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Imagine if the federal government could lift millions of American children out of poverty through a single program. The program will help parents keep nutritious food on the table, save for school expenses and even for kids in college – without any negative impact on the economy.
You don’t have to imagine. We had it last year… and now we don’t.
Through almost every empirical system, the expanded child tax credit (CTC) – a policy passed in 2021 that gives parents hundreds of dollars per month for each child in their family – was a great success, dramatically reducing child poverty and making it easier for families to feed. Buy and pay for accommodation and utilities. The combination of other COVID-19 relief measures, particularly stimulus payments given to Americans in April 2020, January 2021, and March 2021, helped buffer families against the economic rise of the CTC epidemic.
It is rare that researchers can say for sure that a program like CTC actually worked. Politicians generally consider policies in an abstract, speculative way, knowing that a piece of law cannot achieve their goals. But when Congress considered expanding the CTC, there was a mountain of cold, hard data that showed that the program had done much to help children and families.
Yet it was not enough to save. The extended tax credit expires in December 2021 and is unlikely to be renewed. It tells you what you need to know about what is stronger in Washington – the political bias or the real evidence.
At the time of the epidemic, reformers had been pushing for years to establish a universal allowance for families, including children, in the United States. Many other rich countries provide some kind of blanket financial support to the parents and not coincidentally, even in those countries the child poverty rate is low.
But it took a final step – a global epidemic – to get American lawmakers to take action. In the spring of 2021, Democrats in Congress converted the CTC, an anti-poverty measure that has been part of the tax code since 1997, into a kind of emergency child allowance. Unlike the original version, which parents received as a single unit of money when they submitted their taxes, the expanded CTC was distributed in monthly payments. From July to December last year, most parents of children under 6 received $ 300 per child per month, and most parents of children between the ages of 6 and 17 received $ 250 per child per month. The new payments were more generous: families received up to $ 3,600 per child per year under the expanded CTC, compared to just $ 2,000 under the original version. And while the original CTC was available to most middle-class families, many more parents were eligible under the expanded program.
Government programs are often complicated when they start, but for most families being eligible for funding means they were fairly easy to manage. The IRS already has all the necessary information for anyone who has claimed children in their previous year’s tax return – no additional application or form to fill out. Payment went directly to the recipient’s bank account or they received a check in the mail with minimal hassle.
And money has helped – a lot. Starting July 15, most families (88 percent) with children have received a payment of $ 300 or $ 250 per child. Researchers at Columbia University’s Center on Poverty and Social Policy found that July payments put nearly 3 million children out of poverty. By the end of 2021, researchers estimate that the program will lift 3.7 million children out of poverty.
“The families were living in a very precarious economic situation,” said Megan Curran, a researcher with the Columbia team. “$ 300 or $ 600 per month – It may not seem like much, but when you’re earning very little, it may be enough to give you a financial cushion.”
Child poverty reduction was big, headline-making exploration. But funding has helped in other ways as well. Multiple surveys have shown that most parents spend money on essentials such as food, rent and bills.
Low-income parents were particularly likely to spend money on basic necessities. Several studies have shown that once money started coming in, very few families reported that they did not have enough to eat. “The most commonly reported cost was food,” the Quran said. “After that, it was the essential bill – the very basic thing that a family needs.” But money has come in handy for other things as well. When the school year started, about one-third of parents who received CTC payments spent at least some school supplies. Another study found that most parents planned to save some money for rainy days. Some have said they will pay for the tutor for their children – perhaps helping to offset some of the learning disadvantages caused by school disruptions for more than a year. Payments have helped some families dig out of debt or survive eviction.
The results were particularly interesting because no strings were attached to the money. Parents can spend as much money as they want. And despite the long-standing suspicion of politicians that if we paid people, they would end up buying drugs or cigarettes, families were likely to spend it in a way that directly benefited their children.
Of course, it was possible that the extended payments also had errors. For years, some economists have been concerned that child allowances for all families – whether or not parents have jobs – would give some people reasons not to work. A survey published a few months after the CTC expansion estimated that the move would force 1.5 million workers to quit their jobs and leave the workforce, eliminating some payment benefits. In an opinion poll in October, two co-authors of the study argued that based on their findings, expanded CTC would do more harm than good.
That doesn’t seem to have happened. When other economists looked at real-life data from the time of monthly payments, they found that only a small fraction of parents said they had quit their jobs. And those people were balanced by another group of parents who started working after the expanded CTC came into effect – probably because they suddenly had enough money to pay for childcare.
Researchers have cut data into pieces to find a negative impact on the economy. It wasn’t there. Elizabeth Annant, a professor of economics at Bernard College and co-author of a study, said: “The way we cut it, we don’t see the effect on whether parents work.” “And that’s the opposite of all the work of poverty and material suffering where we see huge, huge impact.”
But the evidence doesn’t seem compelling to anyone who controlled the fate of the extended CTC: Democrat Sen. Joe Manchin. By the fall of 2021, when Democrats were considering renewing payments as part of a broader social policy bill, it was clear that it would not receive bipartisan support. This means that if a moderate Democrat leaves the party, the extended payments will expire at the end of the year. Manchin thought the payments were too broad. He doesn’t think parents should be eligible if they don’t have a job, and he wanted a much lower income cap to qualify parents.
There is a definite reason for this – people should not be discouraged from working as a result of payment and it should only go to needy families. But experts have told me that these changes will not actually translate into better spending. A complex formula for determining eligibility can prevent those who need money the most from getting it. And with the exception of parents not leaving their jobs because of pay, the need for work can be counterproductive. “It’s the equivalent of kicking someone when they’re down,” Anat said. “You may have a sick child and stay home for a day and lose your job. Then you can’t go out and pay for childcare to be interviewed for a bunch of new jobs. ”
Manchin did not agree. By the end of 2021, he had allegedly told other senators that without strict restrictions, parents would spend money on drugs – despite mounting evidence to the contrary. Democrats’ social policy bill died in the Senate in December, and the last round of increased payments went to families the same month, with no signs of renewal.
The effects of losing money were as dramatic as gaining it. In January and February, families with children say they are struggling to make ends meet. Child poverty has increased. Parents have struggled to pay for diapers and baby care. A Politico / Morning Consult poll conducted in February found that 75 per cent of people who benefited from the expanded CTC said losing money would affect their financial security.
Meanwhile, researchers like Anat were stunned, wondering how such a successful program could be fogged. “The thing that is very heartbreaking to me is that we were able to find out what the policy actually did,” Anat said. “And now we have an answer. It just helps the kids. That’s all they do. And then they give it up.”