The Expanded Child Tax Credit Is Gone. The Battle Over It Remains.

WASHINGTON — As America’s arduous history is written in some distant decade, two recent events may capture the disruptive forces of the time.

Child poverty has fallen to a record low. And the program that did the most to reduce it is gone.

The story of that temporary program – technically an extension of the tax credit but more clearly a series of monthly checks for most families with children – is extraordinary in every way. Guaranteed income in a country that has long resisted an extended, child tax credit has emerged from obscurity to win support from most Democrats, supporting millions of families with low and middle income during the pandemic and help almost halve the rate of child povertyf.

Then it died, as President Biden’s efforts to maintain it drew united Republican opposition and the defection of a key Democrat in the Senate. Critics call the monthly payment of up to $300 per child an expensive welfare program that will deter working parents by providing cash assistance regardless of whether they have a job or not. .

The test is over, but the battle is not yet. Supporters say new evidence shows payments ease hardship and children are nurtured without reducing parental employment. Some Democrats hope to restore payments to small groups of parents as part of the plan. year-end tax incentivesand although Republicans took control of the House in January, reinstating the entire program remains a long-term goal for Democrats.

“It’s heartbreaking not to get it, but the commitment to the tax credit remains – absolutely,” said Maria Cancian, a former Obama administration official and dean of the Georgetown University School of Public Policy. “We’ve proven that we can get money from our parents and really make a difference.”

Skeptics argue that the six-month period of payments is too short to test whether the guaranteed cash weakens incentives to work, and they find the short-term benefits less impressive. more impressive than advocates say.

“Material hardship has decreased significantly, but the reduction has been exaggerated,” said Michael Strain of the American Enterprise Institute. “It’s much smaller than you’d expect when you hear the phrase ‘halve child poverty’.”

Each side can find support in the experience of Thomas Horton and his wife, Pamela Mudge, raising three children in Pitcairn, Pa., a suburb of Pittsburgh.

Mr Horton, 38, and a teenage son receive disability benefits, which became the main source of support for the family after Ms. Mudge lost her job at the start of the pandemic. The $750 a month tax credit payments boosted their cash income by nearly 50 percent and brought them over the poverty line.

While most of the aid goes to bills, Mr Horton cited twice breaking frugality standards that kept the kids motivated. One was a trip to Walmart, to quell classmates’ taunts about their thrift store-bought clothes. Another was the family’s first vacation – a single night in the state park, where they set up a borrowed tent and made s’mores. He said: “I see happiness in my wife and children that I haven’t seen in a long time. “I feel like the dad of the year.”

At the same time, Mr Horton admitted ending the payments spurred his wife to return to work – a point detractors of the scheme will insist – and her income has largely replaced the pension. lost aid. (She works part-time so she can support his care.) Mr. Horton says she will return to work anyway and if payments continue as advocates hope. , the children will be better off.

“We return to the daily struggle,” he said.

Many countries offer cash aid to subsidize the cost of raising children. But historically, the idea has not gained much attention in the United States, where belief in upward mobility has had a greater influence and racial divisions have slowed the development of the state. Welfare. Most recently in the 1990s, the Democratic president, Bill Clinton, removed guarantees of cash assistance to poor families.

In part, the growing interest in family aid stems from concerns about inequality. It also reflects the science that shows the importance of formative years and research (summarized in one influential report 2019) that find government aid helps children get ahead.

An unexpected force drove this process: Republican tax cuts. A 2017 law raised the child tax credit by doubling its value and extending it to high-income families while keeping income requirements denying one-third of the poorest children full benefits.

Republicans argue that the tax credits logically benefit taxpayers, but Democrats see inequality in child policy that excludes children who need it most. They seek to subsidize all poor and middle-class families, regardless of parental employment, and increase subsidies.

Pandemic offers opportunity. The aid won by Mr Biden last year consisted of six monthly payments ($250 for children or $300 for children under 6) and a one-time payment for an additional six months paid in April. this spring. Advocates had hoped that the program, kept temporarily to limit costs, would become too popular to lapse.

A one-year credit extension, costing about $100 billion, cut child poverty by 36%, according to census data. The the rate of children in poverty decreased overall to 46%unprecedented year-on-year decline.

Food insecurity in households with children also hit a record low, Ministry of Agriculture reports. Surveys have consistently found that child payments have reduced food hardship, determined in a variety of ways, by 25% or more in some cases.

