“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.”
“Republicans are hoping to renew three business world deductions from the 2017 Trump tax cuts that have begun to phase out in recent years. Those provisions would allow companies to deduct more for things like research and development, equipment investments, and interest costs.
For the Democrats, the child tax credit would receive a new expansion that would allow poorer families greater access to the credit. One report from the progressive Center on Budget and Policy Priorities estimated that 16 million children in lower-income households would benefit from the enhancement with a half a million of them lifted above the poverty line.
The deal includes a range of other provisions around issues like double taxation for companies that operate in Taiwan, additional assistance for disaster-struck communities; the costs of the bill would be paid for by implementing changes to a pandemic-era employee retention tax credit.
This bill — if enacted — would serve as a stopgap of sorts ahead of a tax debate in 2025, which will center around an array of provisions in the 2017 Trump tax cuts that are set to expire on Dec. 31, 2025.”
“Since 1975, politicians have built huge portions of the American safety net — like the child tax credit (CTC) — around the idea that excluding the poorest Americans from government assistance will motivate them to climb out of deep poverty on their own and get a job.
This long-standing bipartisan consensus is manifest in the twin ideas of work and income requirements. Work requirements are simple: You either have a job or you don’t, and that binary is what determines whether you’re eligible for a handful of welfare programs.
Income requirements are a little wonkier. They stipulate that anyone without any income will receive no benefits. Only after earned income surpasses a specified level do benefits begin kicking in — which is where we get another dry name: “phase-ins.””
…
“The consensus excluding the poorest Americans from some forms of government assistance through phase-ins held until President Joe Biden’s 2021 American Rescue Plan. Its anti-poverty centerpiece was to cut phase-ins from the existing CTC and crank up the payment, creating what’s known as the expanded CTC.
The results were historic. Over the course of 2021, child poverty was cut nearly in half, and the long-running fear at the heart of the American welfare system — that unconditional aid would discourage work — never came to pass.
Then, to the dismay of advocates and recipients alike, Sen. Joe Manchin (D-WV) blocked the Democratic Party’s effort to make the expansion permanent, fearing, among other familiar concerns like the cost, that recipients would just buy drugs (the data shows that recipients spent the money on food, clothes, utilities, rent, and education). Come 2022, phase-ins returned to the CTC, approximately 3.7 million children were immediately thrust back into poverty in January, and the rest of the year saw the sharpest rise in the history of recorded child poverty rates.”
…
“Now that we have real-world evidence from a nationwide, year-long experiment, the expanded CTC’s success should ignite efforts to roll back phase-ins across the board. That also means cutting them from the CTC’s sister program, the earned income tax credit (EITC), which phases in as a supplement to wages for low-income Americans and helps about 31 million Americans.
The expanded CTC is estimated to have reduced child poverty rates anywhere from 29 percent to 43 percent, with the vast majority of that drop attributable to removing phase-ins. Extending that success to include the EITC would cut child poverty by an estimated 64 percent.”
…
“Winship was unsurprised that his fears of parents choosing to work less didn’t show up during the expanded CTC. It only lasted for one year and was recognized all the while as a temporary program. “These kinds of behavioral effects take time to set in,” he writes. In the long-term, after a decade or a generation of the program being in place, that’s when he would expect to see, as Oren Cass, executive director of the conservative think-tank American Compass, put it, “communities in which labor-force dropout is widespread and widely accepted.””
…
“Long-term speculation, however, can go both ways. The generational impacts of unconditional transfers could just as well lead to long-term investments in education and skills training, support entrepreneurship, and actually raise productivity and economic activity in the long run, all of which would boost, instead of wipe out, poverty reduction.
In 2018, researchers from Washington University in St. Louis estimated that childhood poverty costs the US $1.03 trillion per year, or 5.4 percent of the GDP. They found that every dollar spent on reducing child poverty would save the public 7 dollars from the economic costs of poverty.
Results from basic income pilots across the US also stand in contrast to Winship’s concern. “Our moms get the guaranteed income and not only do they continue to work, they level up their work,” Nyandoro, who runs the nation’s longest-running guaranteed income program, told me. “They’re able to move from jobs to careers. They’re able to go back to school. They’re able to get out of debt.”
The most recent evidence in favor of phase-ins Winship cites is a 2021 paper by a group of economists from the University of Chicago, led by Kevin Corinth and Bruce Meyer. It predicted that making the CTC expansion permanent would spark a 1.5-million-person exodus from the labor force. As analysts were quick to point out, however, the paper is based on a model that already assumes unconditional cash reduces work. Predicting work disincentives using a model that already assumes them tells us nothing about whether the assumption itself is tethered to reality.
Corinth and Meyer have since responded to criticism of their work disincentive assumptions, arguing that they fall well within the range used in other studies. These academic debates will continue, but in the meantime, where should the burden of proof lie?
Eliminating phase-ins from the CTC was a massive anti-poverty success and had no short-term negative employment effects. Recipients spent the extra few hundred bucks on necessities, from food and clothing to shelter and utilities. Even small businesses voiced their support on the grounds that it would boost spending and entrepreneurship.
On the other hand, a minority of skeptics retain speculative concerns that a few generations down the line, newfound consequences might overshadow these benefits.”
“Out of the $105 billion paid out in 2021 and 2022 as part of the temporary expansion of the child tax credit here in the US, only 5 percent went to families without any income at all.”
“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.”
…
“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.”
“At the end of 2021, not quite a year into Joe Biden’s presidency, something unusual happened: Congress actually allowed a massive government program to expire. That program was the expanded child tax credit, which had been enacted as a temporary program under the American Rescue Plan (ARP), a roughly $2 trillion spending package passed exclusively with Democratic votes in March 2021.
