Because Congress Failed to Pass Build Back Better, Child Poverty Grew by 3.7 Million Children from December to January

A new February 2022 report from the Center on Poverty and Social Policy at Columbia University documents an alarming increase in child poverty since the U.S. Senate failed to pass the Build Back Better Bill and permitted important reforms to the Child Tax Credit to expire on December 31: “The overall monthly child poverty rate rose sharply between December 2021 and January 2022, from 12.1 percent to 17 percent—an increase of 41 percent.”

In the American Rescue Plan COVID relief bill, passed in the spring of 2021, Congress temporarily increased the per child amount of the Child Tax Credit, paid it out in monthly installments to help families living paycheck to paycheck, and made it fully refundable. Making the tax credit “fully refundable” means that families earning too little to pay a significant amount in income taxes could benefit from the full tax credit. The Child Tax Credit, established in 1997, has, until the brief 2021 temporary expansion, benefited middle and some upper income families but excluded those who have no income and paid a paltry amount to parents whose income is too low. The Center on Budget and Policy Priorities has called it “an upside-down policy.”

Last week, the New Yorker‘s Isaac Chotiner published an important interview with Sophie Collyer, the research director at the Center on Poverty and Social Policy at Columbia University. Collyer explains to Chotiner what the Center on Poverty and Social Policy has discovered based on data collected since December:

“We found that 3.7 million more children are in poverty as a result of rolling back the child tax credit between December and January. We’ve been measuring poverty over all and among children since the beginning of the pandemic, but using a monthly framework… It’s been a really useful tool for evaluating the impact of the expanded child tax credit in real time. Over the summer, with the initial payments, we saw an immediate reduction in the rate of child poverty, particularly because it was being paid out monthly for the first time and reaching about one in three children who were previously ineligible for the credit. So over the summer you’re seeing both the initial payments being paid monthly for the first time but also a much greater share of the child population being eligible for the credit. But it was only in effect in terms of monthly payments through the end of 2021. And the expansion of the child tax credit was only in effect for the calendar year 2021.”

Collyer explains to Chotiner the serious implications for Black and Hispanic children: “A big piece of the expanded child tax credit last year was that the earnings requirement associated with the credit was removed for 2021, and it was made fully refundable. The amount that you received was independent of your earnings… Before the expansion, many Black and Latino children were left behind when it came to receiving the full benefits of this credit—one out of two Black children and one out of two Latino children were ineligible for the full credit because of family income levels.”  The temporary changes in the Child Tax Credit ended in December, and Collyer continues. “Now, with the absence of the credit, we saw a 5.5 percentage point increase in the poverty rate of Black children and 7.1 percentage points for Latino children, translating to… nearly seven hundred thousand Black children falling into poverty and 1.3 million Latino children falling into poverty as a direct result of the credit being removed.”

Collyer elaborates on why she believes this program is particularly helpful: “It’s cash-based. So many social policies and social programs in the United States consist of in-kind transfers—housing subsidies, food stamps—and they’re infrequently cash. But with this you saw families receiving a cash payment, and cash is fungible. In one month, you might need it to fill in a food budget, but for the next month, it might be used to fix a car. Another month, it might help with child care. That flexibility is also something that comes out of the data, with families using it to meet needs that vary from month to month. I think that’s a really important takeaway in terms of the importance of cash in families’ lives and the importance of the monthly aspect of this.”

In a business column for the Los Angeles Times, Michael Hiltzik lauds last year’s temporary improvements to the Child Tax Credit and condemns the Congressional inaction that blocked support for Build Back Better: “The payments had a rapid and material effect on the child poverty rate, which fell from about 16% in June to about 12% in December. Then the monthly payments ceased, and the child poverty rate rebounded to 17% in January, its highest mark since January 2020. That increase translates to 3.7 million children added to the poverty rolls in just a single month… The Biden administration has been trying to convert the one-year Child Tax Credit (changes) into a permanent program, but that goal has been thwarted by Congress—specifically, by Sen. Joe Manchin III (D-W.Va.). Manchin has bizarrely drawn a line in the sand against the child credit, even though his state is a leading member of the child poverty hall of shame. In 2018, West Virginia boasted the fourth-worst rate of child poverty in the nation and fifth worst in extreme child poverty… The Republican Party has made stinginess a governing principle.”

Years of research document that children’s life chances and educational accomplishments all reflect their families’ economic circumstances.  The editors of a 2011 book, Whither Opportunity? Rising Inequality, Schools, and Children’s Life Chances, Greg Duncan and Richard Murnane, conclude the book’s introduction with this declaration: “We draw three conclusions: First, mindful of the biology of human development and the track record of proven programs, we must channel more policy dollars to enrich the early years of children born into poverty.  Second, we must improve the educational opportunities for children from low-income families at every stage of their development.  Third, we need a national policy debate about the consequences of economic policies that have permitted the growth of family income inequality that the nation has experienced in recent decades. Only if our country faces the consequences of growing income inequality will it be able to maintain its rich heritage of upward mobility through educational opportunity.” (Whither Opportunity? p. 20)

Regents Professor of Education Emeritus at Arizona State University and past president of the American Educational Research Association, David Berliner is even more blunt in his analysis: “(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.)

