An expansion of the child tax credit included in a coronavirus relief package passed last year helped lift millions of American children out of poverty in what experts called one of the most successful anti-poverty experiments ever conducted in the United States, The Hill reports.
But that expansion lapsed at the end of 2021, and new federal data shows an increasing number of households with children now face difficulties paying for ordinary household expenses — putting at risk a generation of children who just months ago appeared on the brink of escaping poverty.
More than a third of families with children, 35 percent, said they were now struggling to cover ordinary costs in late January and early February, after the payments ended, according to a new survey from the U.S. Census Bureau. That figure is up from 30 percent who were struggling to cover costs last year when the payments were still being distributed.
“These payments were so effective because they were such a crucial investment in children,” said Kris Cox, deputy director of federal tax policy at the Center on Budget and Policy Priorities. “The child tax credit expansion overall was projected to lift millions of children out of poverty.”
Previous surveys showed about one in four households used the child tax credit payments to cover expenses, money that is no longer available. The current survey showed about a third of families with children reported they did not have enough food sometimes or often.
The expanded child tax credit payments equated to as much as $600 for a family of four with two children under the age of 5, the equivalent of a quarter of the federal poverty limit. More than 36 million families received monthly payments of up to $300 per child under 5 years old and up to $250 for children between the ages of 6 and 17, wrote Katherine Giefer, a statistician at the Census Bureau’s Social, Economic and Housing Statistics Division.
Congress failed to renew the tax credit at the end of 2021. An expansion was part of the Build Back Better plan that died at the end of last year, in the face of opposition from Senate Republicans and Sen. Joe Manchin (D-W.Va.), who objected to several elements of the plan.
The impacts of poverty on children extend well beyond a child’s present situation, said Rich Besser, a former director of the Centers for Disease Control and Prevention who now heads the Robert Wood Johnson Foundation, which backs expanding the credit.
“Poverty is connected to so many things in a child’s life,” Besser said in an interview. “When you look at the impact of poverty, poverty means that a family is in a stressful situation. It means that a family is at risk for not having enough food to eat, is at risk of eviction, is at risk for having the heat turned off in the winter.”
“The chronic stress that you experience from poverty takes a toll on your health. That kind of chronic stress response is extremely detrimental to one’s physical health,” he said.
The Census Bureau’s Household Pulse Survey, an experimental series of polls designed to test in near-real time the impacts of the pandemic and the associated economic catastrophe and recovery, tracked how families spent their child tax credit payments over recent months.
Economists said they were thrilled with the results, which showed families spending on necessities and common expenses, rather than on extravagances or savings. About one in four households with children reported using the payments to cover expenses. Households with children that struggled to cover expenses were twice as likely to use the payments to make ends meet; those families were eight times more likely to borrow money from friends and family and when times got tight.
“Nine in ten families with low incomes were using this money to pay for everyday expenses. Food, utilities, housing. This was really crucial support to help families that were struggling to make ends meet,” Cox said. “Families spent this money exactly as we would have expected on crucial everyday expenses.”
And the expansion helped deliver more money to the most impoverished, especially Black and Latino children. About half of Black and Latino families were not receiving the full child tax credit because their incomes were too low, a gap that the American Rescue Plan’s expansion eliminated.
Now, supporters of an expanded credit warned that the progress made last year risks unraveling, sending millions of children back into poverty that could have long-term impacts on their physical and mental well-being.
“The incredible benefits of the expanded tax credit, the reduction in child poverty, the reduction in stress of not being able to pay the bills, that’s going to go away,” Besser said. “These are real, and the idea that as a nation something as simple as this can reduce childhood poverty by 40 percent or even higher, this kind of program that we don’t celebrate and immediately make it permanent is unconscionable.”