by eliminating a number of other programs, including some that mostly benefit the poor ”
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“The upside of Romney’s plan being fully paid for, however, is that it would allow Congress to make the measure permanent under budget reconciliation rules, whereas the Biden proposal that relies on deficit funding is a temporary one-year measure.”
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“It’s hard to see Romney’s proposal gaining enough Republican support to get the plan above 60 votes, though I’d be thrilled to be proven wrong on that front. But it could easily, with Romney, Democrats, and maybe a few other choice Republicans on board, make it into a reconciliation package.”
“Suppose you’re a single parent raising two kids, ages 3 and 5. You were furloughed in the spring, when the big-box store you worked at downsized. You started getting hours again in the summer, enduring substantial risk by going to work with customers who didn’t always wear masks. Child care was a mess, and you had to scrape together help from family and friends.
It was a rough year — but you stayed afloat. In total, you ended up working about 1,000 hours last year at $14 an hour, or $14,000 total — plus there were the two stimulus checks the government sent out in April and December.
Less heralded but no less important to helping you pay the bills were a couple of tax credits the government offers: You got $1,725 through the complicated child tax credit (CTC) and another $5,600 from the earned income tax credit (EITC). That came out to $7,325 — a badly needed infusion. But as is the case every year, it was also a pain — you basically have to go to a tax preparer every tax season to help you with the paperwork to claim the credits.
This week, your member of Congress, in an unprecedented act of constituent outreach, asks you to hop on a Zoom. She’s working on legislation meant to make life easier for single parents like you, including a stimulus check. But it’s the two options to reform the tax credits that she wants to ask you about.
The first option: The government will increase your CTC a ton, so you get a whopping $7,200 a year ($3,600 per child), not just $1,725. Instead of a lump sum at tax time, the government will send you the money every month or so. Under this scenario, you’d still get the $5,600 from the EITC. The downside? You’d still have to go through all that tax prep every spring.
The second option: The government will junk the CTC — and will just send you $700 per month in the mail. That’s $350 per kid under 6, every month, regardless of whether you owe taxes. Perhaps just as appealing, there’s no tax-season paperwork to prepare. That’s $8,400 per year total, even more than the CTC in option one. The downside in this scenario: Under this plan, the EITC shrinks — and your EITC goes down to $2,000.
To recap: Both give you more money than you get now. Option one gives you more money than option two. But option two makes your life much easier logistically. You get big regular monthly payments whose amount doesn’t vary. And you would no longer be in a desperate rush every spring to get your tax return in for your big refund.
Option one above is what Democrats in Congress and the Biden administration want to do to tackle child poverty. Option two is Republican Sen. Mitt Romney’s plan to enact a new, simplified child allowance.”
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“If you make $14,000 a year, there are a bunch of state and federal programs out there to help you. And by “a bunch,” I mean a bunch.
Depending on the state you’re in, you may qualify for Medicaid. It’s not so simple, though — you’re eligible in every state that did the Obamacare expansion, but a bunch of states (Texas, Florida, Georgia, North Carolina, Mississippi) set the eligibility cutoff much lower. In Texas, single parents have to make less than $277 a month to qualify, so in this scenario, you’d be way too “rich.” (And getting your kids covered through Medicaid or S-CHIP is a whole other can of worms.)
Need housing? You can apply for a housing choice voucher under the Section 8 program, but it’s underfunded so you will have to navigate years or decades of waitlists.
Need help with child care and early education? There’s Head Start and Early Head Start. In addition, there’s the federal Child Care and Development Block Grant — but you probably won’t get it; only about 15 percent of income-eligible families do, and depending on your state, you might have to be enrolled in a formal welfare-to-work program.
Speaking of which, you might get some money from Temporary Assistance for Needy Families (TANF). But, again, most don’t, and for those who do it’s strictly time-limited and requires tedious “work reports” to prove you’re not too “lazy” to deserve it.
In the winter, if you need help with heat, there’s the Low Income Home Energy Assistance Program (LIHEAP) — but only 20 percent of eligible families get it.
You’ll probably be able to get Supplemental Nutrition Assistance Program (SNAP) benefits, or food stamps, to help with groceries. If you have an infant, you can probably get aid from the nutrition program for women, infants, and children. There are probably some other programs I’m forgetting.
Conservatives and libertarians sometimes see this laundry list and think, “Look at how much we do for poor people!” I see it and think, “Look at how ridiculously complicated the system we make poor people navigate is.””
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“Romney’s child allowance plan is generous. The Democrats’ plan is even more so. But Romney’s plan has one edge: It simplifies things for the people it’s supposed to benefit.”
“In 2019, about one in six children in America — 12 million kids nationwide — lived in poverty. That’s a rate about two or three times higher than in peer countries. And that was before the worst economic and public health crisis in modern history.
The scale of child poverty in America is a disgrace, not only because of the suffering it creates and the potential it drains from our society, but also because it’s easily avoidable. Child poverty is not an inevitability; it’s a policy choice. And we’ve been making the wrong choice for far too long.”