House Version of Build Back Better Makes the Child Tax Credit Fully Refundable. The Magnitude of this Change Is Breathtaking.

In our outrageously unequal and increasingly secular society—when Black Friday crowds filled the stores, scrambled to take advantage of online sales, and grieved shortages of the latest iPhones, the U.S. House of Representatives passed a Build Back Better Bill on November 19 that feels almost like a response to a biblical call for justice for America’s children.

During the four-week season of Advent, which began yesterday, Christians will anticipate the birth of the Christ Child in a humble stable.  Worshipers will consider the words of Mary:  “My soul magnifies the Lord… for God has looked with favor on the lowliness of the Almighty’s servant…  God has scattered the proud in the thoughts of their hearts. God has brought down the powerful from their thrones, and lifted up the lowly; God has filled the hungry with good things….'” (Luke: 1:46-55)

The House version of the omnibus economic reform legislation demanded by President Biden has now been sent to the U.S. Senate for deliberation and possible passage—perhaps by Christmas.  Here is how Sharron Parrott, the president of the Center on Budget and Policy Priorities describes the significance of what the House accomplished on November 19: “Today’s vote brings us a critical step closer to delivering policy advances that help families meet everyday challenges such as paying rent and putting food on the table, affording child care and preschool, securing health coverage, and paying for college… The Build Back Better bill would reduce poverty substantially, particularly among children, narrow our nation’s glaring racial disparities, which are the result of our long history of racism and discrimination; and move us toward an economy that works for everyone.”

The House Build Back Better legislation expands the economic reach of the Child Tax Credit. To explain the significance of this single provision, the Center on Budget and Policy Priorities published a separate 19 page report which explains not only the economic but also the profound moral implications of this reform if the Senate follows through by sustaining the actions of the U.S. House:

“The House Build back Better legislation would ensure that families continue to get a significantly expanded Child Tax Credit via monthly payments through 2022; and it would permanently make the full credit available to children in families with low or no earnings in a year, locking in substantial expected reductions in child poverty. The expanded credit benefits roughly 9 in 10 children across the country….  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… 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. Full refundability ensures that children in these families get the same amount of the Child Tax Credit as children in families with higher incomes. This provision is the main driver of the credit expansion’s child poverty reductions.” (emphasis in the original)

The Center on Budget and Policy Priorities continues: “Build Back Better’s Child Tax Credit expansions—especially permanent full refundability—also represent a significant step toward racial equity; they would permanently eliminate a fundamental design flaw in the credit that had the direct effect of ensuring that disproportionate numbers of Black and Latino children received a partial credit or none at all. Before the Rescue Plan’s expansion, roughly half of Black and Latino children in our country received less than the full Child Tax Credit or no credit at all—compared to roughly 1 in 5 white children—because their families earned too little.  Black and Latino families are overrepresented in low-paid work and face worse employment prospects due to historical and ongoing discrimination in education, housing, employment, and criminal justice that have systematically limited opportunity. Build Back Better would also restore eligibility for the credit to children who aren’t eligible for a Social Security number because of their immigration status but can be claimed as tax dependents by using an Individual Tax Identification Number (ITIN).”

The details of the report are profound.  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.”

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.

CBPP explains the significance for 2022 alone of the changes the House has included in the version it passed on November 19:  “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.” (emphasis in the original)

What will it mean after 2022 if the U.S. Senate passes the Child Tax Credit reforms now embedded in the House version? “If the maximum credit amount drops back to $2,000 per child in the coming years and the age range of eligibility for the credit returns to under 17, but full refundability remains permanent, roughly 2 million children would be lifted above the poverty line (as compared to child poverty without the full refundability provision in place).  That would reduce child poverty by roughly 20 percent compared to what it would be without the expansion.”

The Center on Budget and Policy Priorities shows how, if adopted by the Senate, Build Back Better will help one family in 2022: “A single mom, with a toddler and a daughter who is a second-grader, works as a home health aide helping an elderly person meet their basic needs; she makes $12,500 working part time around her kids’ schedule. Prior to the Rescue Plan, this family received a Child Tax Credit of $750 per child per year, but they now get $550 per month — a total $3,600 for the toddler and $3,000 for the second-grader in 2021 — and would in 2022 as well if Build Back Better is enacted.” (emphasis in the original)

Making the Child Tax Credit permanently refundable is only one of the urgently needed reforms to ameliorate injustice for America’s children now passed in the House version of Build Back Better—all of which the U.S. Senate needs to adopt.  Here is a summary, from First Focus on Children’s president, Bruce Lesley, of the pro-child investments passed by the U.S. House of Representatives: “This once-in-a-generation legislation will transform the lives of our country’s children and the path of the nation itself. Children have endured decades of deferred maintenance on the care and services they need most. The provisions of this bill — extension and permanent refundability of the child tax credit, universal pre-school, affordable child care, better nutrition, paid family and medical leave, improvement of key children’s health programs — will vastly improve the health and well-being of our children. We implore lawmakers in the Senate to support this measure and bring these benefits to our children and our country.”