The sad and familiar demise of the expanded child tax credit

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Imagine this conversation inside the White House on the first day of the Biden administration:

“We have a chance to put in place a policy that will lead to a historic drop in child poverty; a policy that will avoid the bureaucratic tangles that have haunted the Obamacare rollout; a policy that will make an immediate material difference in the lives of millions of our fellow citizens who need it most. And then, after its success has been demonstrated beyond a reasonable doubt …we will end it.

Before you dismiss the premise — of course, no White House would do such a thing — take a look at what happened to the Child Tax Credit expansion. Almost from the time the benefits took effect in July 2021, they began to demonstrate the validity of an idea that had existed for decades: that direct cash grants to families in financial difficulty would be life changing and often far more effective than the tangled mass of government programs laden with bureaucratic requirements and limitations. The policy’s positive impact on everything from food insecurity to health care has been extraordinary. But thanks to the Democratic grip on the Senate, the opposition of only one senator – yes, that one — forced the end of the program last December and a rapid increase in child poverty. And while there’s an effort to revive the program in a lame session — which would require significant Republican support — Democrats, for the most part, aren’t talking about it on the campaign trail or almost anywhere. .

And therein lies an unfortunate story about politics and the social safety net, and how difficult it is to strengthen it.

When the US bailout was signed into law in 2021, it took the Child Tax Credit and expanded its size and eligibility, made it “fully refundable” (meaning it would even go to families who owed no taxes to the government), and began providing its benefits as monthly payments made directly to bank accounts. For families whose hardship had been exacerbated by the pandemic, this proved to be a literal lifeline and – in a significant departure from traditional social welfare programs – left it up to parents to decide where that money went. no longer necessary. For some, it went to food; for some, taking their children to the dentist; for some, paying for childcare.

Here’s how the New Republic summarizes its impact:

“The result was extremely beneficial: during the six months of the expanded CTC, the overall child poverty rate in the United States was reduced by 30%; food insufficiency was reduced by 26 percent. An August report from the Niskanen Center predicted that the CTC would “increase consumer spending by $27 billion, generate $1.9 billion in state and local sales tax revenue, and support more than 500,000 full-time jobs at the median wage”.

The 2021 law only allowed for one year of payments, partly because it was expensive and partly because Democrats believed the program would be so popular among voters that politicians wouldn’t let it expire. Some on the left saw it as proof that Joe Biden would indeed be an FDR-like president, leaving behind a transformed welfare state.

But one key political player saw the expansion of the child tax credit in very different terms. West Virginia Sen Joe Manchin, who had repeatedly upended the Democrats’ ambitious social spending plans and whose support was crucial to any legislative success his party would achieve, was an adamant opponent of the credit. Without work requirements, he argued, people would simply withdraw from the workforce. Ultimately, since success or failure hinged on Manchin’s vote, party leaders did not include the program in their last-ditch effort to save Biden’s program, the Tax Reduction Act. inflation.

The impact of the end of the CTC, like its enactment, was swift and dramatic. In one fell swoop, some 4 million children were pushed back into poverty. And according to prominent Democratic pollster Stan Greenberg, its expiration could also hurt Democratic prospects in the fall campaign.

Although Greenberg notes in the American perspective that the program sounds good, he wonders why Democratic leaders ignore it: “I think the main reason is that elected Democratic leaders see their political base as increasingly educated female voters in better-educated suburbs and areas economically dynamic metropolitan areas. . And they believe their diverse base of African Americans, Hispanics and Asian Americans is driven more by identity politics than economic issues.

It seems the battle for Congress is being fought in middle-class suburbs across the country, and for Democrats, votes will be won or lost on issues of abortion, immigration, crime and the danger of Trumpism. . Rescuing millions of children from poverty doesn’t seem likely to resonate on the battlefields of 2022. And there may be broader currents at work.

As a representative Rosa DeLauroone of the program’s main proponents and Greenberg’s wife, puts it bluntly in her book, the biggest obstacle is simply “the indifference to the condition of children, especially poor children”.

There remains a powerful strain in our politics that regards a social program aimed at the plight of the poor as a waste, a reward for the “undeserving”. That’s why voters will often support social programs when directed at everyone — Social Security and Medicare, for example — but not when directed at “them.”

If there is reason to be optimistic about the credit, it is that a number of Republicans, notably Sen. Mitt Romney, seem willing to support some form of it. And the success of credit expansion in its short life has clearly strengthened the case for direct cash payments, which have the merit of appealing to liberals and conservatives alike – liberals because of their impact on the lives of the poor, conservatives because they suppress with intrusive government regulations. If the expanded Child Tax Credit takes on new life in the lame duck session, it will alleviate the depressing fact that one of the most successful pieces of social legislation in decades has been snuffed out in its cradle.

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