Study: Child poverty rate jumps after benefit ends

The number of American children in poverty spiked in January after the expiration of President Joe Biden’s expanded child benefit at the end of last year, according to new research released Thursday.

The Center on Poverty and Social Policy at Columbia University said that the child poverty rate rose from 12% in December 2021 to 17% last month, an approximately 41% increase. The study found that an additional 3.7 million children are now in poverty relative to the end of December, with Black and Hispanic children seeing the biggest percentage point increases.

Democrats in Congress last March approved an expansion of the Child Tax Credit that ran from July through the end of 2021. The program extended payments of $250 per month for children ages 6 through 17 and $300 per month for those under 6 to families in the United States, though the benefits were phased out for wealthier families. The program’s cost was about $120 billion per year. More than 61 million children in roughly 36 million households received the payment in December, according to federal data.

With the expansion in effect, Democrats and the White House frequently touted the credit as achieving a dramatic victory over child poverty. Administration officials pointed to data showing a 24% drop in hunger for families connected to Biden’s tax credits.

But the White House was unable to secure an extension of the program amid a disagreement over its broader economic proposal with Sen. Joe Manchin, D-W.Va., who raised multiple objections to the child benefit and said it was discouraging parents from working. Virtually all Republicans have also opposed Biden’s expanded Child Tax Credit, and Washington has shifted away from pandemic spending as lawmakers seek to curb the worst inflationary spike in four decades.

The expiration of the program now threatens to undermine what White House officials had seen as a potential legacy achievement for the president. Instead, the number of children in poverty went from roughly 8.9 million in December 2021 to 12.6 million last month.

“They had a short-term victory in the fight against child poverty, and it’s quietly slipping away,” said Joshua McCabe, a social policy expert at the Niskanen Center, a right-leaning think tank.

Child poverty rates fell from roughly 17% in February 2021, before the credit was approved as part of the stimulus plan in March, to roughly 12% by the end of the year. Poverty rates for Black and Hispanic children fell sharply as well. The Columbia researchers previously found the Child Tax Credit was keeping 3.7 million children from poverty and reducing monthly child poverty rates by 30%.

Plans to extend the credit appear stuck. Manchin and other Democrats met with White House chief of staff Ron Klain on Thursday, and the senator told reporters afterward that there was no discussion of reviving the spending package that would include the expanded benefit. Sen. Mitt Romney, R-Utah, has begun preliminary conversations with Senators about extending a smaller version of the credit on a bipartisan basis.

The White House said in a statement, “We can all agree that the extended Child Tax Credit is a historic tax cut for middle class, families and the key driver behind the American Rescue Plan putting us on the path to cut child poverty in half.”

The White House statement also urged families to fill out their taxes this year to ensure they receive the full benefit from the program. Half of the expanded Child Tax Credit will be paid out to Americans when they file their taxes this year, with the other half having been disbursed in monthly increments over the last six months of 2021.

Some advocates have urged both parties to seek compromise and be willing to accept a smaller version of the credit to secure its expansion.

“Today’s report should shake Washington to its core. … This is not a moment for staking out political positions. Congress needs to compromise on a targeted, monthly child tax credit that can reverse these grievous losses,” said Paolo Mastrangelo, head of policy and government affairs for Humanity Forward. “Any extension, even one that is much more targeted in size and scope, will help reduce the tragic number of families entering poverty.”