It’s no surprise, then, that children have long had the highest poverty rates of any age group in the United States. They also have the dubious honor of notching one of the highest child-poverty rates in the developed world, largely because other rich countries invest considerably more in children than we do.
Thanks to Biden’s legislation, though, the United States will see a (partial) reversal of decades of de-prioritizing kids. The covid-19 package is expected to cut overall poverty by about one-third — and child poverty roughly in half, according to an analysis from the Center on Poverty and Social Policy at Columbia University. Among the biggest beneficiaries of this law will be young children of color.
“President Biden has often talked about the need to invest in our kids as a matter of moral importance,” White House communications director Kate Bedingfield said during a call on Thursday. “But it’s also a matter of economic importance, and it’s an investment in our competitiveness as a country, too.”
The single most important element of the law is its expansion and transformation of the child tax credit. Low- and moderate-income families will receive $3,000 annually per child, or $3,600 per child under age 6, likely paid out in monthly installments. Perhaps most important, families will receive these “child allowances” even if they have zero tax liabilities. In effect, that means the credit will benefit the very poorest children, who had previously been excluded even though their families could use the cash the most.
Anti-poverty groups, racial justice advocates and Democratic lawmakers have wanted to create something like this for years. A few pro-family conservatives have also joined the coalition. They have pointed to the success of similar programs in peer countries, such as Canada and Germany (where it’s called, delightfully, “kindergeld”).
The American Rescue Plan gets it done — if only for a year.
The child allowance isn’t the only way the law aims more fiscal firepower at kids. It also allocates $39 billion to shore up the nation’s struggling child-care facilities, for instance, bringing the total additional funding appropriated over the past year for child care to about $50 billion.
“This is the biggest investment in child care since World War II,” said Center for Law and Social Policy executive director Olivia Golden, who developed a number of child-centered federal programs during the Clinton administration.
The new law will deliver other important infusions, too. It appropriates $1 billion for Head Start and $170 billion for public schools. There’s money for nutritional programs for school children, infants and pregnant women. And it expands eligibility for some other kinds of benefits so that more children and young adults could be included — for example, by allowing children who are U.S. citizens to qualify for stimulus checks even if both their parents are undocumented.
There are some caveats, of course. The big bucks being allocated to child care and schools, for example, are really more about repairing damage done by the pandemic recession than expanding the (insufficient) infrastructure that pre-dated the crisis.
And even the centerpiece of the law’s child agenda, those monthly child allowances, won’t do much to reverse the country’s broader tendency to transfer tax dollars from young to old. That’s chiefly because “it’s modest, temporary and not paid for,” as C. Eugene Steuerle, Urban Institute fellow and co-author of that Kids’ Share report, put it.
Democrats have made clear their interest in making child allowances permanent. If that happens, they’ll likely need to come up with a way to pay for the program, through tax increases or spending cuts. Not only because congressional rules and political constraints generally require finding budgetary offsets — but also because deficit-financing effectively just dumps the cost of ultimately paying for the program on future taxpayers.
That is, on the kids themselves, who are already on the hook for so much.