Build Back Better Would Reduce Economic Injustice Among America’s Children

Today, with the Build Back Better Bill awaiting action in the U.S. Senate, it’s a good time to reflect on the Victorian British attitude that prefigured Americans’ faith in personal responsibility. Mr. Bumble, the parish beadle who oversees provisions for the poor in Charles Dickens’ Oliver Twist, complains: “We have given away… a matter of twenty quartern loaves and a cheese and a half, this very blessed afternoon, and yet them paupers are not contented… Why here’s one man that, in consideration of his wife and large family, has a quartern loaf and a good pound of cheese, full weight. Is he grateful, ma’am? Is he grateful? Not a copper farthing’s worth of it!  What does he do, ma’am, but ask for a few coals; if it’s only a pocket handkerchief full, he says! Coals! What would he do with coals? Toast his cheese with ’em, and then come back for more. That’s the way with these people, ma’am; give ’em a apron full of coals to-day, and they’ll come back for another the day after to-morrow, as brazen as alabaster.”

This blog quoted from Charles Dickens’ Oliver Twist in December of 2017 in a post criticizing an important economic policy: Congressional passage of President Donald Trump’s tax cuts for wealthy individuals and corporations. In our culture, even though we profess a commitment to progressive taxation, we like to use tax cuts to reward the enterprising—celebrities, tech wizards, and enormous corporations.

Assuming that people can pull themselves up by their bootstraps, we publicly neglect those who fall behind. The problem has been bipartisan. The 1996 welfare reform law Bill Clinton pushed through Congress was called the Personal Responsibility and Work Opportunity Act. Its name presumed that the poor are irresponsible and lazy. Welfare’s replacement—Temporary Assistance for Needy Families (TANF)—left our society with alarming poverty and inequality. The law was inequitably administered by state governments.  It also turned out to live up to its name: Temporary Assistance. Many states phased out assistance and cut out the employment training programs that had not been designed well enough to prepare workers for available jobs. And the minimum wage stayed so low that people who did find jobs were paid so little they could not rise above the federal poverty level.  Nobody did anything about the children whose families struggled to survive.

Right now, the U.S. House of Representatives has passed the Build Back Better Bill which represents a radically different philosophy: President Biden’s commitment to helping children whose families live in poverty instead of punishing their parents.  The U.S. Senate is negotiating its version, which many hope to see passed by the end of 2021.

The Center on Budget and Policy Priorities explains why a single reform in the Child Tax Credit—making it fully refundable for families with very low income—is for America’s children the most important element in Build Back Better: “Making the full Child Tax Credit available for families with low or no earnings in a year, often called making it ‘fully refundable,’ is expected to generate historic reductions in child poverty compared to what it would have been otherwise. Before the Rescue Plan made the full Child Tax credit fully available in 2021, 27 million children in families with low or no income in a year received less than the full credit or no credit at all.” In the American Rescue relief bill last spring, Congress made three significant changes in the Child Tax Credit: raising the maximum Child Tax Credit from $2,000 to $3,600 per child through age 5, and $3,000 for children age 6-17; allowing families to receive a Child Tax Credit for 17-year-olds; and making the Child Tax Credit fully refundable for the year 2021.  The House version of the Build Back Better Bill extends the first two provisions only through 2022, but the House version permanently makes the Child Tax Credit fully refundable:

“In the absence of the full refundability provision, the first two of those changes would lift an estimated 543,000 children above the poverty line, reducing the child poverty rate by 5 percent… But the two changes plus full refundability stand to raise 4.1 million children above the poverty line and cut the child poverty rate by more than 40 percent.  In other words, the full refundability feature makes the expansion nearly eight times as effective in reducing child poverty.”  “Until last spring’s COVID relief bill, many children had been excluded because “their families’ incomes were too low. That included roughly half of all Black and Latino children and half of children who live in rural communities… This upside-down policy gave less help to the children who needed it most.  The (COVID) Rescue Plan temporarily fixed this policy by making the tax credit fully refundable for 2021.  Build Back Better, in one of its signature achievements, would make this policy advance permanent.”  (emphasis in the original)

