A new study from the New York Times and research group Child Trends suggests that child poverty has plummeted in the United States, dropping 59 percent between 1993 and 2019. But the job is not finished; some 11 percent of children remained poor in 2019. That number is higher depending on which child poverty measure one uses. Which is why it is inexcusable that Congress recently let expire one of the most potent programs the nation has to lift children out of poverty: a generous child tax credit.
Unbridgeable ideological divides are not to blame; both Democrats and Republicans favor beefing up the credit. The outlines of a deal are obvious.
There also is no uncertainty about what expanding the child tax credit would accomplish. Lawmakers temporarily enhanced the support in 2021, giving the neediest families reliable monthly payments according to how many children they had. Along with making the maximum per-child payment more generous, they fixed a kink in the law that funneled more money to those with higher incomes than to the poorest, which had shortchanged some 27 million children. The result: Child poverty dropped by nearly half in 2021, to a record low of 5.2 percent.
Editorial Board coverage on inequality and poverty
Democrats sought to extend this expansion in a big party-line spending bill, but senators failed to agree on the plan. Instead, they let the single-year expansion expire. This year’s child poverty rate is no doubt heading back toward 2019’s level in response.
Critics worry that expanding the tax credit discouraged work, because families could claim the maximum amount regardless of their income. If they paid less in federal income taxes than the amount they would get in aid, the government gave them the balance. This could really add up; Congress boosted the maximum credit to $3,600 per 0-to-5-year-old and to $3,000 per 6-to-17-year-old. This might have made it more attractive for some parents to stay home rather than continue working for little money.
Initial studies have found that these employment effects were actually pretty small, possibly in part because the expansion was temporary. Making it permanent might cause some families to make more substantial life changes. But the trade-off would be acceptable, because the employment effects are still likely to be tiny relative to the policy’s benefits.
A robust child tax credit would be an investment in society’s future. Research suggests that topping up family income helps children on a variety of long-term measures, such as educational attainment, lifetime income and health. Surveys indicate that families used their tax credit money on healthier food, tutoring and child activities.
Yet there is one more catch: paying for it. Congress’s one-year enhancement cost some $110 billion. Lawmakers could roll back some of the GOP’s gratuitous 2017 tax cuts, but Republicans would resist. Their alternative is to take money from other important anti-poverty programs. The obvious deal is for Republicans to agree to some tax hikes and Democrats to offer other program cuts that would do minimal harm to the anti-poverty effort.
Congress has a knack for allowing partisanship to derail opportunities to make obvious deals that could make a big difference. This should not be one of them.
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