» Overlooked in Biden’s COVID-19 proposal: A push to cut child poverty in half.
WASHINGTON — A major anti-poverty effort that could lift the prospects for millions of children and close a long-standing gap in the nation’s economic safety net appears headed for approval by Congress, tucked into the COVID-19 relief bill, where it has largely been overshadowed by the debate over the size of stimulus checks.
The proposal, which could provide nearly all American families with monthly checks of up to $300 per child, would cut child poverty nearly in half, lifting nearly 10 million children up to or above the poverty line, according to analyses by the National Academy of Sciences and other expert groups.
The idea has been debated in Congress for nearly two decades, during which lawmakers have taken incremental steps to give more help to low-income families with children.
That it suddenly stands at the brink of passage — the proposal is included in the House and Senate Democratic versions of the $1.9 trillion COVID relief bill and is a high priority for Speaker Nancy Pelosi and other party leaders — vividly illustrates how the pandemic and resulting economic crisis have shifted what’s considered possible in domestic policy.
“Not that many years ago, this was considered on the fringe, out there, not going to happen,” said Rep. Rosa DeLauro, DConn., who has led efforts to expand aid to low-income children since 2003. “Now it is at the center.”
“The moment has met us,” DeLauro said.
The proposal also illustrates a central part of the emerging Biden domestic policy agenda. The president doesn’t back sweeping plans to restructure policy from the ground up, of the sort backed by many progressive Democrats. But he is moving aggressively to accomplish some long-sought progressive goals, surprising some of his critics on the left.
The proposal is “hugely important to the president” and Vice President Kamala Harris, said Jared Bernstein, Biden’s economic adviser, in a presentation hosted by the Washington Post on Thursday.
The biggest stumbling block to expanded family assistance in the past has been the price tag, roughly $120 billion per year for a plan like the one Biden has proposed.
The amount, however, seems less daunting to lawmakers in the context of the much larger economic relief package.
The price needs to be weighed against the heavy cost that child poverty imposes on society, said Hilary Hoynes, an economist and expert on poverty at the University of California, Berkeley.
Cutting potential
The National Academy of Sciences study, which Hoynes helped direct, estimated in 2019 that child poverty reduces the country’s long-term economic potential by 4 percent to 5 percent, or roughly $800 billion to $1 trillion per year by reducing lifetime earnings and increasing illness and crime.
Cutting child poverty creates additional “benefits to society, and the benefits can be quite large,” Hoynes said.
“We have to pay some money today to increase incomes long run,” she said. “That’s the way to think about the trade-offs.”
Those arguments have had more sway with lawmakers because of the economic disruption over the past 11 months, combined with the continued effect of the Great Recession, said Sen. Michael Bennet, D-Colo., who, along with Sen. Sherrod Brown, DOhio, has pushed the effort in the Senate to increase family payments.
The recession caused by the COVID-19 pandemic has meant “the wheels are coming off ” for many families, Bennet said. The economic pain has underscored the “enormous vulnerability” many families face, he said.
“People see the need more than they did before,” he said.
That’s true for some Republican lawmakers in addition to Democrats.
The 10 Republican senators who met with Biden recently to propose a scaled-back COVID-19 package did not include the child payments in their plan, although one of the group, Sen. Mitt Romney of Utah, introduced his own plan Thursday that parallels Biden’s proposal in part.
The Biden plan would build on an existing tax break that currently provides most of its benefits to middle- and upper-income families.
Under the current system, families can take $2,000 off their taxes for each child up to age 17. That widely used tax credit provided an estimated $118 billion last year to more than 48 million families.
But a tax credit provides the biggest help to those with significant tax liabilities. Families with incomes of up to $400,000 a year are currently eligible for the child tax credit, and last year, about 40 percent of the benefit went to households with incomes above $100,000, according to researchers at Washington’s Brookings Institution.
Although Congress has changed the law over the past decade to allow families with little or no tax liability to get some money in the form of a tax refund, only about 15 percent of the benefit last year went to families with income of less than $30,000.
Some 27 million children in low-income families get less than the full benefit, and many of the poorest get nothing.
“You have a child credit that’s close to universal” except that “there are tens of millions of children who live in families with incomes that are too low to benefit,” Hoynes said.
“When you put it that way, it really doesn’t make sense.”
Increasing a credit
Biden’s plan would change the law in two major ways — increasing the credit to $3,000 per child ages 6 through 17 and $3,600 for younger children and making the entire benefit refundable, which would make all low-income families eligible for the full amount.
Congressional Democrats have been working with the Treasury Department to structure the benefit so families could choose to receive monthly payments, rather than waiting to get a lump sum when they file their taxes, a significant help to many low-income families.
Sending out millions of monthly checks could pose a big burden on the IRS, but Treasury Secretary Janet Yellen is “committed to monthly payments,” Bennet said. “We’re going to find a way.”
Expanding the child credit would have its biggest effect in low-income neighborhoods and among Black and Latino families, who are more likely to be poor.
For many low-income families, the money would represent a significant increase in income.
A single mother earning $10,000 a year who has a toddler currently gets only a partial benefit. Under the new plan, she would get nearly $2,500 in additional income, said Chuck Marr, an analyst at Washington’s Center on Budget and Policy Priorities. A parent with two children who lost her job in the recession and has no income as a result currently gets no benefit; under Biden’s plan, she could get up to $7,200, depending on the age of the children.
The COVID relief package would provide the increased benefit only for 2021, but Democrats have made clear they aim to make the change permanent in a second round of legislation this year. That would make the family payments the most significant part of the overall bill, DeLauro said.
“The direct COVID relief payments will go away,” she said. “The expansion of the child tax credit will be permanent.”