In a new report last Friday, the Center on Budget and Policy Priorities warns about what we can expect if the U.S. Senate fails to pass the Build Back Better Bill by the end of December, 2021 and allows to expire the reforms instituted temporarily for this year alone in last spring’s American Rescue Plan: “If Build Back Better isn’t enacted, the Child Tax Credit would revert to providing the least help to the children who need it most — and some 27 million children would once again get a partial credit or none at all because their families’ incomes are too low.”

The First Focus for Children Campaign outlines other urgently needed reforms included in the House version of the Build Back Better Bill: “The Children’s Health Insurance Program, CHIP, which covers roughly 10 million children would be made permanent, sparing it from serial expiration every few years.”  The bill would also require states to make children’s eligibility continuous over all 12 months for CHIP and Medicaid; would guarantee 12 months (instead of 60-days) of postpartum coverage for mothers on Medicaid; and would provide 4-weeks of paid leave for new parents and expand family leave. Build Back Better would significantly expand access to quality child care and phase in universal pre-K for 3- and 4-year-olds. For young adults aging out of foster care, the law would lower the age of eligibility for the Earned Income Tax Credit from 25 to 18. The bill would also address hunger among children by making meals available during the summer months when school is not in session.

None of these programs directly invests in public education, but together they will improve educational opportunity. Why?  We know that a family’s economic circumstances affect children’s opportunity at school. Recently this blog covered a new report that 101,000 students in the New York City Public Schools—10 percent of the district’s students—were homeless in the past year.  Decades of research show that such challenges directly affect students’ experiences at school.

The Regents’ professor emeritus at Arizona State University and former president of the American Educational Research Association, David Berliner explains: “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… 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.)

in 2013, the Stanford University educational sociologist, Sean Reardon released a massive data report confirming the connection of school achievement gaps to growing economic inequality and rapidly growing residential patterns of economic segregation in metropolitan areas. Reardon documented that across America’s metropolitan areas the proportion of families living in either very poor or very affluent neighborhoods increased from 15 percent in 1970 to 33 percent by 2009, and the proportion of families living in middle income neighborhoods declined from 65 percent in 1970 to 42 percent in 2009.  Reardon also demonstrated that along with growing residential inequality is a simultaneous jump in an income-inequality school achievement gap among children and adolescents. The achievement gap between students with income in the top ten percent and students with income in the bottom ten percent is 30-40 percent wider among children born in 2001 than those born in 1975.

For the sake of our children and to ensure they can thrive at home and at school, the United States needs to do better. During the Victorian era, Charles Dickens castigated a society that forgot about the well-being of children and sought to punish their parents for laziness. Today, we ought to notice that, like the parish beadle, Mr. Bumble, in Oliver Twist, too many members of Congress have for decades conditioned any sort of public assistance as a punishment for parents’ lack of “personal responsibility.” For too long, Congress has been willing to forget our public obligation to the children who are always the victims of poverty.  President Biden’s approach in Build Back Better instead addresses the vulnerability and distress of too many American children—as a matter of economic justice.

Congress Must Make Last Spring’s Temporary Expansion of the Child Tax Credit Permanent As Part of the Build Back Better Bill

In the American Rescue Plan, the COVID-relief bill passed in March, President Joe Biden and Congress temporarily increased the Child Tax Credit and made it fully refundable. Now, as House and Senate bargain and fight about President Biden’s Build Back Better Bill (sometimes called the reconciliation package), they need to invest in making permanent last spring’s temporary expansion of the Child Tax Credit.

Congress should not add parental work requirements as qualifications for families to receive the full Child Tax Credit. The program was designed to protect children from the ravages of poverty.  Children should not be punished if parents are unable to work or unable to find or afford childcare.

