Bringing the Child Tax Credit Back to Life Is Too Costly

“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”

How China came to regret its one-child policy

“China’s population drop isn’t the result of a single, acute crisis, but years of policy decisions and cultural and economic shifts that have led this nation of 1.4 billion people to where it is today: facing an aging and shrinking population for the foreseeable future.”

“As much as China’s aging and eventual shrinking was a demographic inevitability as it became richer and more modern, the particular speed at which that transition is occurring, and the particular challenges that pace will present, are Beijing’s own doing.”

“In 2015, the Chinese government did something it almost never does: It admitted it made a mistake, at least implicitly.
The ruling Communist Party announced that it was ending its historic and coercive one-child policy, allowing all married couples to have up to two children.

The one-child policy had helped lead to the mother of all demographic dividends, the term for the economist boost created when a country’s birth and death rates both decline. Between 1980 and 2015, China’s working-age population grew from 594 million to a little over 1 billion. China’s dependency ratio — the total young and elderly population relative to the working-age population — fell from over 68 percent in 1980 to less than 38 percent in 2015, which meant more workers for every non-working person.”

“But no fuel burns forever, and over the past decade, hundreds of millions of Chinese have hit retirement age, with a plummeting number of young people to replace them. So the slogans went from “Having only one child is good” to “One is too few, while two are just right.”

How did the Chinese people react? Not by having more children. By 2021, China’s total fertility rate (that is, the number of expected births per woman over the course of their reproductive lifetime) had fallen to just 1.15, nearly a full child below the replacement rate of 2.1. (That’s two to replace each parent, plus a slight extra to make up for children who might die before they reach adulthood”

“For all its power and aggregate wealth — it is by most accounts the world’s second-largest economy — on a per capita basis, it’s still a middle-income country at best. To reach anything like a per capita parity with a country like the UK, let alone the US, would require years more of high-powered economic growth that will be increasingly difficult to pull off in an aging nation. In the end, China could get old before it gets rich.

And if China can’t grow faster, the elderly will bear the brunt of the cost. A 2013 study estimated that nearly a quarter of China’s seniors live below the poverty line, and the country — like many others in East Asia, including richer nations like Japan and South Korea — has little in the way of old-age support. That was less of a problem when older adults could count on being taken care of by their children, but decades of the one-child policy has left an inverted pyramid known as “4-2-1,” with four grandparents and two parents depending on one child.

As more and more young Chinese choose to go without children altogether — pursuing the “double income, no kids” lifestyle — more and more elderly Chinese will have no familial support whatsoever, with one survey projecting 79 million childless older adults in China by 2050. And those trends will reinforce each other — younger Chinese are already citing the burden of caring for elderly parents as one reason to have fewer or no children.”

“Beyond ending the one-child policy, the Chinese government has begun offering financial inducements to couples to have more children, following in the footsteps of other countries that have faced demographic deficits.

Shanghai will give mothers 60 days of additional parental leave, while Shenzhen has joined other Chinese cities in giving subsidies — $1,476 in its case — to couples who have a third child. But don’t expect these moves to make a major difference in birth rates. While such financial incentives might prompt couples to have a child earlier than they had planned, there’s little evidence the programs can convince a childless couple to have a kid, or lastingly increase birthrates.”

Yes, you can have kids and fight climate change at the same time

“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.”

What’s so scary about a transgender child?

“Are there people who later regret transition? Yes, but the data shows that the vast majority of people who pursue transition do not regret it. In the handful of studies conducted around this question, an average of about 2 percent of respondents express regret. A separate survey questioning why people detransition found the most common reason was social pressure, often from a parent. Many of those detransitioners retransitioned later, when it felt safe to do so.”

“The medicine we use to treat trans children today — often dubbed “experimental” — has, in actuality, been used to help trans youths transition with the support of parents and doctors since the mid-20th century.”

Another Analysis Suggests Mandatory Reporting Laws May Be Doing Children More Harm Than Good

“Mandatory reporting laws say that certain classes of professionals are legally obligated to report suspected child abuse and neglect to authorities. Federal law requires states to have such laws in place.
While mandatory reporting might seem at first rather uncontroversial—one hopes that any adult, mandated or not, would report suspected child abuse—the nature of these laws leads to a lot of unfounded reporting. Mandatory reporters who fail to do so face penalties ranging from criminal charges to professional sanctions and loss of occupational licenses, so it behooves them to report liberally. (“Mandatory reporters are required to report the facts and circumstances that led them to suspect that a child has been abused or neglected” but “do not have the burden of providing proof that abuse or neglect has occurred,” notes a report from the U.S. Children’s Bureau.) This can lead to a lot of false reports of abuse that cause major headaches and heartaches for the families involved.

