Congress Canceled 2021 Child Tax Credit Reforms, Pushed 5.1 Million Children Back into Poverty

Very few people are talking about an alarming piece of news from last week: Child poverty in America has more than doubled since 2021. On September 12, the story was in the papers and on PBS and cable news, but after that, it pretty much fell out of our collective consciousness. This news should trouble us all from an educational point of view—on top of what it says about the misery, hunger, and isolation of millions of children and their families.

David Berliner is an expert, a Regents’ professor emeritus and former dean of the College of Education at Arizona State University and the former president of the American Educational Research Association. Berliner is blunt in his analysis of how poverty affects children’s learning at school: “(T)he big problems of American education are not in America’s schools. So, reforming the schools, as Jean Anyon once said, is like trying to clean the air on one side of a screen door. It cannot be done! It’s neither this nation’s teachers nor its curriculum that impede the achievement of our children. The roots of America’s educational problems are in the numbers of Americans who live in poverty. America’s educational problems are predominantly in the numbers of kids and their families who are homeless; whose families have no access to Medicaid or other medical services. These are often families to whom low-birth-weight babies are frequently born, leading to many more children needing special education… Our educational problems have their roots in families where food insecurity or hunger is a regular occurrence, or where those with increased lead levels in their bloodstream get no treatments before arriving at a school’s doorsteps. Our problems also stem from the harsh incarceration laws that break up families instead of counseling them and trying to keep them together. And our problems relate to harsh immigration policies that keep millions of families frightened to seek out better lives for themselves and their children…  Although demographics may not be destiny for an individual, it is the best predictor of a school’s outcomes—independent of that school’s teachers, administrators and curriculum.”  (Emphasis in the original.)

Last week, when the U.S. Census Bureau released the new Supplemental Poverty Measure data for 2022, the big story got lost in the weeds of much of the reporting.  Here is Hayes Brown in an opinion piece for MSNBC: “While the country’s official poverty rate stayed the level in 2022, the bureau’s Supplemental Poverty Measure, or SPM, which factors in noncash federal assistance and a broader range of necessary expenses, ticked up to 12.4%. That’s an increase of 4.6 percentage points from 2021, and the first time it rose since the 2010 Recession. But the real heartbreaking statistic is that the SPM of childhood poverty more than doubled from 2021-2022—from an all-time low of 5.2% to 12.4%. That equates to roughly 5 million kids who were worse off last year than they were the year before.” Brown at least captures the heart of the story toward the beginning of his article, while some other reporters bury it later in their reports.

Nobel Prize winning economist and NY Times columnist Paul Krugman, on the other hand, perfectly captures the nugget of the tragedy: “I’ve been writing about economics and politics for many years, and have learned to keep my temper. Politicians and policymakers often make decisions that are simply cruel; they also often make decisions that are stupid, damaging the national interest for no good reason. And all too often they make decisions that are both cruel and stupid. Flying into a rage every time that happens would be exhausting.  But the latest census report on income and poverty made me angry. It showed that child poverty more than doubled between 2021 and 2022. That’s 5.1 million children pushed into misery, for it really is miserable to be poor in America.  And the thing is, this didn’t have to happen. Soaring child poverty wasn’t caused by inflation or other macroeconomic problems. It was instead a political choice. The story is in fact quite simple: Republicans and a handful of conservative Democrats blocked the extension of federal programs that had drastically reduced child poverty over the previous two years, and as a result just about all of the gains were lost.”

Krugman adds: “The cruelty of this choice should be obvious. Maybe you believe (wrongly) that poor American adults are responsible for their own poverty; even if you believe that, poor children aren’t to blame.  Maybe you worry that helping low-income families will reduce their incentive to work and improve their lives. Such concerns are greatly exaggerated, but even if you worry about incentive effects, are they big enough to justify keeping children poor?”

Congress reformed the Child Tax Credit in three important ways in 2021 as part of the American Rescue Plan, a COVID relief bill, but Congress then allowed these reforms to expire at the end of 2021.  In the American Rescue Plan, Congress expanded the amount of the full Child Tax Credit families would receive—from a tax credit of $2,000-per-child per-year to $3,000 (and $3,600 for children under the age of 6); payed out the tax credit monthly instead of in one annual lump sum; and made the Child Tax Credit fully refundable, which means that in 2022, America’s poorest families —families with little or no income who had been paying too little in income taxes to receive a full credit—received the full Child Tax Credit for each of their children just as middle and upper income Americans have received it for decades.

Sharon Parrott, president of the Center on Budget and Policy Priorities, explains: “The 2021 expansion temporarily fixed a flaw in the tax code that bars families with low incomes from receiving the full Child Tax Credit while allowing a married couple making up to $400,000 to receive the full amount. For many families who have experienced discrimination, inadequate schooling, a layoff, or poor health, and for families whose parents work in low-paid jobs like child care or home health care, the design of the Child Tax Credit compounds the inequities they face and does less than it should to help them make ends meet. Since the expiration of the Child Tax Credit expansion at the end of 2021, the credit has reverted to a maximum of $2,000 per child and no longer is fully available to all low-income children. Some 19 million children live in families whose incomes are too low to qualify for the full credit. This includes nearly half (46 percent) of Black children, 1 in 3 Latino and American Indian and Alaska Native children, about 1 in 6 white and 1 in 7 Asian children, and 1 in 3 children in rural counties.”

The rise in child poverty from 2021 to 2022 also reflects the expiration of other pandemic relief programs and reflects the growth of inflation during 2022. But the primary cause of the alarming reversal in child poverty was the expiration of reforms to the Child Tax Credit.  Parrot explains that in 2022: “The number of children in families with incomes below the poverty line rose by 5.2 million, increasing the child poverty rate from 5.2 to 12.4 percent, marking the largest increase for children… in the data back to 1967…  The increases in poverty among Black and Latino children were especially large, with the Black child poverty rate rising from 8.3 percent to 18.3 percent, and Latino child poverty rising from 8.4% to 19.5%.”

In , the Washington-Post‘s Catherine Rampell considered the politics: “This expansion was funded for just a year, with the (apparently Pollyannaish) hope that a groundswell of popular support would pressure politicians to extend it… That anticipated groundswell of political support never materialized. The program wasn’t exactly disliked—a plurality of voters supported extending it back in late 2021, as the programs’ expiration date was approaching—but it wasn’t really a motivating issue either. Parents of minor children represent a small share of voters. Minor children themselves can’t vote at all.  And the rest of us apparently don’t prioritize the issue of child poverty, at least not enough to pressure federal officials to do much about it. ”

The demise of the American Rescue Plan’s expansion and full refundability of the Child Tax Credit made me think about The Other America, Michael Harrington’s classic 1962 book that helped build the political will for the War on Poverty: “There is a familiar America. It is celebrated in speeches and advertised on television and in the magazines. It has the highest mass standard of living the world has ever known… (But there exists) “another America… The other America is not impoverished in the same sense as those poor nations where millions cling to hunger as a defense against starvation. This country has escaped such extremes. That does not change the fact that tens of millions of Americans are… existing at levels beneath those necessary for human decency… That the poor are invisible is one of the most important things about them. They are not simply neglected and forgotten as in the old rhetoric of reform; what is much worse, they are not seen.” (The Other America, pp. 1-6)