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Study: Child poverty rises after tax credit expires

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A swing sits empty on a playground outside Providence, RI on March 7, 2020. Columbia University’s Center on Poverty and Social Policy estimates the number of poor children has increased by 3 .7 million from December 2021 to January 2022, an increase of 41%, only one month without the expanded child tax credit payments. (David Goldman, Associated Press)

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WASHINGTON — The number of children living in poverty in the United States jumped dramatically after just a month without expanded child tax credit payments, according to a new study. Advocates fear halting payments will unravel what they say are landmark achievements in poverty reduction.

Columbia University’s Center on Poverty and Social Policy estimates that 3.7 million more children lived in poverty in January, a 41% increase from December, when families received their last check. The federal aid began last July but ended after President Joe Biden’s Build Back Better bill stalled in a sharply divided Congress. Payments of up to $300 per child were made directly to bank accounts on the 15th of each month, and last week marked the second missed deposit of the year.

The Columbia study, which combines annual US Census data with information from the Census Bureau’s Current Population Survey monthly bulletins, found the monthly child poverty rate rose to 17% from 12.1% in December. in January. This is the highest level since December 2020, when the United States was struggling with high unemployment and a resurgence of COVID-19. Black and Latino children experienced the highest percentage point increases in poverty – 5.9% and 7.1% respectively.

Megan Curran, policy director at the Center on Poverty and Social Policy, said the sudden spike shows how quickly payments have become essential to household financial stability for millions of families after just six months.

“It really had a huge impact right from the start,” Curran said. “We saw food insecurity drop almost immediately as soon as payments started…all that progress we’ve made could now be lost.”

Curran said the rise in the number of children living in poverty may also partly reflect rising prices.

The new figures represent a serious setback to the original goals of the Child Tax Credit program, which ambitiously aimed to halve child poverty nationwide. As part of Biden’s $1.9 trillion COVID-19 bailout package last year, the existing child tax credit program was massively reshaped, increasing the amount of payments, dramatically expanding the pool of eligible families and delivering the money in monthly installments designed to be incorporated into day-to-day household budgets.

The program extended payments of $250 a month for children ages 6 to 17 and $300 a month for those under 6 to most families nationwide, at an annual cost of around $120 billion. dollars. The goal was to put discretionary money in the hands of parents with the freedom to spend it as they saw fit from month to month.

Republican lawmakers are generally united against expanding the tax credit – describing it as excessive, inflationary and a work disincentive. But when it was first passed, many Democrats openly declared their intention to make the payments a permanent anchor of America’s social safety net.

The goal of the Democratic Congress was to keep the program going and fight for its coming months, armed with data and millions of anecdotes about the benefits of the tax credit.

Instead, the 50-member Democratic bloc in the Senate crumbled from within, with West Virginia Sen. Joe Manchin holding his vote for weeks before finally refusing to endorse Biden’s social spending package. . Manchin cited his opposition to the massive price of the child tax credit among his reservations with the bill.

Earlier, Manchin called negotiations on Biden’s Build Back Better bill “dead.”

New Mexico Democratic Senator Martin Heinrich, one of the staunchest advocates of the expanded child tax credit, said in a statement to The Associated Press on Wednesday that nearly all children in his state benefit from the credit and that letting it expire was “a moral failing”. “

An informal survey of families by the non-profit advocacy group ParentsTogether Action found a similar immediate impact on lapsed child tax credit payments for respondents, with around 1 in 5 families surveyed saying they could no longer afford housing or enough food for her children.

Allison Johnson, the organisation’s campaign manager, said the Child Tax Credit payments were designed so parents “don’t have to make these really tough choices”, she said.

The end of deposits makes it nearly impossible for needy families, who may struggle to pay off debt or meet large expenses, to develop financial stability or momentum, Johnson said.

“This lack of clarity is very difficult for people. It makes them unable to plan things,” she said.

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