“It’s a huge impact — a huge one,” said Elaine Waxman, a researcher at the Urban Institute. “People clearly used the money to buy food, otherwise we wouldn’t have seen such numbers.”

JP Morgan Chase Institute notice payments increase the bank balance, creating a stepping stone for emergencies. Researchers at Columbia University found that the poverty level of New Yorkers is the lowest in 5 years that has data.

“To put it bluntly. Megan A. Curran, an analyst at Columbia’s Center for Poverty and Social Policy, who published a review of recent studies. “These are some of the most impressive results we have ever seen from a single policy.”

But some difficulties seem to be mostly unaffected. Many studies found small or no impactturn on Parents’ ability to pay rentmaybe because housing payment is big. While proponents hope credit will boost education spending or get rich, a study that directly questioned it found it did not. And had small impact above parental depression or stress, maybe because payments expired too soon to solve the inherent problems.

“The evidence is not uniform.” Elaine Maag, a researcher at the Urban Institute who helped carry out many of the studies. “But just because we don’t see improvement in every aspect of someone’s life doesn’t mean we shouldn’t support a program that has helped in some way. I thought people’s lives would be easier, and they did.”

The influence of payments on parents’ employment decisions has attracted much interest. One study found that aid coincided with a employment fell by two percentage points, though only among the least educated parents. But at least six learn Find constant In parent’s jobalthough the decline will likely take more than six months to fully appear.

A deeper question is whether reducing parental hours benefits children. While evidence is scarce, Louwanda Douglas, a nursing assistant in Pittsburgh, said the payments give her more time for her family.

Before the show, Ms. Douglas, 44, worked a second job as a night janitor sending her daughters — Londyn, 12, and Leslie, 7, — to cheerleading classes. With $500 a month from the tax credit extension, she quit her night job and took the girls to practice. “My kids always want me there – they look so happy,” she said.

When the tax credit payments ended, Miss Douglas resumed a job (to spend time looking after her ailing mother), and Londyn left the classroom in part because of the cost.

Scott Winship of the American Enterprise Institute argued that last year’s program had little predictive value because the conditions were so unusual, with short-term payments, other forms of temporary assistance and the job market. affected by the virus. “Studying a six-month program amid a pandemic doesn’t give you much information,” he said.

But others say that a real-world trial involving more than 60 million children is more rigorous than the small trials that often shape policies. H. Luke Shaefer, a researcher at the University of Michigan, who found that: “Those are worlds ahead of the kind of evidence we usually have. the difficulties decrease as soon as the payouts start and increase as soon as they stop.

Last year, Mr. Biden’s protracted effort to resume payments failed to convince Senator Joe Manchin III, a West Virginia Democrat who has criticized the program’s cost and said the aid should be limited to working parents only.

Despite bets on its popularity, the program expired with little political response and Democrats, accused of inflationary spending, have said little about it during their campaigns. parliamentary election campaign. The credit back to where it was before: a $2,000 annual stipend that covers high-income families but do not reach full those in the bottom third.

“There was a deafening silence” from politicians as well as beneficiaries, said Sidney M. Milkis, a political scientist at the University of Virginia. “Those most affected feel unmotivated to vote.”

Robert Greenstein of the Brookings Institution, a longtime advocate for safety net programs, has called on Congress to restore payments to some parents. in exchange for corporate tax relief expires this year. “Its benefits are proven, while the idea that there may be some minor adverse effects in the future is just speculation,” he said.

But at least one prominent Democrat has warned that progressives are too focused on securing income. Isabel V. Sawhill, also at Brookings, said she agreed with Mr. Manchin that aid should go to working parents (she would include intermittent workers) and low-income families enter modestly.

She warned that a broader program could squeeze spending on other services low-income families need, like education and health care. “I could build you a Cadillac for a preschooler or a childcare system for that money,” she said.

Credit advocates often lament that the United States has higher rates of child poverty than many advanced countries (with poverty rates defined as half of each country’s median income). Zachary Parolin, a researcher affiliated with Columbia University, found that extended credit lifted Americans’ rankings to 21st out of 53 countries, from 40th – to a place next to Germany, instead of Bulgaria.

He was stunned when the payments came to an end. “I have a theory that once the policy is in place there is no way to get rid of it,” he said. “I was wrong – it’s gone.”