A year after the expansion expired, however, Democrats began looking for ways to bring it back. The cost of doing that would be very high.
The ARP raised the maximum child tax credit from $2,000 to $3,600 per child for families making up to $150,000 a year. The one-year program made the credit fully refundable, meaning that people would qualify for it even if they owed no income taxes. That change expanded the benefit to millions of households that previously had earned too little to qualify.
The ARP also turned what had been an annual lump sum around tax season into a monthly payment that in many cases was directly deposited into parents’ bank accounts. In effect, the law set up a program of monthly checks, sent directly to the bank accounts of most families.
Although the program was initially designed as a one-year expansion, supporters hoped it would become permanent. As The New York Times reported in January 2022, the benefit “was never intended to be temporary,” and “many progressives hoped that the payments, once started, would prove too popular to stop.”
Yet at the end of the program’s first year, after paying out about $80 billion, Congress declined to extend the program. Even with Democrats in control of both the House and the Senate, there simply weren’t enough votes to keep it going. Sen. Joe Manchin, the moderate Democratic senator from West Virginia, was vocally opposed, citing cost concerns and warning that the expanded eligibility would subsidize unemployment. Progressive ambitions were foiled”
“Total births and the general fertility rate in the US have fallen significantly over the past 15 years. While 2021 saw a 1 percent increase in births from the year before — the likely result of planned pregnancies postponed during the first difficult year of the pandemic, plus the reproductive benefits of remote work — that number was still more than half a million fewer than the US peak in 2007. The total fertility rate — the number of children women are projected to give birth to over the course of their lifetimes — stood at 1.67, well below the point needed to replace the population through reproduction alone. Nearly one in six Americans 55 and over is childless, a percentage that is only expected to grow. Without the boost of immigration, the US population growth rate would have essentially flatlined in recent years, and even with it, it grew by just 0.4 percent in 2022, among the lowest rates in the nation’s history.”
…
“America has room for more children; it needs them to thrive; and most of all, people do want the freedom to choose the family sizes they desire, including larger ones. It’s a future that progressives can — and should — help create.”
…
” while it’s true that a child born today will be responsible for adding more carbon into the atmosphere, that 60-metric-ton figure was derived from work by researchers in 2009 who added up not just the lifetime emissions of the child, but dwindling portions of the lifetime emissions of that child’s descendants, all the way until 2400 — and making all of that the responsibility of the parents. And that number assumes that the world will make no additional progress in decarbonizing the global economy, which already isn’t true. In a rich country like the US, a baby born today will emit less CO2 on average over the course of their lifetime than their parents did; according to the International Energy Agency, if the world achieves carbon neutrality by 2050, the carbon footprint of those New Year’s babies could be 10 times smaller than that of their grandparents.”
…
“As for those fears that having a child would doom them to life in a hot hellscape, the world now appears to be on a path to dodge the worst-case climate scenarios. This isn’t to minimize the very real suffering that will be unavoidable thanks to warming, especially in poorer countries, but a child born today almost anywhere around the world has a better chance of living a good, long life than at almost any other time in the whole of human history.”
…
“an aging country is one that will have a dwindling number of young workers to support a growing number of elderly. Today there are around three and a half working-age adults to support every American eligible for Social Security. By 2060, that is projected to fall to two and a half workers for every retiree. Social Security isn’t a Ponzi scheme, but without enough young workers putting in payroll taxes, it can’t continue in its current form.”
…
“A study of 33 OECD nations between 1960 and 2012 found that while countries can remain inventive even as they age, rates of innovation eventually begin to stagnate and decline. As a 44-year-old it pains me to say this, but creativity is a quality most concentrated in the young.”
…
“The average cost of child care in the US now exceeds $10,000 a year. That’s an enormous burden for working- and middle-class families, but it also discourages people who would have more children from doing so. Reducing the cost of care is one of the few proven ways of boosting fertility over the long term”
…
“while the most effective way to grow population over the long term is the old-fashioned one — have more children — liberalizing immigration to add more Americans would pay off immediately.”
“According to Sen. Mitt Romney (R–Utah), America’s current welfare policies have two major flaws: They penalize recipients who get married by reducing the benefits they’re eligible for, and they don’t do enough to help couples afford to have more kids.
“There’s a growing gap between the number of children people say they want to have and the number they actually decide to have,” he said during an event yesterday at the American Enterprise Institute (AEI) in Washington, D.C. “Just to be clear here, I don’t think the goal of policy should be to try to create incentives to have people have more children than they want, but instead should find a way to bridge the gap between what people would like to add to their family and what they’re able to afford.”
Attempting to address these issues, Romney in June released the Family Security Act 2.0, a proposal to send parents monthly checks of between $250 and $700 per child, beginning midway through a pregnancy. A household would need to have earned at least $10,000 the previous year to be eligible for the full benefit, a provision meant to keep families from dropping out of the work force entirely. The program would be “paid for” by reducing or eliminating various existing income tax breaks.
It’s hard to fault efforts to resolve distortions introduced by previous federal policy, including the whoopsie-daisy of incentivizing low-income couples to remain unmarried. The idea that it’s the government’s job to help people have more kids rests on a more debatable assumption—namely, that parents should not have to shoulder the full cost of raising future members of society.
Regardless of whether you buy that “positive externalities” argument, the federal government does spend billions each year on family programs. Given that these efforts are not likely to go away (however much libertarian purists might wish otherwise), it’s worth considering whether Romney’s proposal represents at least an incremental improvement over the status quo.”
“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.”
…
“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.”