The U.S. Finally Found a Way to Reduce Child Poverty. Why Are Some Democrats Opposed?
While the expanded child tax credit has been a win-win for families and the economy, conservative Democrats in Congress are still finding ways to undermine it.
American families have struggled for decades to make ends meet with wages simply not rising as fast as the cost of living and a social safety net that has been so decimated that the United States now spends less on children than nearly any other wealthy nation on earth.
This year there was a small glimmer of hope that such a trend might be halted and even reversed. Democrats, using their razor-thin control of the Senate and marginal control of the House, passed an expanded child tax credit (CTC) in March 2021 as part of President Biden’s American Rescue Plan that not only increased the tax refund received by families with young children but also began sending them a monthly advance instead of making them wait until they filed their annual tax return.
By any measure, the funds being sent to families are embarrassingly modest and only offer an increase from the previous tax credit of $1,000 to $1,600 over the entire year. Families whose incomes are low enough to qualify and have children aged 6 through 17 are now receiving $3,000 a year instead of $2,000, while those with children younger than 6 are getting checks that add up to $3,600 a year.
Still, putting cash, however small an amount, into the hands of ordinary Americans is a win-win proposition for everyone but the most conservative pundits. As the 2020 CARES Act’s enhanced unemployment benefits—amounting to a $15 an hour wage—demonstrated, the economy as a whole is buoyed when people have more money in their pockets to spend on basic necessities. And, just as importantly, the benefits helped the most vulnerable, particularly Black and Latino workers, to stave off financial ruin.
Now, the monthly CTC payments are already showing similar promise. The Center on Poverty and Social Policy (CPSP) at Columbia University documented “a notable drop in child poverty” after just the first month of payments. Additionally, the benefits are particularly helpful for Black and Latino children, who the CPSP estimates have twice the poverty rate of white children. Yet, because the CTC relies on tax returns filed in the previous year, white children actually benefited more than children of color as their families were “more likely to have filed taxes.”
The U.S. Census Bureau also found that after just one month of payments, food insecurity among vulnerable families dropped significantly, and families receiving checks also had less difficulty paying for weekly expenses. So convincing are the expanded CTC’s proven benefits that nearly 450 economists wrote an open letter to Congress urging them to extend the program.
The CTC payments benefit roughly 39 million American families who are currently receiving monthly checks of up to $300 per child, per month. Meanwhile, the cost of child care in the United States is exorbitant, averaging about $1,300 per month for infants and nearly $900 per month for preschool-aged children. For families with multiple children and parents in low-wage jobs, child care is simply out of reach, and the modest CTC payments don’t even come close to covering the costs.
At the same time, child care workers are so underpaid that in the wake of the pandemic, more than 120,000 have simply quit their jobs. Even the U.S. government is so concerned that the Treasury Department issued a report admitting that “the existing child care system in the United States, which relies on private financing to provide care for most children… fails to adequately serve many families.”
This is not a new problem. In a 2014 speech at the White House Summit on Working Families, former President Barack Obama acknowledged that, “in 31 states, decent childcare costs more than in-state college tuition,” and that “there are other countries that know how to do childcare well.”
Child care is such an important factor for families with young children that the latest Harris Poll survey found that 76 percent of working parents felt that child care decisions were a major factor in their employment decisions.
The cost of raising a child is estimated to be nearly a quarter of a million dollars—a sum that is wildly out of reach for low-income families. Combined with persistent wealth and income inequality, it’s no wonder that, as per a recent CDC report, 2020 was “the sixth consecutive year that the number of births [in the U.S.] has declined.”
One 2009 study concluded that cheaper child care is the key to reversing falling birth rates. There are two simple ways to make child care cheaper: heavily subsidize the child care industry (the U.S. government, after all, subsidizes fossil fuel and agricultural industries), or put more money into the hands of parents with children.
The expanded CTC benefits are currently valid only for a year, and some Democrats want to make them permanent. But President Joe Biden wants them extended for only four years via a $3.5 trillion budget reconciliation bill called the Build Back Better Act. Meanwhile, some conservative Democrats want to roll back the expanded benefit right away. The watchdog group Accountable.US identifies nine House Democrats and two Senate Democrats opposing the extension of an expanded CTC. Of these 11 naysayers, eight are millionaires.
In spite of its clear benefits, the CTC is in very real political danger of being rolled back. Sen. Cory Booker (D-N.J.), who is one of its biggest proponents, said, “There’s nothing bigger than this… if you just want to look at the impact on a child’s life, this is the biggest thing that we’re doing.” Indeed, it’s hard to argue against helping vulnerable American children, but some Democrats like Sens. Joe Manchin (D-W.V.) and Kyrsten Sinema (D-Ariz.) are managing to do so as they stand in the way of the current iteration of the CTC.
Manchin, in particular, has adopted a posture far closer to the Republican way of thinking: that benefits aimed at wealthy interests are good for the nation, while benefits to vulnerable individuals are effectively “entitlements.” Using Republican-favored buzzwords, Manchin recently said that while he supports the CTC in theory, “anything that can be added should be means tested,” and that it is important that the United States not turn into a so-called “entitlement society.” One critic, MSNBC’s Hayes Brown, explained that “‘Means testing’ is just a nicer way to say, ‘We want people to jump through more hoops, so fewer people can get help.’”
The West Virginia senator exudes such hubris in opposing his own party that in a New York Times interview earlier this year, he essentially dared Democrats to try to oust him, saying, “What are they going to do, [are] they going to go into West Virginia and campaign against me? Please, that would help me more than anything.” With friends like Manchin, Republicans can sit out the discussion and simply take no clear policy position on the matter.
With many progressive Democrats working to protect the expansion of the CTC, some are going on the offensive in trying to get money into the hands of low-income and middle-income Americans by other means. In July, Rep. Ilhan Omar (D-Minn.) introduced a guaranteed income bill that would ensure individuals making up to $75,000 a year receive $1,200 monthly checks. The SUPPORT Act, backed by progressive stalwarts such as Reps. Cori Bush (D-MO) and Pramila Jayapal (D-Wash.), includes running a pilot program to prove that monthly payments would have a positive impact on families.
Such approaches embody the opposite of the trickle-down economic model long championed by many establishment economists, in the face of progressive opposition. Now, the trickle-down model is so discredited that even Biden has explicitly rejected it. Rather than infusing the top tiers of society with money, tax breaks and subsidies, based on a fantasy that those riches will eventually reach the bottom tiers, policymakers are beginning to get on board with direct benefits to vulnerable Americans. But, due to conservative opposition, whether or not the CTC survives Washington’s political wrangling remains to be seen, even as tens of millions of Americans rely on it.
A version of this story first appeared at Economy for All, a project of the Independent Media Institute.