Voters see it as a strong Democratic accomplishment, and a key Republican vulnerability.
In the American Rescue Plan, passed at the outset of the Biden administration, Congress greatly expanded the Child Tax Credit (CTC) to virtually all families with children, and paid it out monthly for the first time. Starting in July 2021, the IRS sent families payments—$300 for each child under 6 years of age and $250 for children 6 to 17 years. The credit was made fully refundable and offered to families with the lowest incomes for the first time. More than 90 percent of all children were eligible for the credit. (Full disclosure, my wife Rosa DeLauro was a co-author of the policy.)
While only in place for a year, the results of the expanded Child Tax Credit were—without understatement—transformative.
Harvard economist Jason Furman wrote, “The Biden plan is the most impressive and ambitious child poverty plan ever in the United States. This would not just help in the short run but have long-run mobility benefits as well.”
H. Luke Shaefer and Kathryn J. Edin, co-authors of $2.00 a Day: Living on Almost Nothing in America, wrote, “The expanded child tax credit could effectively eliminate the kind of $2-a-day poverty that motivated our book … We have the ability to wipe away the most extreme forms of child poverty with a simple policy.”
Academic studies found that in just its one year of operation, the expanded CTC was delivered to 36 million households and cut child poverty by over 40 percent, with 3.7 million kids lifted out of poverty. The number of children without enough to eat fell by three million. And after it expired, 2.1 million children in Black, Hispanic, and Indigenous communities fell into poverty.
The additional funding for poor families sustained families and supported work. Low-income recipients spent more than 90 percent of the added money for food, utilities, clothing, diapers, and education. Many used the monthly credit to cover child care costs so they could go back to work. When the monthly payment stopped, the number of unemployed went up because these families could not afford child care.
The worry of conservative skeptics that the payment would be “welfare” and lead to people declining employment has not been borne out.
The expanded Child Tax Credit is expensive, but it is an investment. Economists have found that taxpayers get 84 cents back for every dollar spent in children being healthier with decreased health care costs, less costs for child protection and foster care, and higher wages and taxes paid. The investment pays off tenfold, as children get more education and training, there is less crime, parents earn more money and pay more taxes, and people are healthier and live longer.
But if the Child Tax Credit is really going to become “Social Security for children,” then it also must be good politics.
Fortunately, it is.
The full article can be read at The American Prospect.