Imagine if the federal government could lift millions of American children out of poverty with a single program. This program would help parents put nutritious meals on the table, pay for school fees and even save for their children’s college – all without negative impact on the economy.
You don’t have to imagine it. We only had it last year… and now we don’t.
It’s rare that researchers can say with certainty that a program like the CTC actually worked. Politicians tend to view policies in an abstract, hypothetical way, knowing that a law may not achieve their goals. But when Congress considered extending the CTC, there was a mountain of cold, hard data showing that this program did a lot to help children and families.
But that wasn’t enough to save it. The extended tax credit ended in December 2021, and there’s little chance it will be extended. That tells you everything you need to know about what’s more powerful in Washington – the politicians’ biases or actual evidence.
For years, by the time the pandemic hit, reformers had been pushing for the US to introduce a universal allowance for families with children.
Many other rich countries Give parents some kind of flat-rate financial support, and it’s no coincidence that these countries have it too lower child poverty rates.
But it took the ultimate upheaval — a global pandemic — to move American lawmakers into action. In spring 2021,
Democrats in Congress transformed the CTC, an anti-poverty measure that has been Part of the tax code since 1997, in a kind of emergency child benefit. Unlike the original version, which parents received as a one-time lump sum when filing their taxes, the extended CTC was paid out in monthly payments. From July to December last year, most parents of children under the age of 6 received $300 per month per child, and most parents of children between the ages of 6 and 17 received $250 per month per child. The new payment was more generous: Families received up to $3,600 per child per year under the expanded CTC, compared to just $2,000 in the original version. And while the original CTC was primarily available to middle-class families, the expanded program catered to many more parents.
Government programs are often flawed to begin with, but the fact that most families were entitled to the payments meant they were fairly easy to administer. The IRS already had all the information it needed for anyone who had children claimed for the previous year’s taxes—no additional applications or forms to fill out. The payments
went directly to the recipients’ bank accounts or get a check in the mail with minimal fuss.
And the money helped – a lot. As of July 15, the vast majority (88 percent) of families with children
receive a payment from $300 or $250 per child. Researchers from the Columbia University Center on Poverty and Social Policy found that the July payment around 3 million children saved from poverty. end of 2021, the researchers estimated that the program lifted 3.7 million children out of poverty.
“Families lived in very precarious economic circumstances,” he said
Megan Curran, one of the researchers of the Columbia team. “That $300 or $600 a month — that might not sound like a lot, but if you’re earning very little, it can be enough to give you a financial cushion.”
Reducing child poverty was the big, headline-grabbing finding. But the payments helped in other ways too.
Several Survey found that most parents spent the money on essentials like food, rent, and bills.
Low-income parents in particular would rather spend the money on basic needs.
Several studies found that once the money arrived, fewer families reported not having enough to eat. “The most commonly reported expenses were groceries,” Curran said. “After that, it was important bills — those very basic things that households need.” But the money was useful for other things, too. As the start of the school year rolled around, about a third of the parents who received a CTC payment spent at least part of it on school supplies. Another study found that most parents intended to save some money for a rainy day. Some said they would spend the money on tutoring their children – perhaps helping to offset some of the learning loss caused by more than a year of school breaks. The payments helped some families get out of debt or escape eviction.
The results were particularly striking because there were no strings attached to the money. Parents could spend the payments however they wanted. And despite politicians
long-standing suspicion that if we just gave people money, they would run away to buy drugs or cigarettesthere was an overwhelming likelihood that families would spend it in ways that directly benefited their children.
Of course, it was possible that the extended payments also had disadvantages. Some economists have feared for years that child support for all families – whether the parents work or not – would give some people a reason not to work.
A study published A few months after the CTC expansion, it was estimated that the move would cause 1.5 million workers to quit their jobs and leave the labor force, negating some of the benefits of the payments. In an October opinion column, two of the study’s co-authors argued that based on their findings, the expanded CTC should be extended would do more harm than good.
That doesn’t seem to have happened.
As other economists looked Using real-life data from the time monthly payments ran out, they found that only a small fraction of parents reported quitting work. And those folks were offset by another group of parents who started working after the expanded CTC went into effect — perhaps because they suddenly had enough money to pay for childcare.
The researchers sliced and diced the data, looking for negative effects on the economy. It wasn’t there. “No matter how we cut it, we just don’t see it affecting whether parents work,” he said
Elizabeth Anat, Professor of Economics at Barnard College and co-author of one of the studies. “And that’s in contrast to all the work on poverty and material hardship where we’re seeing huge, huge impact.”
But the evidence seemed unconvincing to the one person who controlled the expanded CTC’s fate: Democratic Senator Joe Manchin. By fall 2021, when the Democrats
consider extending payments As part of a sweeping social policy bill, it was clear it would not garner bipartisan support. That meant if a moderate Democrat defected, the expanded payments would expire at the end of the year. Manchin felt the payments were too broad. He didn’t think parents should be entitled unless they have a joband he wanted a much lower income cap for parents to qualify.
There is some logic to his reasoning – the payments shouldn’t discourage people from working and they should only go to families in greatest need. But experts told me these changes wouldn’t really result in money better spent.
A complicated formula for determining eligibility can prevent the people who need the money most from getting it. Aside from the fact that the parents didn’t quit their jobs because of the payments, work demands can be counterproductive. “It’s like kicking someone when they’re down,” said Ananat. “Maybe you have a sick child and have to stay home for a day and lose your job. Then you can’t pay for childcare to interview for some new jobs.”
Manchin did not agree. By the end of 2021 he will
Reportedly said other senators that parents without strict restrictions would spend the money on drugs – despite a lot of evidence to the contrary. The Democrat Social Policy Bill died in the Senate in Decemberand the latest round of expanded payments went to families that same month, with no sign of an extension in sight.
Losing the money had just as dramatic an impact as winning. In January and February families with children
would rather say They struggled to cover household expenses. Child poverty increased. parents reported fighting pay for diapers and child care. A poll by Politico/Morning Consult The survey, conducted in February, found that 75 percent of people who had benefited from the expanded CTC said losing the money would affect their financial security.
Meanwhile, researchers like Anat stood on the sidelines, frustrated, wondering how such a successful program could have gone up in smoke. “What’s so heartbreaking to me is that we were actually able to figure out what the directive did,” said Ananat. “And now we have an answer. It just helps kids. That’s all it does. And then just let it go.”