If Pres. Joe Biden and the Democrats accomplish nothing else, they should be proud of this: they cut child poverty in half.
Temporarily. They need to cement their accomplishment by making the expanded child tax credit program permanent.
According to a story in this morning’s Wisconsin State Journal, payments should start showing up in people’s bank accounts this week and they’ll keep coming every month through December.
Here’s how it works. As part of Biden’s COVID relief plan, the existing tax credit was increased from $2,000 to $3,000 per child and for young children it’s $3,600. And eligibility goes up to $150,000 in annual income for a couple or $75.000 for an individual tax filer.
But here are two key improvements. First, the credit is fully refundable. That means that poor families, which couldn’t get the credit before because they didn’t pay enough in taxes in the first place, now can get the full payment. And second, it’s not just an increased refund check in one lump sum once a year. It’s a monthly payment that goes straight to your bank account. In other words, the help shows up on a monthly basis, just like how real people live their lives. And that’s especially helpful to the families who need it most, those living paycheck to paycheck and for whom a once a year bonanza is nice, but not nearly as useful as a steady income.
The result of all this is to slash child poverty almost in half. According to a Columbia University study, it will reduce child poverty by 45%.
It’s an expensive program, but the payback is enormous. The cost, over ten years, is projected at $1.6 trillion. But it has been estimated that child poverty results in an annual loss in productivity of $800 billion to $1.1 trillion every year.
In his American Families Plan, Biden would extend the program for another four years. It’s likely that that plan will need to be passed using budget reconciliation, so that it can pass with Democratic votes only in the Senate.
But the President should at least consider pulling it out and trying for passage as a separate bill. That’s because Sen. Mitt Romney (R-UT) was pushing for an almost identical plan even before the COVID bill passed. Romney might be able to convince the nine or 10 other Republicans who joined him in reaching a deal with Biden on the infrastructure bill to come along with him on this one as well. Racking up a series of bipartisan victories has its own benefits to our system beyond just the tangible progress in the legislation.
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