The big problem with the Child Tax Credit until last spring when Congress temporarily expanded the program was that it helped middle class families far more than it assisted impoverished families whose children’s needs may be desperate.  Until Congress fixed it temporarily in the American Rescue Plan, the Child Tax Credit was what the Center on Budget and Policy Priorities calls “an upside-down policy (which) gave less help to the very children who needed it most.” “Prior to enactment of the American Rescue Plan in March,  27 million children received less than the full Child Tax Credit or no credit at all because their families’ incomes were too low, including roughly half of all Black and Latino children and children who live in rural communities… Enacted in 1997, the original Child Tax Credit largely excluded children whose families had low or moderate incomes because the credit could only be used to offset a family’s income tax liability, not to boost a family’s low income.”

The Center on Budget and Policy’s September 7, 2020 report fills in the history of the Child Tax Credit: “As part of tax legislation, President George W. Bush signed in 2001, a bipartisan group of senators restructured the Child Tax Credit to make it partially ‘refundable,’ meaning that a family with little or no income tax liability could receive part of the credit as a refund… During each of the Bush, Obama, and Trump Administrations, policymakers on a bipartisan basis incrementally reduced the earnings threshold.  Most recently, Republican Senators Marco Rubio and Mike Lee pushed to reduce it to $2,500 in the 2017 law, which also increased the maximum credit to $2,000 per child.  But because the credit only phased in at the rate of 15 cents on the dollar for earnings above $2,500, a mother of two earning $15,000 received just $1,875 per year… still substantially less than middle-income families. The American Rescue Plan took a major step in rectifying this problem by making the full Child Tax Credit available to children in families with low or no earnings for 2021.”

The American Rescue Plan also increased the amount of the Child Tax Credit to $3,600 for each child under age 5 and to $3,000 for children ages 6-17.  “The Rescue Plan also allowed the IRS to deliver the Child Tax Credit to families on a monthly basis, rather than as a lump sum at tax time. The monthly cadence of payments provides financial predictability and stability for families with incomes near the poverty line.”

In late September, as some members of Congress suggested adding parents’ work requirements as a condition for families’ qualification for the Child Tax Credit, the Center on Budget and Policy Priorities released a second report to define the explicit purpose of reforming the Child Tax Credit: to help support children living in poverty, not to punish unemployed parents. “Recent suggestions that Congress should deny the credit to children whose parents don’t have earnings are misguided. Taking away the full credit from children based on their parents’ earnings would needlessly leave in poverty — or push deeper into poverty — the children who need help the most, injuring their long-term health and educational outcomes and reducing their earnings as adults, while doing virtually nothing to boost parental employment…In more than 95 percent of families who benefit from making the credit fully refundable, the parent or other caretaker is working, between jobs, ill or disabled, elderly, or has a child under age.”

Permanently expanding the Child Tax Credit and making it fully refundable are tools for addressing economic inequality and racial injustice. The Center on Budget and Policy Priorities continues: “Prior to the Rescue Plan expansion, about half of Black and Latino children received a partial credit or no credit at all because their incomes were too low, compared to about a fifth of white children. About half of children in rural… communities were also excluded from the full credit due to their family’s low income. These facts reflect sharp disparities in the educational and employment opportunities available to Black, Latino, and rural communities… The nation’s high child poverty rate and gaping racial ethnic, and geographic disparities in child poverty have translated into lost opportunities for millions of children.”  “The most common way people used their initial monthly Child Tax Credit payments this summer was to buy food… In the month and a half after the initial monthly Child Tax Credit payment was issued, the number of adults with children reporting that the household didn’t have enough to eat dropped by 3.3 million or nearly one-third.”

While middle class families have been receiving the full Child Tax Credit for each of their children since its inception in 1997, working poor and unemployed families have been excluded. The purpose of permanently expanding the Child Tax Credit is to help alleviate the threats of hunger, housing insecurity, and family stress for 27 million of our nation’s poorest children who have been left out of this program. It is time for Congress to do the right thing by making permanent the temporary reforms that were part of the American Rescue Plan.