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Stimulus Spending Drove Poverty Lower Again in 2021, Census Bureau Reports


Estimates vary as to the extent to which fiscal stimulus as a whole has fueled inflation that began skyrocketing a year ago – supply chain troubles and the war in Ukraine also played a role. But much of the aid has gone to the non-poor. And because people on low incomes tend to spend any benefits quickly, while those who can afford to save money when income may have spent it all over time, This drives prices up in 2022.

“The idea is that pandemic insurance will find and fill in the gaps. The point is that you’ve painted a full wall to fill a few cracks,” said Jonathan Parker, head of finance at the MIT Sloan School of Management. If pandemic aid were only aimed at those in real need, he said, any inflationary impact would be “much, much less”.

Refundable tax credits, including the extended child tax credit and earned income tax credit, have lifted 9.6 million people out of poverty.

Some conservatives argue that falling poverty rates offer few lessons for the future.

Michael R. Strain, director of economic policy research at the American Enterprise Institute, said: “Okay, great, it looks like poverty has decreased a lot, but it’s not really – not on a single basis. long-term maintenance”. “If you think of poverty in a broader sense in terms of issues around self-sufficiency, income and upward mobility, then I think that the great reduction in poverty is based on temporary income transfers. times is not really poverty alleviation. . “

But for many recipients, the aid serves as a springboard to a better life.

Among those who escaped poverty with government help is Kristina Ennis, 29, a restaurant waitress in Pittsburgh who had her first child last year. Maternity leave has reduced her income, and the pandemic has led to a reduction in her fiancé’s working hours.

Their income, after taxes and working expenses, would put them below the $25,000 poverty line. But the safety net provided them with more than $18,000 worth of help, including stimulus payments, tax credits and food stamps. About a third of the support, including the expanded child tax credit, covers pandemic-related aid, while the remainder comes from the permanent safety net.



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