Investing in America’s future
An expanded federal child tax credit is not just the right thing to do; it’s good economic policy.
It should be enough to say: No child should grow up hungry. No family should worry about buying their kids shoes or school supplies. No parent should ever have to choose between seeking care for a sick youngster or paying an essential bill.
But if the “compassion and justice for all” argument doesn’t persuade Republicans in the U.S. Senate to restore the expanded child tax credit, they might consider it from another angle: the economy.
The federal child tax credit, expanded as part of pandemic relief efforts, lifted millions of children out of poverty nationwide in 2021, sending the national rate of child poverty to a record low. And a year after it expired, that rate had more than doubled as too many of America’s children slid back.
Efforts to renew the expanded credit have stalled in Washington after passing the House — that’s right, the dysfunctional, divided House — in January by a vote of 357 to 72. That’s a show of undeniable bipartisan support, if anything is. But some Senate Republicans say the measure will cost too much and take away parents’ incentive to work.
In truth, the legislation — in which the expanded credit has been paired with some business tax breaks aimed at encouraging investment — is a down payment on America’s future. The fact that it’s also the right thing to do dials up the urgency of bringing the matter to a vote.
We don’t need to rely on hypotheticals here; the experiences of 2021 show how giving families this extra boost played out in the real world. And the objections to reviving the credit are not supported by evidence.
As for keeping parents out of the workforce, researchers from Columbia University concluded that the expanded credit “had no discernable negative effects on parental employment.” That’s echoed by the federal Bureau of Labor Statistics, which found that in 2021, when the expanded credit was in effect, employment rates among parents and nonparents alike saw the same post-pandemic rebound.
And what did families do with this extra money? Columbia and other institutions found they used it primarily on food, rent, child care and bills. In other words, they used it to meet basic needs and stabilize their families’ lives. That kind of stability improves educational outcomes and strengthens the social fabric. Consider that research in the social sciences has also traced a relationship between food insecurity and violence or crime later in life, and you can make a case that helping families feed their children is curbing expenses in criminal justice down the road.
Indeed, researchers in 2018 calculated that child poverty costs the U.S. more than $1 trillion annually in lost economic activity, crime and health costs, among other expenses. That’s far more than the cost of an expanded tax credit.
And that’s the bottom line: Not addressing poverty also comes with costs. Pay now or pay later. The “now” option has the potential to lift communities as it steadies the ground beneath parents’ feet. And it makes America, yes, a little kinder.
Although Senate Majority Leader Charles E. Schumer says he backs this bill, he has not yet promised to bring it forward for a vote. It deserves his active support, not just favorable murmurs. This investment in America’s families, and in the next generation, will pay dividends for years to come.