American families have struggled for decades to make ends meet with wages simply not rising as fast as the cost of living and a government social safety net that has been so deeply decimated that the U.S. now spends less on children than nearly any other wealthy nation.
This
year there was a small glimmer of hope that such a trend might be
halted and even reversed. Democrats, using their razor-thin control
of the Senate and marginal control of the House, passed
an expanded child tax credit
(CTC) in March 2021 as part of the American Rescue Plan that not only
increased the tax refund received by families with young children but
also began sending them a
monthly advance
instead of making them wait until they filed their annual tax return.
By
any measure, the amounts are embarrassingly modest and only offer an
increase of $1,000 to $1,600 over the entire year. Families whose
incomes are low enough to qualify and have children aged 6 through 17
are now receiving $3,000 a year instead of $2,000, while those with
children younger than 6 are getting checks that add up to $3,600 a
year.
Putting
cash, however small an amount, into the hands of ordinary Americans
is a win-win proposition for all but the most conservative pundits.
As the 2020 CARES Act unemployment benefits—amounting
to a $15 an hour wage—demonstrated,
the economy as a whole is buoyed when people have more money in their
pockets to spend on basic necessities. And, just as importantly, the
benefits
helped the most vulnerable,
particularly Black and Latino workers, to stave off financial ruin.
Now,
the monthly CTC payments are already showing similar promise. The
Center on Poverty and Social Policy
at Columbia University documented “a notable drop in child
poverty” after just the first month of payments. Additionally,
the benefits are particularly helpful for Black and Latino children,
who the center estimates have twice the poverty rate of white
children. Still, because the CTC relies on tax returns filed in the
previous year, white children benefited more than children of color
as their families were “more
likely to have filed taxes.”
The
U.S.
Census Bureau
also found that after just one month of payments, food insecurity
among vulnerable families dropped significantly, and families
receiving checks also had less difficulty paying for weekly expenses.
So convincing are the expanded CTC’s proven benefits that
nearly 450 economists wrote an open
letter to Congress
urging them to extend the program.
The
CTC payments benefit roughly 39
million American families
who are currently receiving monthly checks of up to $300 per child
per month. Meanwhile, the cost
of child care
in the U.S. is exorbitant, averaging at about $1,300 per month for
infants and nearly $900 per month for preschool-aged children. For
families with multiple children and parents in low-wage jobs, child
care is simply out of reach, and the modest CTC payments don’t
even come close to covering the costs.
At
the same time, child
care workers are so underpaid
that in the wake of the pandemic, more than 120,000 have simply quit
their jobs nationwide. Even the U.S. government is so concerned that
the Treasury
Department issued a report
admitting that “the existing child care system in the United
States, which relies on private financing to provide care for most
children… fails to adequately serve many families.”
This
is not a new problem. In a 2014
speech
at the White House Summit on Working Families, former President
Barack Obama acknowledged that, “in 31 states, decent childcare
costs more than in-state college tuition,” and that “there
are other countries that know how to do childcare well.”
Child
care is such an important factor for families with young children
that the latest Harris
Poll survey
found that 76 percent of working parents felt that child care
decisions were a major factor in their employment decisions.
The
cost of raising a child is estimated to be nearly
a quarter of a million dollars—a
sum that is wildly out of reach for low-income families. Combined
with persistent wealth and income inequality, it is no wonder that,
as per a recent CDC
report,
2020 was “the sixth consecutive year that the number of births
[in the U.S.] has declined.”
One
2009 study concluded that cheaper
child care
is the key to reversing falling birth rates. There are two simple
ways to make child care cheaper: heavily subsidize the child care
industry (the U.S. government, after all, subsidizes fossil
fuel and agricultural industries),
or put more money into the hands of parents with children.
Currently,
the expanded CTC benefits are valid only for a year, and some
Democrats want to make them permanent. But President Joe Biden wants
them extended for only four
years
via a $3.5 trillion budget reconciliation bill called the Build
Back Better Act.
And some conservative Democrats want to roll back the expanded
benefit right away. Accountable.US
identifies nine House Democrats and two Senate Democrats opposing the
extension of an expanded CTC. Of these 11 naysayers, eight are
millionaires.
In
spite of its clear benefits, the CTC is in very real political danger
of being rolled back. Senator
Cory Booker (D-NJ),
who is one of its biggest proponents, said,
“There’s nothing bigger than this… if you just
want to look at the impact of a child’s life, this is the
biggest thing that we’re doing.” Indeed, it’s hard
to argue against helping vulnerable American children, but some
Democrats like Senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ)
are managing to do so as they stand in the way of the current
iteration of the CTC.
Manchin
in particular has adopted a posture far closer to the Republican way
of thinking: that benefits aimed at wealthy interests are good for
the nation, while benefits to vulnerable individuals are effective
"entitlements." Using Republican-favored buzzwords,
Manchin recently said that while he supports the CTC
in theory,
"anything that can be added should be means-tested," and
that it is important that the U.S. not turn into an "entitlement
society." One critic
explained
that “‘Means testing’ is just a nicer way to say,
‘We want people to jump through more hoops, so fewer people can
get help.’”
The
West Virginia senator exudes such hubris in opposing his own party
that in a New
York Times
interview earlier this year, he essentially dared Democrats to try to
oust him, saying, “What are they going to do, [are] they going
to go into West Virginia and campaign against me? Please, that would
help me more than anything.” With friends like Manchin,
Republicans can sit out the discussion and have no
clear policy position
on the matter.
With
many progressive Democrats going on the defensive to protect the
expansion of the CTC, some are going on the offensive in trying to
get money into the hands of low-income and middle-income Americans by
other means. Minnesota Democratic Representative Ilhan
Omar
in July introduced a guaranteed income bill that would ensure
individuals making up to $75,000 a year receive $1,200 monthly
checks. The SUPPORT Act, backed by progressive stalwarts such as Cori
Bush (D-MO) and Pramila Jayapal (D-WA), includes running a pilot
program initially to prove that monthly payments would have a
positive impact on families.
Such
approaches embody the opposite of the trickle-down
economic model
long
championed by many establishment economists in the face of
progressive
opposition.
Now, the trickle-down model is so discredited that even Biden has
explicitly
rejected it.
Rather than infusing the top tiers of society with money, tax breaks
and subsidies, based on a fantasy that those riches will eventually
reach the bottom tiers, policymakers are getting on board with direct
benefits to vulnerable Americans. Whether or not the CTC survives
Washington’s political wrangling remains to be seen, even as
tens of millions of Americans rely on it.
This article was produced by Economy
for All,
a project of the Independent Media
Institute.
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