The problem is exacerbated by states perpetually expanding the list of people considered mandatory reporters.”

“Being investigated by child protective services can be a disturbing experience for parents and children alike, and even lead to children being temporarily removed from their parents’ homes. It can also lead to a range of other invasive measures.”

“”Nationally, the families of more than half of Black children will be investigated by child protective services before those kids turn 18; in much of the country, more than one in 10 Black kids will be removed from their home,” she writes. “In New York City, Black families are six times more likely than white families to be investigated and 11 times more likely to experience a separation. If social workers are by and large earnest, gentle, well-intentioned individuals, they are also unavoidably narcs, bound by laws demanding that they rat on the very communities they’re supposed to help.””

Child poverty in the US was stagnant — and then something changed

“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.”

“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.”

“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.”

“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.”

“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.”

“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.”

“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.”

“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.”

Mitt Romney’s Family Plan Isn’t Great, but It May Be Better Than the Alternatives

“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.”

Opinion | Both Parties Are Getting It Wrong on Parental Leave

“It is not difficult to design a good national parental leave program that provides time off and a bit of cash to all new parents based on their prior income. It is as simple as slightly increasing the Social Security payroll tax and then instructing the Social Security Administration (SSA) to provide all new parents with a few months of cash benefits equal to a high percentage of their usual weekly earnings or a decent minimum benefit.”

“With the exception of the Cassidy-Sinema proposal, all of the parental leave bills in the current Congress use work history requirements to exclude a large minority of new parents from benefit eligibility.”

“In addition to failing at income replacement, the Cassidy-Sinema proposal also makes no sense as an administrative matter, which perhaps explains why it is the only plan that has no accompanying bill text. Child Tax Credit eligibility is redetermined every year based on the income of the household that the child resides in. Families with very low or high incomes are not eligible for the CTC and so it is unclear how they would pay back the benefit they received. Children often move between households from year to year, whether due to divorce, family instability or otherwise. In these scenarios, the person who receives parental leave benefits under the plan is not the same person who is eligible for the subsequent years of CTC benefits, which also makes it hard to understand how paying back the benefit would actually work.
Like the Cassidy-Sinema plan, the Rubio-Romney New Parents Act also relies on parents paying back the benefits they received in order to finance the program. But in the New Parents Act, this is accomplished by docking parents’ Social Security checks when they retire.

Making people poorer in retirement in proportion to the number of children they have is strange, especially if you believe, as bill sponsor Marco Rubio does, that parents are already “double-charged for federal senior entitlement programs” because they both pay into them directly and undergo huge personal costs to raise up the next generation of workers that keep the programs afloat for parents and non-parents alike.

But even more bizarre than trimming Social Security checks to finance the program is the provision of the New Parents Act that requires the SSA to recover the leave benefits paid to parents who die before retirement by going after the deceased parents’ estate. Requiring surviving spouses and orphaned kids to pay a deceased parent’s leave benefits back to the government is as cruel as it is unnecessary.”

“What’s remarkable about how bad all of these proposals are is that their problems are so easy to fix. In some policy areas, badly designed programs are the result of difficult decision-making and navigating powerful interests and entrenched constituencies. With parental leave, the policymakers are essentially starting from scratch. There is no good reason why an ideal leave program — i.e. one that is publicly-administered, inclusive of all new parents, provides scaled income-replacement, has a decent minimum benefit, and does not need to be paid back — could not be implemented.
Yes, it would mean raising taxes, but only by a tiny amount: Washington, D.C.’s paid leave program, which includes both parental leave and medical leave, is funded by a 0.26 percent employer payroll tax, more than a standalone parental leave program would cost. That’s all it takes to create simple, popular programs.

Lawmakers in both parties seem hellbent on much worse approaches, but it’s not too late to get it right. Doing so would deliver not only much-needed help to the public but likely a major political win to whichever party can figure it out.”

The end of Roe will mean more children living in poverty

“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.”

“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.”

“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.”