Yesterday, Ohio Senator Sherrod Brown and four colleagues—Michael Bennet (CO), Cory Booker (NJ), Raphael Warnock (GA), and Ron Wyden (OR)—wrote to President Joe Biden and Vice President Kamala Harris to advocate for including last year’s expansion of the Child Tax Credit in a 2022 version of the Build Back Better Bill.
Last year’s temporary expansion was part of the American Rescue Plan COVID relief bill. The program expired at the end of 2021, when the U.S. Senate failed to pass the House of Representatives’ version of Build Back Better.
Many have worried that because West Virginia Democrat Joe Manchin has expressed opposition to expanding the Child Tax Credit, Senate Democrats will, in 2022, push through a watered down Build Back Better bill that lacks this program, but Senators Brown, Bennet, Booker, Warnock, and Wyden declare that this program is essential. They explain why: “The expanded Child Tax Credit represents the biggest investment in American families and children in a generation. From July to December 2021, the monthly payments of $250 per child age 6-17 and $300 for children under age 6 reached more than 35 million families. Nearly 9 in 10 American children benefited from these payments, which enabled their families to afford rent, put food on the table, and pay for child care so their parents and caregivers could stay in the workforce. Data from the Census Bureau show 91 percent of low-income families spent their payments on basic necessities like groceries, utilities, housing, and school-related costs.”
The senators continue: “The expanded Child Tax Credit is a signature domestic policy achievement of this administration, and has been an overwhelming success. The expanded Child Tax Credit payments, which are projected to reduce child poverty by more than 40 percent, kept an estimated 3.7 million children out of poverty in December 2021 alone. These anti-poverty effects are particularly strong for children of color, nearly half of whom were excluded from the full credit prior to the American Rescue Plan. Nationwide, the payments cut hunger among families with children by 24 percent.”
In their letter, the senators cite a preliminary academic study published last week by the National Academies of Sciences and described by the NY Times expert social science reporter Jason DeParle. Neuroscientific research documented a small but significant increase in babies’ brain activity in the months when their parents were awarded $333 per month in cash assistance. DeParle reports: “The payments will continue until the children are at least 4 years old, and the researchers plan further tests.”
DeParle explains further: “Evidence abounds that poor children on average start school with weaker cognitive skills and neuroscientists have shown that the differences extend to brain structure and function. But it has not been clear if those differences come directly from the shortage of money or from related factors like parental education or neighborhood influences.” In this study, “Using electroencephalograms… to evaluate the children at age 1, the researchers found that those in the high-cash group had more of the fast brain activity other research has linked to cognitive development than those in the low-cash group… Researchers are still trying to determine why the money altered brain development. It could have purchased better food or health care, reduced damaging levels of parental stress, or allowed mothers to work less and spend more time with their infants… Economists and psychologists once dominated studies of poor children, but neuroscientists have increasingly weighted in.” Here DeParle is referring to a body of research documenting “toxic stress,” which children living in poverty are more likely to experience partly through their environments and partly from their parents’ anxiety and depression.
DeParle explores how the debate about the Child Tax Credit has played out politically in Congress: “Most Republicans oppose the monthly grants, citing the cost and warning that unconditional aid, which they describe as welfare, discourages parents from working. Sharing some of those concerns, Senator Joe Manchin III, Democrat of West Virginia, effectively blocked the Biden Plan, though he has suggested that he might support payments limited to families of modest means and those with jobs.”
Economists and sociologists have questioned this assumption that the Child Tax Credit payments will undermine parents’ motivation to work. Many parents who desperately need the Child Tax Credit are already working. A sociology professor at American University, Celine-Marie Pascale explains that, “A recent study by the Brookings Institution defined low-wage work as a median hourly wage of $10.22 or $17,950 per year. By this measure, 44% of all workers in the U.S. are low-wage earners.”
And “low-wage work” pays more than minimum-wage work. The federal minimum wage is $7.25 per hour—just over $15,000 per year for working full time—at the same time the federal poverty level for a family of four is $26,500. Low-wage work is particularly common among women including many single mothers. The Economic Policy Institute reports that, “The average hourly wage for early care and education workers and home health care workers is $13.51 and $13.81 respectively—about half the economywide average hourly wage. For a full-time worker, this translates to less than $30,00 a year.”
Expanding the Child Tax Credit would improve children’s lives and additionally have educational implications. Kevin Welner, a professor of education at the University of Colorado and executive director of the National Education Policy Center explains: “Those of us who work in or with schools never question the enormous impact that a teacher or school can have on a student. But this essential truth coexists with another truth: that differences between schools account for a relatively small portion of measured outcome differences. That is, opportunity gaps in the U.S arise primarily outside of schools. This should not be a surprise. Poverty, concentrated poverty, and racialized poverty are pervasive features of America. School improvement efforts cannot directly help children and their families overcome decades of policies that perpetuate systemic racism and economical inequality. When children are born in the United States, their educational and life outcomes can all be predicted based on their parents’ education, income and wealth. Compared to the Scandinavian countries and other so-called Western democracies like Canada, Spain, Australia, and New Zealand, American children are inordinately trapped in intergenerational poverty. Inequality in the U.S. is stark and enduring.”
Last year as part of the American Rescue Plan COVID relief bill, Congress enacted three temporary reforms in the Child Tax Credit—increasing the per-child benefit, distributing the tax credit monthly instead of once a year, and making the tax credit fully refundable. Ironically, prior to last year’s reforms, America’s poorest families could not qualify because their incomes were too low. Making the Child Tax Cut fully refundable to America’s poorest families is the most desperately needed reform in this program. The Center on Budget and Policy Priorities explains why:
“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.” “Prior to the Rescue Plan, 27 million children received less than the full Child Tax Credit or no credit at all 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.” (emphasis in the original)